Why retailers must embrace the Relationship Era

• Why retailers must embrace the Relationship Era

  

Indifference is expensive. Hostility is unaffordable. Trust is priceless.
Some companies learn this by accident, happy or otherwise. Others have that understanding, you might say, baked in. One such is Panera Bread, the chain of almost 1,500 bakery cafés in the "quick casual" restaurant segment. Panera's hallmarks are freshly baked bread, a healthy menu by chain restaurant standards and welcoming service.
The goal is to create what chairman and co-CEO Ron Shaich calls "positive energy" and personal touch. "That's our whole marketing effort," Shaich says. "It's fueling word of mouth. Marketing is simply amplification of the experience within. It's not like we are going to convince you that we are something that we are not."
What they are is successful and growing. Over the past fifteen years, the average Panera café has gone from $1.1 million in annual sales to $2.4 million. This is a reflection of total dedication to both customer experience and employee satisfaction, which are complementary for all the obvious reasons.
"I got a letter from a woman in Florida who was undergoing cancer chemotherapy," Shaich says. "And she came in without hair one day, one of our people reached over and gave her a hug and said 'Can we buy you lunch? We just want to be here in support of you.' And she was so moved by this, she wrote me. I mean this happens thousands of times when you can create that kind of space for people." Such episodes, routine or not, are as affecting for employees as they are for clientele. Shaich says the ensuing company lore imbues the workplace with a sense of purpose.
"Profit is a byproduct. It’s pretty clear to me, it's a byproduct of pleasing people and when you please people, they come back. And when they come back, they leave something." Yeah, including their money. Panera did $2 billion in 2012. Its stock chart looks like Mt. Rainier. Shares were selling for $15 in the year 2000. Now they’re at $169.
Consider this simple experiment:
Type "I love Apple" into your search bar. You will get 3.27 million hits. If you type "I love Starbucks," 2.7 million hits. Zappos: 1.19 million.
And "I love Citibank"? You get 21,100. AT&T Wireless: 7,890. Exxon: 4,730. Dow Chemical: 3. Out of 7 billion human beings, 3! Just to put that into context: If you type "I love Satan," you get 293,000 hits. Now consider this: Citibank, AT&T Wireless, ExxonMobil and Dow among them spend $2 billion a year on advertising. Money, it turns out, really can't buy you love. It can't even buy you like.

Millions of people will, of their own volition, announce to the world their affection for a brand. Not for a person, not for an artwork, not for a dessert but for a good or service. Congratulations. People care about you.The methodology here may not be especially rigorous, but the results dramatize three immutable facts of contemporary marketing life:

1. Your brand is inextricably entwined in such relationships. If you were to type in "I hate Exxon," you'd get 2. 16 million hits— not counting the "I hate ExxonMobil" Facebook page. People are decreasingly listening to your messages, but that hasn’t stopped them from thinking about you and talking about you. And each of those expressions of like, dislike, ardor or disgust has an exponent attached to it, reflecting the outward ripples of social interaction.
2. What used to happen in the privacy of your own boardroom, plants and C-suite is now extremely public and common currency on the Internet. People in glass houses shouldn't do anything illegal, embarrassing, hypocritical, offensive, tasteless, vulgar, excessively greedy or otherwise incorrect — especially when getting caught being honorable and constructive has such benefits. Perhaps by coincidence, but most likely not, this sudden vast availability of information corresponds with a societal megatrend of judging institutions not only on their offerings but on their conduct. Thus, for the first time in commercial history, there is not just moral value but asset value in being a mensch.

This is the Relationship Era, the first period of modern commerce when your success or failure depends not on what you say, nor even on what you produce, but increasingly on who you are. And it isn't hard to discover who you are. Just Google yourself. Take your time. It's all there, in perpetuity.
Except for a handful of industrial juggernauts mainly removed from public view (including ExxonMobil, truth be told) doing business in the Relationship Era has many requirements. Ethical conduct. Seamless customer relations. Constant contact and cooperation with all stakeholders, including not just investors but also employees, suppliers, distributors and retailers, neighbors, governments and the society at large. It must be an all- pervasive imperative to earn the trust of all concerned — not as a means to gain advantage in a sale or negotiation but as an end in itself. We shall meditate on this subject in detail in the next chapter.
Suffice for the moment to say that in bygone eras, trust was at best subsidiary to the all pervasive focus on increased sales and market share. And in the current environment, the degree to which consumer trust influences purchasing decisions has never been higher and is clearly rising. Yet, paradoxically, trust and transactions are independent variables. Only when you view them as such can you fully understand their relationship in true brand sustainability, as we shall illustrate presently.
Meantime, let us nonetheless think about the value of trust relationships — versus the dependence on advertising and public relations to shape perceptions about a brand.
"It's always been about the individualized relationship," says Scott Olrich, CMO of Responsys, which provides relationship based marketing software for some of the largest brands in the world. "A century or so back, the local corner shop lived or died based on the relationships they built. As new means of mass communication emerged, companies used their increased reach to try to advertise their way out of that responsibility. But today every aspect of a company's behavior is on public display. A relationship first approach to every customer interaction has again become the imperative."
Dealing with this new reality requires an entirely new mentality across nearly all areas of an enterprise, in which every function of business embraces the Relationship Era — but in consumer interactions most of all. The behaviors associated with the Consumer Era nowadays seem cold- blooded and opportunistic, like a swinger on the prowl in a bar. The Relationship Era approach has more in common with romance, or, at least, a human connection.

Americans won't pay for same-day delivery ... or will they?

• Americans won't pay for same-day delivery ... or will they?

  
  

The following is an excerpt from a recent conversation on RetailWire, reproduced here with kind permission.
There are a number of companies (Amazon, eBay, Google, Instacart, Postmates, Shutl, Walmart, Zipments, etc.) tinkering around with same-day — in some cases same-hour — delivery in the U.S. Obviously, management at each of these businesses believe there is a market opportunity in the service even though the primary reason people abandon their shopping carts online, according to numerous studies, is because they don't want to pay anything for shipping.
New research from The Boston Consulting Group (BCG) reinforces the premise that there's an expectation of free shipping. Nearly three in four people in a survey of 1,500 U.S. consumers listed free delivery as the top factor in their decision to purchase. Number two was lower prices (50 percent) and only nine percent cited same-day delivery as the most important factor in choosing where to buy online.
One potential demographic opportunity, according to BCG, are consumers between 18 and 34 with household incomes above $150,000 living in urban areas. These "affluent millennials" represent about two percent of the U.S. retailing market.
"Same-day delivery will be a niche service in the near future," said Rob Souza, a partner at BCG, in a statement. "Retailers may choose to offer it to build customer loyalty, enhance brand awareness, or keep up with the competition. But it is unlikely to generate significant revenues for either retailers or carriers."
Affluent Millennials are willing to pay up to $10 to have items they order online delivered on the same day. BCG estimates the market for same-day deliveries at between $425 million and $850 million.
The one thing that BCG's research and other studies have made clear is that Americans are looking for deals. So, what if an offer that includes same-day delivery is too good to turn down?
A big rumor is that Google is getting ready to introduce its answer to Amazon Prime, Amazon.com's annual subscription program that provides shoppers with free two-day delivery on all orders. The planned Google Shopping Express, according to TechCrunch, will offer same-day delivery from major brick and mortar stores for an annual fee between $10 and $15 cheaper than that paid by Prime members.
Another report by NDTV Gadgets claims Google has already begun testing the service using third-party couriers to pick up products from stores and make deliveries to consumers.
RetailWire spoke recently with Tom Allason, CEO of Shutl, which also uses courier services to handle pick-up and deliveries. Mr. Allason told RetailWire consumers who go to a retailer's online site can choose the "now" option for same-day delivery. In some cases, retailers partially or completely underwrite the cost of the delivery, helping to overcome the objection to paying for deliveries. The company is launching its service this month in Chicago, New York and San Francisco with plans to open in 17 other cities in the U.S. and Canada.

Wal-Mart may get customers to deliver packages to online buyers

Exclusive: Wal-Mart may get customers to deliver packages to online buyers

Thu, Mar 28 01:01 AM EDT

By Alistair Barr and Jessica Wohl
SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc is considering a radical plan to have store customers deliver packages to online buyers, a new twist on speedier delivery services that the company hopes will enable it to better compete with Amazon.com Inc.
Tapping customers to deliver goods would put the world's largest retailer squarely in middle of a new phenomenon sometimes known as "crowd-sourcing," or the "sharing economy."
A plethora of start-ups now help people make money by renting out a spare room, a car, or even a cocktail dress, and Wal-Mart would in effect be inviting people to rent out space in their vehicle and their willingness to deliver packages to others.
Such an effort would, however, face numerous legal, regulatory and privacy obstacles, and Wal-Mart executives said it was at an early planning stage.
Wal-Mart is making a big push to ship online orders directly from stores, hoping to cut transportation costs and gain an edge over Amazon and other online retailers, which have no physical store locations. Wal-Mart does this at 25 stores currently, but plans to double that to 50 this year and could expand the program to hundreds of stores in the future.
Wal-Mart currently uses carriers like FedEx Corp for delivery from stores - or, in the case of a same-day delivery service called Walmart To Go that is being tested in five metro areas, its own delivery trucks.
"I see a path to where this is crowd-sourced," Joel Anderson, chief executive of Walmart.com in the United States, said in a recent interview with Reuters.
Wal-Mart has millions of customers visiting its stores each week. Some of these shoppers could tell the retailer where they live and sign up to drop off packages for online customers who live on their route back home, Anderson explained.
Wal-Mart would offer a discount on the customers' shopping bill, effectively covering the cost of their gas in return for the delivery of packages, he added.
"This is at the brain-storming stage, but it's possible in a year or two," said Jeff McAllister, senior vice president of Walmart U.S. innovations.
Indeed, the likelihood of this being broadly adopted across the company's network of more than 4,000 stores in the United States is low, according to Matt Nemer, a retail analyst at Wells Fargo Securities.
"I'm sure it will be a test in some stores," he added. "But they may only keep it for metro markets and for higher-priced items."
LEGAL BOUNDARIES
Start-ups such as TaskRabbit and Fiverr already let individuals rent out their time and expertise to companies and people looking for small jobs to be completed.
Zipments was founded in 2010 as a crowd-sourced delivery network that allowed anyone over 18 years old with a vehicle, a text-enabled phone, and a PayPal account to bid on courier services for local businesses.
Such online match-making businesses often push legal boundaries - and a Wal-Mart crowd-sourced delivery program would be no different, according to Nemer.
Online packages delivered by customers may never reach their destination, either through theft or fraud, the analyst said.
Such a crowd-sourced delivery service may not be as reliable as FedEx or United Parcel Service, which have insured drivers, he added.
"You are comfortable with a FedEx or UPS truck in your driveway, but what about a stranger knocking on your door?" Nemer said.
ZIPMENTS EVOLVES
While Zipments started out with a pure crowd-sourcing approach, the company now does more screening of drivers before allowing them to be part of its delivery network, Chief Executive and co-Founder Garrick Pohl said in an interview. It now serves big cities including New York and Chicago.
Theft, fraud and late deliveries have never been a problem, but insurance and licenses were an obstacle, Pohl explained.
Drivers often need personal liability insurance to cover package delivery activities. Cargo insurance is also needed. Zipments self-insures this risk up to $250, but the firm encourages its couriers to buy additional coverage for higher-value packages, Pohl said.
In some areas, like downtown Chicago, people also need a courier license to deliver things, he added.
"Zipments now helps people get all these things set up before allowing them to deliver goods," Pohl said.
Still, he said the issues are not insurmountable, citing pizza restaurants, which have used part-time drivers to deliver pies for years.
"It's a great solution for large retailers like Wal-Mart," Pohl said. "We'd like to see them move quicker, but it's great that they are considering it."
Zipments is trying to provide such services to retailers, although Pohl declined to say which companies the start-up is talking to about this.
(Reporting by Alistair Barr and Jessica Wohl; Editing by Jonathan Weber, Martin Howell and Leslie Gevirtz)

Walmart Vs. Amazon: It's About To Get Interesting

(Image credit: AFP/Getty Images via @daylife)

In the case of Walmart Vs. Amazon, it’s about to get interesting.
Let’s put aside the much discussed news leak that Walmart is considering using its own shoppers as delivery people, providing some kind of incentive to drop off online orders on their way home from the store.
It’s not likely to happen, there are far too many unattractive variables. But it shows the retailer is thinking outside of the box when it comes to competing with its online competition, Amazon.
Walmart already offers in-store pick up and just expanded its test of a locker system where shoppers can order online and pick-up in the store without waiting in line. It’s similar to Amazon’s recent deal with Staples and 7-Eleven to do the same.
The big box behemoth may not be a start-up, but it does try to think like one with its Walmart Labs division. That group is developing Pangaea, a global technology platform, scan and go apps that let shoppers buy in store via a smartphone, and online operations in growing markets outside the U.S. such as Brazil and China.
Wal-Mart is still testing same-day delivery in four cities. The program uses stores as fulfillment centers and if expanded, could turn 4,000 stores into bases for same day delivery.
According to Internet Retailer, Walmart is the fourth largest e-commerce retailer and expects to generate $9 billion in global e-commerce revenue in its current fiscal year, ending Jan. 31, 2014.
Compared to Amazon, that $9 billion is pocket money. Amazon’s sales for the fourth quarter alone were $21.27 billion.
But take a look at the profits and some other key indicators. Income is slowing, expenditures are up and there’s an Marketplace Fairness Act on its way to force the collection of state sales tax. Sooner or later, people will start to notice the lack of earnings.
Amazon is building out a physical infrastructure to provide same day delivery, it doesn’t have Walmart’s existing store base to work from.
It’s too early to call a winner in the retail race. Maybe there’s room for both, although they don’t think so. In the case of Walmart Vs. Amazon, it’s about to get interesting.

J.C. Penney: It's Apparently More Than CEO Johnson Who Live Far From Headquarters

J.C. Penney’s new CEO Ron Johnson reportedly often spends life far from the company’s Plano, Texas, headquarters. It’s not just him. Many of the retailer’s executives have cross-country commutes, and aren’t centrally located in the Lone Star.

(Image credit: Getty Images via @daylife)

Johnson and executive vice presidents Ben Fay and Laurie live in California; Chief Creative Office Michael Fisher and a senior design executive, Nick Wooster, come in from New York and construction executive Bob Laughrea resides in Boston, according to Bloomberg. If only the tally ended there. Bloomberg also reports that human resources chief Dan Walker, vice president Sissie Twiggs and senior vice presidents Amy Leonard and Donna Isralsky also live in California and commute.
J.C. Penney defends these living arrangements, noting fairly that retail executives–especially those involved in a complicated turnaround–spend an enormous amount of time flying all over. The company’s argument: Why uproot a family if the J.C. Penney parent will still spend the week at 30,000 feet?
Still, it’s more about the message than the logistics. Johnson and his crew are leading what some observers call the most ambitious retail turnaround ever, and it’s not working. J.C. Penney shares have been halved since Johnson took over; the company’s credit rating reduced to junk and some of the most ambitious parts of the turnaround–no coupons, no promotions–have already been reversed. The company is ceding market share to rivals like Macy’s and Kohl’s, as well as others like Gap and Target.
Investors are indeed souring on Johnson and his executives–major investor Vornado Realty Trust sold half its stake–and seeming to enjoy the high-altitude lifestyle while the company is in turmoil won’t help them change that.

Future of Frozen Food

Crazy Smart or Over the Edge? Doritos To Bag Locos Tacos Tortilla Chips

Line Extension Hits Stores April 8, Gets Marketing Started Via Twitter Contest

Published: March 26, 2013

This is enough to make your head spin, and maybe your heart burn. PepsiCo's Frito-Lay is about to put Taco Bell's Doritos Locos Tacos in a bag.

Yes, the brand that put its name on the wildly popular new fast-food offering is trying to seize on the momentum by launching a line extension scheduled to hit stores on April 8. Or is that a line extension of a line extension?
Doritos announced the product on Twitter, which includes bag shots of Nacho Cheese and Cool Ranch flavors. The Taco Bell icon is displayed prominently.
Doritos is supporting the new launch with a Twitter contest in which users are are urged to respond by answering this question: "How bold will you go for a pallet of Doritos Locos Tacos tortilla chips?" The winner gets 66 11-ounce bags of Doritos Locos Tacos Nacho Cheese-and-Crunchy Taco-flavored tortilla chips and 66 11-ounce bags of Doritos Locos Tacos Cool Ranch-and-Crunchy Taco-flavored tortilla chips. (Retail value = $566, according to the contest rules).
Taco Bell's Doritos Locos tacos, which debuted last March, were the biggest product launch in its 50-plus year history. The product has been wildly successful for the chain in terms of buzz; Taco Bell sold more than 200 million of them in less than six months. Earlier this year, parent company Yum Brands execs said that in 2012, Taco Bell sold 325 million Doritos Locos Tacos and contributed to the broadening of the Taco Bell brand, but financial specifics were not given.
Taco Bell last year hinted that it would expand the product line, and earlier this month it launched the Cool Ranch Doritos Locos taco, accompanied by what the company said was its largest marketing campaign to date.
PepsiCo Chief Financial Officer Hugh F. Johnston foreshadowed an expanded partnership earlier this year at a financial conference, telling analysts that "we are gearing up for year two of our Doritos partnership with Taco Bell with even more exciting new products."

Radioactive

PGA Tour 14

Amazon Prime: Bigger, More Powerful, More Profitable than Anyone Imagined

Amazon Prime: Bigger, More Powerful, More Profitable than Anyone Imagined

Andrew Harrer / Bloomberg / Getty Images

Amazon’s competitors — a group that basically includes every retailer under the sun nowadays — have more reasons than ever to fear the world’s largest e-retailer. Membership in Amazon Prime, the service that includes unlimited free two-day shipping and tends to boost customer spending at Amazon dramatically, has doubled in less than two years. Analysts predict it’ll easily double again by 2017.

Last week, a report from Morningstar and Consumer Intelligence Research Partners (CIRP) estimated that there are now 10 million subscribers to Amazon Prime, which offers free streaming of thousands of movies and TV shows and, most important, free two-day shipping on most Amazon purchases. The service usually costs $79 annually, though it’s cheaper for college students ($39 annually, after six months free).

It’s unclear exactly how many Prime subscribers there are at any given time (Amazon doesn’t make this info public), but it sure looks like membership soared. It’s been estimated that there were fewer than 7 million subscribers at the start of 2012 and about 4 million members in the fall of 2011. The numbers have likely been boosted by Amazon including free Prime trials with sales of the Kindle tablet, but even so, the increases are impressive — and are presumed to keep occurring with regularity. The Morningstar report predicted that there could be 25 million Prime members by 2017.

Even more interesting than the growing Prime ranks is what Prime seems to do to subscribers. A 2010 Businessweek story stated that Amazon Prime broke even within three months of launching, not the two years predicted by its creators. That’s because customers spent as much as 150% more at Amazon after they became Prime members. Subscribers not only ordered more often, but after paying the $79 fee, they started buying things at Amazon that they probably wouldn’t have in the past. Since shipping was always speedy and free, members saved themselves a trip to the store for things like batteries and coffee beans. “In all my years here, I don’t remember anything that has been as successful at getting customers to shop in new product lines,” Robbie Schwietzer, vice president of Amazon Prime, told Businessweek.

The net result of Prime membership — and the thing that has to scare the bejesus out of Amazon’s competition — is that it tends to cause subscribers to stop shopping anywhere else. It’s assumed that Amazon’s prices are competitive. With Prime, shipping costs become a total nonissue. Subscribers automatically defer to shopping at Amazon first because they know shipping is free. And when they spot something they like at another retailer’s site or in a store (yes, it still happens), Prime members are likely to see if Amazon also sells the item. Chances are, Amazon does, the price is about the same or better, and two-day shipping is, of course, thrown in for free.

Sure, Amazon “pays” for all the shipping on Prime orders. A 2011 investigation estimated that the average Prime member used $55 worth of shipping and $35 in digital content annually. That’s $90 total, so Amazon was “losing” $11 annually by collecting its $79 membership fee.

Regardless of what might seem like a net loss, Amazon Prime has been and continues to be a hugely profitable enterprise for the e-retail giant. A Prime member now makes $1,224 in Amazon purchases each year, on average, compared with $505 for non-Prime customers. After factoring in costs incurred for shipping and streaming, the average Prime member yields Amazon $78 more in profits than other customers, according to Morningstar. Yep, it’s nearly equal to that $79 membership fee.

Wired notes that “Amazon could cut the price by $50 and still make far more than what the company makes off non-Prime customers.” Such a decreased price would probably boost Prime membership through the roof, as more shoppers would find it worthwhile to pay the fee in exchange for a year’s worth of unlimited two-day shipping. “They should be able to give Prime away for free,” says CIRP partner Michael Levin.

An extreme Prime price cut could wreak havoc throughout the retail world. Just imagine if, suddenly, tens of millions of consumers doubled their annual spending at Amazon.com like previous Prime customers have done. Such a change would hammer Amazon’s online and brick-and-mortar competition, and probably also hurt the chances of emerging same-day-shipping services, whose fees fewer would be willing to pay. When two-day shipping is always free, after all, it’s much harder to justify forking over $10 or more to get an item a little quicker. (Amazon also offers same-day shipping in several major cities, and it gives a discount on the expedited service for Prime members.)

That said, there are reasons why Amazon is likely to maintain the Prime fee structure as is. Sure, there are all those millions of $79 yearly fees to consider. That’s easy money for Amazon. And based on expanding Prime-membership numbers, the world’s largest e-retailer doesn’t appear to need help growing its subscriber base.

But there’s more to it than that. From the get-go, many Prime members have been motivated to spend more at Amazon not just because prices were good and shipping was free, but because they want to get their money’s worth out of their $79. If a customer is not ordering all that much, the subscription fee isn’t worth paying. If Prime fees go away, the compulsion to “get your money back” goes away too. When something is free, consumers tend to think it’s not particularly valuable.

Of course, there are many options in between $0 and $79. Amazon is famous for aggressive pricing tactics, and it has always seemed willing to accept smaller transaction profits so long as it wins the sale. “Your margin is my opportunity,” is a favorite quote from Amazon CEO Jeff Bezos. His company is driven to make more sales and attract more customers, and a cheaper Prime-membership fee would help with both.

On Why Smartphones are Killing PCs

When people use a laptop, they expect everything to be free, and when they use a smartphone they expect to pay. That is the main reason why the laptop eco-system is dying and smartphones are thriving.
Laptops have traditionally been expensive. For a couple of decades now we have gotten used to paying over $1,000 for one– the average selling price of a Mac is $1,400. Smartphones however are almost free. While Google is beginning to have some success selling the Nexus 4, most people are reluctant to pay for a smartphone. They expect it subsidized or free. But what is remarkable is how the user behavior changes after the acquisition of the gadget. A phone consumer expects a phone for free, but what happens afterwards they are willing to pay for in excess (e.g. texting, voice minutes, data roaming), even when free alternatives exist. It is a different frame of mind, almost like a deal, an agreement between corporations and consumers: get something for free and pay later, vs get something that is expensive upfront and then stop paying. A laptop is a big investment upfront to enter a mostly free world. A smartphone is a tiny investment upfront to enter an expensive, yet very much accepted world. A laptop is an all-you-can-eat experience, including an all-you-can-eat fixed internet connection. In the laptop world piracy is rampant because people expect everything to be free, but much less so in the smartphone world. And this is almost psychological: the same people who pirate on laptops don’t as commonly pirate on smartphones, even though for example there are many bit torrent clients for Android. A smartphone is an “a la carte” experience in which every component is paid for and dearly, including data packages. As a result the smartphone eco-system is well funded and thriving but the PC or laptop eco-system is dying, making the laptop experience less and less “fun”. Since 2011 more smartphones are sold than PCs. This is mostly because developers and content producers need to get paid, and they are seeing much more money developing or producing for iOS and Android than for Windows and Mac.
Moreover “smartphone only” experiences are on the rise. Path, Foursquare, Uber, Instagram and Whatsapp are but some examples of these. When smartphones started, people used to say that they fell short of what was available on the Web. Now the opposite is true. People using laptops have to have smartphones handy as well. And this is even more extreme with games. As developers realized that few wanted to pay for games on laptops but many more were willing to pay for games on smartphones/tablets, they switched to develop for iOS and Android. And games became huge on mobile.
This perception translates to the investment world. For example Instagram is a free app and yet Facebook paid almost a billion for it. They didn’t pay concretely because of the money they thought they would make out of Instagram itself, but because as young as it is Facebook was until recently a PC company and in Instagram it found a short cut to the mobile world. In general VCs now are much more likely to invest in a mobile platform than in a PC platform even if the mobile platform like Instagram had no way to monetize itself. Mobile growth has the same premium Web growth had a decade ago. And this is regardless of the fact that so far, for example in advertising, it is easier to monetize on the web than on mobile. This is because everyone sees the future as mostly mobile.
For many years, when phones were phones and PCs were PCs, there was a tough debate on how content and software producers were going to get paid. And the answer, provided by Steve Jobs, turned out to be get people hooked on a device that was a computer but one in which everyone had to pay, and call it a phone. There was always another possible alternative, which was open source software and user generated content. That still exists, mostly promoted by Google, but even Google had to adopt the content/software world of Apple to make Android thrive.
Now before I end, here is a list of secondary reasons to explain why smartphones and tablets are killing PCs (or why iOS and Android are killing Windows and OSX):
-Smartphones expanded into tablets and they started competing in screen size with one of the few advantages left for PCs.
-People are finally getting used to glass keyboards (some apps like Swiftkey make them more friendly), and can therefore bid farewell to their keyboards.
-Laptops are more for content producers and most people are content consumers. That’s why the work environment is still dominated by PCs and probably will be for a long time.
-Smartphones are much easier to carry around and therefore open to a whole set of apps, like for example sports apps.
-Smartphones offer connectivity via WiFi and mobile and most laptops only WiFi; WiFi is common but not as pervasive as mobile and therefore a smartphone/tablet has the best of both worlds.
-One of the biggest advantages of laptops is storage, but cloud computing is taking care of that.
-The hardware that is needed to provide a great mobile experience uses energy in a smarter way than the hardware that is needed to provide a great laptop experience.
-While there are very affordable laptops now, they are not as inexpensive as great smartphones that are given out for free or almost nothing in contracts, and laptops are in a head-on race between processor speed and RAM and programs that makes inexpensive laptops appear as just bad products.
But overall I stand by my initial thought, that is, the main reason smartphones are killing PCs is because there is more money in smartphones and while information wants to be free it costs money to produce it. At the risk of gaining many enemies with my statement, I would like to change the famous “information wants to be free” to “information wants to be affordable”. I can agree with Aaron Swartz that science that can only be afforded at expensive universities is wrong, but still the key is not to make things free, it’s to make them affordable. To make information affordable, content affordable, and software affordable. And mobile platforms seem to have achieved a better balance at this than laptops ever did. That is why they are thriving. Better format, better business model. That simple.
(Photo: fishbrain.randy@sbcglob

Virtual Presenter

The New Rules of Leadership

Spring is in the air, the days are getting longer and the crocuses are poking up their hopeful heads. Yet, these remain bleak times for too many job seekers, even leaders and managers with impressive resumes. The reason? The demands of a collaboration-based, talent-hungry, global, wired economy are evolving so quickly that success depends on nothing less than continuous learning. Fall behind and you may find yourself disqualified from the race.
I recently had the eye-opening experience of reading a report written by the analyst Josh Bersin of Bersin by Deloitte, in which he makes his predictions for the coming year. This post is inspired by his research and insights.
One senior innovation advisor at a major energy company told Bersin, “In today’s economy there is no way anybody can be an expert in a substantial part of their total field. The modern ‘renaissance man’ is one who understands how to learn.”  This is huge and so important.
Companies of all sizes in all industries are trying to meet the new imperative. Learning and Development (L&D) spending was up 12 percent in 2013, the largest jump in almost a decade. The goal is to integrate learning into a company’s culture and processes. There are also training sessions, workshops, conferences, and retreats, but the most successful strategies are those that make learning a continuous process, hardwired into a company’s metabolism.
For leaders this is both a daunting challenge and an exciting opportunity to engage and retain top talent. You have to keep your eye on the horizon, your ear to the ground and your nose in the wind. Your company’s needs are ever-changing, and you must stay one step ahead.
How? Start by understanding that change is happening at unprecedented rates, that new technologies can disrupt the best-laid plans, that competition is fierce. These days, laurels aren’t for resting on, they’re for leaping from. Complacency = Extinction.
Leadership by walking around may sound Paleolithic, but there’s no substitute for getting out into your organization and seeing how things actually work, talking to people, making sure you understand what everyone is doing. You’d be surprised how many leaders, even in this day and age, hide out in the executive suite. Not smart. Get out there and learn what’s happening.
Understand and master the borderless future world of work. Technology has rendered borders largely meaningless, not only between counties, but between companies and their stakeholders, including employees, partners, customers and at times even competitors. It’s a diverse, cross-cultural new paradigm with a flatter structure. Engage with all the new technologies and social media.
Talent is priceless. There’s a tremendous competition to hire the very best, especially people with superb and specialized technology and creative skills. Traditional career paths and job descriptions can turn these people off. Be flexible and work with talent to design jobs that allows them maximum freedom and productivity. If you don’t, they will likely move to a company that does.
Embrace emerging markets. There’s tremendous energy and excitement  in India, China, Brazil and Eastern Europe. Make sure you understand these economies and are engaging them in every way possible. These days, we need them at least as much as they need us. Humility can be a great business tool.
The rules of leadership are ever-changing. Staying engaged, open-minded, technologically savvy, and embracing continuous learning, not only individually but as a core organizational imperative, are the hallmarks of 21^st century leaders.
Make a list of everything that you’re doing to learn and develop. Be specific. Then examine the list for areas where you should be doing more. Take actions to up your proficiency in those areas.

McDonald's Has a Millennial Problem

Country's Biggest Fast Feeder Doesn't Rank in Top 10 Fave Restaurants Among This Huge and Influential Demo

Published: March 24, 2013

McDonald's may be the country's No. 1 fast-food chain and one of its most-beloved brands, but when it comes to millennials, the Golden Arches says it doesn't even rank among the demographic's top 10 restaurant chains.
It's enough of a concern that McDonald's is launching its biggest product of the year, McWrap, to court a huge and influential cohort that values choice and customization. According to NPD Group, there are 59 million people ages 23 to 36 in the U.S. -- the range it defines as millennials.

McDonald's McWrap

McDonald's isn't the only major marketer trying to reach millennials. Everyone from Coke and Gatorade to brewers and media companies are struggling to understand this group. There's even confusion about just who millennials are in terms of age range (restaurant consultant Technomic counts them as 19-to-34-year-olds; McDonald's, in an internal memo obtained by Advertising Age, classifies them as ages 18 to 32). Size estimates for this demographic group range anywhere from 59 million to 80 million.
But on one thing most marketers agree: "They're 80 million [people] but they're influencing the next 80 million, both younger and older," said Gary Stibel, CEO at New England Consulting Group.
How to solve the millennial problem? McDonald's hopes a sandwich item is the key.
"McWrap offers us the perfect food offering to address the needs of this very important customer to McDonald's," says the fast feeder's memo, which notes that "McDonald's is currently not in the top 10 of millennials' (customers primarily ages 18-32) favorite restaurants."
Referred to in the memo as a "Subway buster," the McWrap "affords us the platform for customization and variety that our millennial customer is expecting of us." The McWrap comes grilled or crispy in three varieties -- sweet chili chicken, chicken and bacon, and chicken and ranch -- and will range from 360 to 600 calories, depending in part on the type of chicken.
Said the memo: "Our customers are consistently telling us, particularly millennials, they expect variety, more choices, customization and their ability to be able to personalize their food experience."
The importance of this ability is clear in the McDonald's memo. "In fact, they have told us that if we did not offer McWrap, 22% of these incremental customers would have gone to Subway."
When asked to comment on the memo, the company said only that "millennials have and will continue to be an important audience for us at McDonald's."
Millennials are indeed going to burger chains, but they are going less often. The hamburger category, which includes McDonald's, Wendy's and Burger King, still receives 29% of all millennials' quick-service visits, according to NPD, more than any other restaurant category. Fast casual, which includes chains like Chipotle, gets 6% of millennial quick-service traffic.
But hamburger chains have seen a 16% decline in traffic from millennials since 2007, NPD said. In the year ended November 2012, millennials made 3.6 billion visits to hamburger chains, down from 4.2 billion visits in the year ended November 2007. There was a 12% decline in quick-service restaurant visits by millennials in the same time period.
The means of reaching millennials might be higher-quality products and lots of choice. The group has caused fits for big beer marketers in recent years as it changes drinking habits in search of variety rather than remaining loyal to certain brands or styles as previous generations had. Brewers have responded with new brands and line extensions, such as Bud Light Platinum, which has shown early success in nighttime drinking occasions.
Mr. Stibel notes that when his firm researches beer trends, "we don't research the average user; we research bartenders near college campuses, because we learn what's happening today from studying younger beer drinkers." He said: "It's like a python swallowing a mouse -- you watch that trend reverberate through the population."

McDonald's Quarter Pounder

Mr. Stibel said there are three reasons reaching young adults is important, two of which are not new: Marketers want to reach young consumers as they start earning more money and forming families, and younger generations have been the source for trends in fashion and food. But the third reason -- the new one -- is that older consumers are increasingly learning from their children, such as how to use apps on smartphones.
Media companies, too, are catering to millennials. Participant Media, the company behind films like "Lincoln" and "The Help," is launching a cable network targeting the demographic this summer positioned as a vehicle for content that inspires social change. Participant believes the generation has the strong desire and capacity to help change the world.
Technomic research seems to agree; it finds millennials place a high value on attributes like social responsibility, sustainability, local, organic, grass-fed and hormone-free offerings when it comes to dining out.
Aside from being socially conscious, Participant Media said the millennial demographic is the one that pay-TV providers are most at risk of losing, and it believes the network could provide a new way to watch TV. Participant acquired the Documentary Channel in December and has agreed to buy the distribution assets of Halogen TV from Inspiration Networks. Participant will combine and rebrand the services as a new channel, which will be available to about 40 million subscribers.
When it comes to using media to reach millennials, marketers are revamping their strategies; the tried-and-true tactic of saturating the big broadcast networks with beer ads just doesn't cut it. MillerCoors, for instance, has struck a deal with Turner Broadcasting that makes the marketer's brands the only beers featured in product placements on TNT and TBS, from cans and barware to tap-handles and even trucks, Ad Age reported last week.
"They grew up with DVRs. They grew up being marketed to through video games. We have to be more relevant than 10 years ago," said Stevie Benjamin, the brewer's media director.
Coke and Gatorade are two marketers doing something right to reach millennials: More than half of consumers ages 13 to 34 are drinking those beverages at least once a month, according to Consumer Edge Research. Gatorade outperforms with people under 24, with 57% grabbing the sports drink at least once a month. And Coke is more popular with those older than 25, with 55% drinking the soda at least once a month.
Coke has been aggressive in targeting youth, especially in recent years. It has focused on music as a conduit to the cohort and has been cultivating communities across social-media platforms. Gatorade keeps tabs on social conversation through its "Mission Control" monitoring center; it also connects with athletes one-on-one through camps, as well as locker-room and sidelines programs.
By the time marketers finally have millennials figured out, it may be time to move on. According to U.S. Census data, 46% of households headed by a millennial adult ages 20 to 34 in the U.S. have kids, which means marketers will be -- or should be, anyway -- focusing on marketing to millennials as parents.

How to Make More McMillennials

Generalizing for a group of people who are sometimes upwards of 15 to 20 years apart can be a dangerous move. Some demographers would even separate millennials into a few distinct subgroups. But there are some common themes and values held dear among all millennials.
Fresh and organic food: Millennials place an emphasis on the importance of organic and fresh food. Fast-casual chains do well with the demo because many of them promote a fresh or organic message.
Variety and customizable products: In the food world, millennials appreciate the ability to build their meals from an array of choices. Chains like Chipotle and Subway do well in this regard because each item is made to order.
Social change: Millennials care about social issues and tend to support companies that are actively helping address problems across the globe.
Sustainability: Particularly with food, millennials value companies that are proactive with sustainable farming practices and are environmentally conscious.
Social-savvy brands: Brands that have active Facebook and Twitter pages and engage in conversations with customers tend to have more long-term support from millennials.

Why Beer Marketers Don't Spend Much on Joe Six-Pack Anymore

Subpremium Suds Like Busch, Keystone Light Yield 'Fast Nickels,' But Advertising More-Expensive Brews Brings in "Slow Dimes'

Published: March 24, 2013

With the beer market inundated by fruity flavored brews, pricey craft brands and Justin Timberlake ads, what ever happened to Joe Six-Pack?
He's still there, chugging cheap beers after work, but brewers are dedicating fewer dollars to reach him as the "subpremium" segment declines. Instead, beer marketers, on a quest for fatter profit margins, are encouraging drinkers to trade up to pricier line extensions such as Bud Light Platinum or new concoctions like Redd's Apple Ale.

Brewers are advertising economy brands less: Measured-media spending on the five largest low-end brews -- Natural Light, Busch Light, Busch, Miller High Life and Keystone Light -- fell to $6.9 million last year from $22.4 million in 2011, according to Kantar Media. That compares with the $32 million that Anheuser-Busch InBev spent last year launching Bud Light Platinum. Redd's Apple Ale, introduced by MillerCoors this year, is getting a similarly hefty push, while the brewer last week launched the first national TV ads for Leinenkugel's that spotlight its lemonade-flavored Summer Shandy offering, whose sales soared 90% last year, according to the brewer.
Add in the fact that the economic downturn hurt blue-collar drinkers the most and the result is that the sub-premium segment has been on a long-term slide, falling to 13.5% in 2012 from 15.7% of beer sales at supermarkets in 2009, according to SymphonyIRI. During the same period, craft-beer sales grew to 11.9% from 8.3%, while so-called superpremium beers, like Blue Moon and Shock Top, jumped to 10.7% from 9.1%.
How has beer been able to get consumers to trade up in a sluggish economy? "It comes down to emotional engagement," Trevor Stirling, a beverages analyst at Sanford C. Bernstein, said. "Consumers are much more likely to "brand' themselves by what they drink, be it a quirky, heavily hopped IPA, or a "sophisticated' Stella; whereas Natty Light and Beast Light have, if anything, negative brand badging."
New drinkers -- think Joe College -- are a lot more experimental than they used to be, sampling craft beers, cocktails and flavored malt beverages, rather than relying on the same old Keystone or Natural Light. Younger drinkers "grew up with so many different flavors that it's not unusual for them to want to try different things," said Dan Wandel, SymphonyIRI's senior VP-beverage alcohol client insights.
Marketers have also spurred the shifts by hiking prices on subpremium brands. A-B InBev for the past few years has been closing price gaps between mainstream beers like Bud Light and its value brands in an effort to rebalance its portfolio -- and the American beer market at large -- toward premium beers. "Our strategic intent is to grow our share of the value segment, but without growing the segment itself," said Edison Yu, VP-value brands at A-B InBev.
Still, big brewers cannot risk alienating economy drinkers for fear of losing them to cheap liquor or smaller beer brands like Pabst Brewing Co.'s Pabst and Old Milwaukee, whose locally targeted, quirky Will Ferrell ads have gotten a ton of free media attention.
There are signs that A-B InBev and MillerCoors this year are paying a bit more attention to their low-end brands, rolling out new packaging, campaigns and promotions. The goal is to protect share in a segment that still accounts for 18.4% of dollar sales, according to SymphonyIRI. Although declining, the segment is still larger than imports (14.4%) and crafts (5.4%).
"When you are a big mega-brewer like [A-B InBev] or MillerCoors, you are looking to be all things to all people," said Benj Steinman, president of Beer Marketer's Insights. "And if subpremiums are 20% of the business, you damn well want to play there." Economy brands are more about "fast nickels" than a "slow dime," said Ashley Selman, marketing director-economy brands at MillerCoors. "We make less per barrel, but we sell a lot of volume."
As they narrow their focus, value brands are zeroing in on core drinkers. Keystone Light is replacing its "Keith Stone" ads that targeted younger drinkers with a partnership with tournament-fishing organization FLW. Its mostly in-store campaign targets Walmart-shopping, middle-age drinkers.
Busch is seeking to hook more anglers with a limited-time promo this spring in which 50,000 special "fishing-lure" cans will be randomly inserted into cases. Fans who upload pictures of the cans to the Busch Facebook page can win prizes, including a fishing trip with star angler Kevin VanDam.
Miller High Life is launching a campaign that plugs the beer's role in "everyday celebrations," teaming with Harley Davidson for in-store promotions that tout the fact that both brands are turning 110 years old this year.
Despite the competition from crafts, economy brands are not giving up on younger drinkers. A-B InBev's Natural Light, which targets college-age consumers, is seeking to stand out with new "stubby" bottles, dubbed "Fatty Natty," rolling out nationally. MillerCoors is targeting hipsters with its Hamm's brand via grassroots marketing.
The brew is part of the marketer's "classic" economy-brand lineup, which is meant to compete with crafts. "These guys are still challenged by the economy," Ms. Selman said. "And they don't have the money to buy crafts all night long."gbggg  

Disgruntled patrons get Ben & Jerry’s inside scoop

Disgruntled patrons get Ben & Jerry’s inside scoop

Ice cream company buses devoted critics to Vermont to tour its operations

Recent Ben & Jerry’s visitors were given lab coats, hairnets, and safety vests during a tour of the Vermont firm’s manufacturing floor. (Ben & Jerry’s)

By Kathleen Pierce

Globe Correspondent /  March 11, 2013

A luxury bus idled on Sargent’s Wharf in Boston earlier this month as a groggy group of 16 strangers boarded for a long ride to Vermont. But they weren’t going on a late-season ski trip — this was an ice cream-tasting expedition.

Some of the travelers had lodged complaints with premium ice cream maker Ben & Jerry’s — quibbles about such things as unpleasant texture or uneven flavor. In response, the company decided to bring some of them to its manufacturing plant in Waterbury, Vt., where they could weigh in on what happened and whether their concerns had been addressed.

“I complained about a pint of Half Baked,” said Scott White, 24, a carpenter from Framingham. Six months ago, he dipped a spoon into a pint of the stuff — chocolate and vanilla ice cream studded with fudge brownies and chocolate chip cookie dough — and found the brownies “hard and powdery.”

White let the company know by e-mail, which prompted Ben & Jerry’s usual response to a dissatisfied customer: a coupon for more ice cream, plus a refund check. Six months later, however, he got something much better: an invitation to take a behind-the-scenes look at how his favorite ice cream is made.

“It’s like a Willy Wonka-type journey into a factory and I’ve got a golden ticket,” said White, who brought along a friend from Falmouth.

The journey and visit were an “attempt to say, ‘We heard you and you are right,’ ” said Kelly Mohr, a Ben & Jerry’s spokesman. “We didn’t want to just take the complaint; we wanted to move it further.”

Out of 25,000 e-mails, phone calls, and letters the company receives every year, 30 percent are negative, according to Wendy Steager, Ben & Jerry’s consumer affairs manager. In this case, because Boston is one of Ben & Jerry’s biggest markets, it decided to treat eight disgruntled customers and their guests to a day in Waterbury to meet company “flavor gurus,” tour the factory floor, and receive what most people who make the pilgrimage to the popular tourist destination here never get: a backstage pass to what Steager considers “sacred ground.”

“We are the kind of company that takes what customers say seriously,” she said.

And with some stores selling Ben & Jerry’s pints for more than $5 in a still-fragile economy, keeping core customers satisfied is especially crucial these days.

Though owned by global giant Unilever, which has 400 brands — including Lipton, Dove, and Hellmann’s — Ben & Jerry’s is willing to take risks, said Steager. “We take every piece of feedback to help improve our product.”

In Waterbury, the Boston-area visitors gathered in a colorful conference room where quality manager Melissa Corcia told them what went wrong with the pint of Pistachio Pistachio that Leslie Gerhat of Waltham bought last summer.

The nuts “were roasted a little too long; they were a little stale,” Corcia said. To correct that and ensure freshness, she said, the company has changed the way it roasts pistachios.

Like most of the consumers on the trip, the “terrible” pint Gerhat purchased did not sour her on a favorite treat.

“If you are a lifelong fan of something, instead of saying, ‘I got bad pistachios; I will never have that again,’ I’m more inclined to voice my opinions,” she said. “It’s an opportunity to influence a company that I care about.”

Part of the reason the company rolled out the red carpet for this group was to “help them understand how critically important it is for us to hear their feedback and do something with it,” said Steager.

Flavor guru Eric Fredette sliced pints in half to demonstrate what company inspectors look for in quality-control checks: pistachios that go all the way through and a harmonious marriage of ingredients.

After trying a fresh scoop of Pistachio Pistachio, Gerhat was all smiles. “This is night and day. Tastes like you are eating real pistachios,” she said.

Next, the visitors were given lab coats, hairnets, and safety vests so they could go on the manufacturing floor during production. As pints of Half Baked zipped by on conveyor belts, the rhythmic beat of ice cream being pumped into pints and lids fastened by machines filled the room. The group peered into blend tanks, saw homogenizers, and even tossed in a few ingredients.

As she dropped cookie dough into a chunk feeder, ­Alyce Delbridge of Somerville said her poor experience with banana peanut butter frozen Greek yogurt had become a ­distant memory. “It’s nice to know that someone will be eating the cookie dough that I dumped in,” she said.

To longtime employees like archivist Lisa Wernhoff, the event was “the odd kind of thing Ben and Jerry would do.”

Page 2 of 2 --

Founded by childhood friends Ben Cohen and Jerry Greenfield in a gas station in Burlington, Vt., in 1978, the company still adheres to what it believes are progressive values. It is the only Unilever operation that still has its own board of directors, said Wernhoff.

 “It’s a company within a company, instead of a brand owned by a company,” she said.

Wernhoff remembers the early days, when Greenfield would respond to each customer complaint in writing. “From the day we started, we’ve always been concerned about the complaints we got. Whether they like us or hate us,” she said.

Many hours later, as the bus pulled into Boston, there was nary a whiff of hate in the air.

“I’ve never seen a company do this type of thing,” said Gerhat. “It makes me even more inclined to buy their products.”

But potential future ­complainers out there should not expect similar treatment. Ben & Jerry’s does not plan to incorporate Vermont junkets into its business plan.

“It’s one time only,” Steager said.

Creamof the crop

- Boston is one of the top five markets for packaged super premium ice cream.

- In 1981, Boston became the first major city to sell Ben & Jerry’s ice cream.

- In 2012, sales of Ben & Jerry’s ice cream were up 13 percent in Boston grocery stores.

GE, Pfizer, Microsoft, Apple And Other Major US Corporations Are Parking More Cash Abroad To Avoid Paying Taxes

U.S.-based nonfinancial companies are parking record amounts of cash abroad, thanks largely to a tax code that encourages them to indefinitely keep profits from their foreign subsidiaries outside of the country.
Some of the largest companies in the U.S. greatly boosted their tax-avoiding cash stockpiles abroad last year, according to recent surveys of company filings from the Securities and Exchange Commission.
For example, the Jedi master of avoiding U.S. taxation, General Electric Company (NYSE:GE) , increased its tax-free cash accumulation to $108 billion, up from an estimated $94 billion in 2010 . Microsoft Corporation (Nasdaq:MSFT) increased its stockpile to $61 billion, up 36 percent from 2011 and up from $30 billion in 2010. Apple Inc. (Nasdaq:AAPL) raised its ante to $40 billion, up 73 percent from 2011.
Sixty of the country’s largest nonfinancial corporations kept $166 billion in cash outside of the U.S. last year, shielding more than 40 percent of their profits from taxes , according to a report in Monday’s Wall Street Journal. And that’s from total overseas earnings of $1.3 trillion, up 15 percent from 2011.
A separate analysis of 83 of the largest nonfinancial corporations found that companies increased by $183 billion their foreign-based cash accumulations, representing a 14.4 percent rise from 2011 , according to Bloomberg. Microsoft, Apple and Google Inc. (Nasdaq:GOOG) together hold $134.5 billion in cash abroad.
“The corporate system is broken and it’s broken primarily because of international,” Edward Kleinbard, a tax law professor at the University of Southern California, told Bloomberg.
The Journal’s survey said the propensity to keep profits outside of the U.S. was most prevalent among tech and healthcare companies; the 26 of them on the list of 60 kept $120 billion abroad last year.
In the first quarter of 2012, the Federal Reserve estimated in its Flow of Funds report that U.S. nonfinancial companies held $1.7 trillion in liquid assets (cash) in the first quarter of last year, but that figure only accounts for U.S.-based assets. According to the IRS figures, the total amount of liquid assets in the first half of last year was much higher: $5.1 trillion. That means for every dollar a U.S. nonfinancial company held inside the U.S., it held three dollars abroad.
According to Pulitzer Prize-winning financial journalist and author David Cay Johnston, the reasons for hoarding cash abroad are threefold: Profits held overseas aren't taxed if they’re owned by offshore subsidiaries; companies have had no incentive to invest these proceeds due to lackluster growth in jobs and wages that suppress demand for goods and services; and mountains of cash held in offshore accounts provides a nice cushion if the economy gets worse.

Friendly's vies for a renaissance

February 21, 2013: 11:03 AM ET

77-year-old burger and ice cream chain Friendly's wants to bring customers back to its booths by returning to its roots.

By Beth Kowitt, writer

FORTUNE -- Friendly's wants you to remember the good old days. The 77-year-old burger and ice cream chain is betting that it can drive customers back to its booths by moving its menu and restaurants closer to what they looked like during the brand's prime.
"One of the things I tell people is, if there's any advantage I have over prior administrations at Friendly's, it's simply this: I remember as a guest or a customer what Friendly's once was," says CEO John Maguire, who's been on the job for about nine months.
Maguire, a native of Massachusetts, where Friendly's is based, grew up with the restaurant and was drawn to the idea of having a shot at reviving it. He joined the company after working for Panera (PNRA) for 19 years, his last as COO.
"They're trying to bounce back by refreshing their image and getting some of these customers who have left to come back and re-engage the brand," says Darren Tristano of food services research firm Technomic. He adds that it's "absolutely a necessary strategy" for Friendly's, which emerged from bankruptcy in January 2012.

Friendly's, which is owned by private equity firm Sun Capital Partners, joins a growing number of brands like McDonald's (MCD) and Wendy's that are updating their restaurants at a faster rate to keep up with customers' expectations, says Tristano.
The chain's decline started 10 to 15 years ago, as Friendly's and other brands in the family-style dining category saw their share decline to casual dining restaurants (think T.G.I. Fridays, Olive Garden, Applebees), says Tristano. As it struggled to compete, Friendly's lost focus on its core customer and tried to be like everyone else. "In trying to be all things to all people, they ended up being nothing to anyone," Maguire says.
Officially called Friendly's Ice Cream, the company has 361 restaurants in 16 states predominantly focused in the Northeast. But the chain also sells its ice cream in 7,500-plus grocery stores across the U.S. and does more than $500 million in sales annually between the restaurants and ice cream business. The company plans to expand its grocery-store business, which was up 20% last year.
As Maguire worked to redefine the brand, he focused on the three elements that he says matter most in the business: the people, the food, and the physical restaurant.
The menu had ballooned over the years, with items like meals under 550 calories, steak tips, and a roast turkey dinner. And they weren't selling. The company looked at 185,000 point of sale transactions to narrow in on the most popular items, which, not surprisingly, turned out to be burgers, melts, fried seafood, French fries, and ice cream.
The data showed that reducing the menu by 65% would only impact sales by 2.5%. So Maguire cut the menu by 40%, increased portion sizes, and added a number of items like a fried chicken dinner, a turkey wrap, fish tacos, and a new product called the Slinky Dog, which is a nine-inch, 100% beef hot dog.
Maguire's team has also moved to improve the quality of the food. The Fribble, the restaurant's signature milkshake, went back to being made with real ice cream rather than soft serve. At breakfast, customers get thicker toast and an extra-large egg, not a medium-sized one. Hamburgers are fresh, never frozen. And the Fishamajig went back to being made with haddock rather than deep-skinned Pollock. "If we're an indulgent brand that has the potential for calories," Maguire says, "the quality of that food really has to be worth the caloric intake."
Maguire thinks that Friendly's biggest advantage is its ice cream, which represents 20% of sales, compared to 5% or 6% for most restaurants in its segment. It's what sets Friendly's apart, with three out of every four customers ordering a dish that has an ice cream component.
To get its people on board, the company recertified and retrained every employee and decided to go through the process of rehiring the staff. "There are people who couldn't make that trip," says Maguire, "that couldn't embrace change, couldn't really understand what we were trying to do." In the end, about 95% of its restaurant employees were rehired.

As for the physical restaurant, the company has remodeled 10 locations in the Springfield, Mass., area and Maine. Maguire describes the new look as timeless. "We wanted to make them as relevant in the 1940s and 1950s, which was our heyday, but still make them relevant in the 21^st century at the same time," he explains. In the last few decades, the restaurant's customer base has predominantly been seniors and families with young kids. Maguire's hopeful the updated look will attract customers in the 25-to-49 age group.
The last step for Friendly's is getting customers to give it a second chance. "The marketing campaign is going to get people back through the doors, but execution at unit level will determine if they keep coming back," says Technomic's Tristano.
Friendly's will remodel its entire system over the next 12 to 18 months, but even locations still waiting on a facelift have a reduced menu with the higher quality food. Sales are up more than 20% at restaurants where the company has put all of the pieces together, Maguire says.
Another development that marks a return to the company's past -- opening a new location, which is on the horizon for 2013. "There's no reason we can't continue to grow again at some point," Maguire says. But, he adds, first things first.

Target's Canadian launch expected to spark price wars

CTVNews.ca Staff
Published Tuesday, Mar. 5, 2013 6:35AM EST
Last Updated Tuesday, Mar. 5, 2013 4:32PM EST

The arrival of U.S. discount giant Target in Canadian markets will introduce some much-needed retail competition, providing shoppers with more opportunities to benefit from price wars, experts say.
As eager shoppers streamed into Target stores that opened Tuesday in three Ontario communities, analysts said the launch will put a lot of pressure on big-box retailers like Wal-Mart, Sears, Canadian Tire and Loblaws Joe Fresh. 
And that could mean lower prices across the board.

Digital Extra

First customers Scott Lester, left, and Sam Skelhorn, exit the new Target store with their purchases in Guelph, Ont. on Tuesday, March 5, 2013. (Dave Chidley / THE CANADIAN PRESS)

People begin to lineup outside for Target’s grand opening in Milton, Ont., Tuesday, March 5, 2013.

Employees work on preparing the new Target store in Guelph, Ontario. (Dave Chidley / THE CANADIAN PRESS)

Tony Fisher, President of Target Canada, speaks to the media during a tour of the new Target store in Guelph, Ontario. (Dave Chidley / THE CANADIAN PRESS)

“We haven’t had a good retail price war in quite some time in Canada,” retail analyst John Winter told CTV’s Canada AM on Tuesday. “It’s exciting to see who will end up with a good market share.”
Target has assured customers it will focus on being “competitively priced” with other retailers in Canada.
"In certain cases, the prices will actually be completely on par with U.S. prices and in some cases there might be some differences,” Target Canada spokesperson Lisa Gibson told The Canadian Press. “Our overall goal is to make sure we're competitive with the marketplace."
But Winter warned that likely means prices in the Canadian locations will be higher than in Target stores south of the border.
“In Canada, we can source the material for just the same price they can in the States. The difference is in the labour cost. Minimum wage higher, there are more public holidays, for instance, to be paid for out of sales,” he said.
That didn’t deter shoppers from lining up in front of Target outlets in Guelph, Milton and Fergus, Ont., well ahead of their 8 a.m. opening. Some arrived as early as 5:30 a.m. and left with shopping carts full of merchandise.
A number of shoppers who braved the cold in line said they regularly head over the border for their Target fix.
“We just went there Saturday, in the States,” one man waiting outside the Milton location told CTV Toronto.
The first Ontario locations in relatively smaller markets are part of a test program for the phased rollout of the Target brand across Canada.
Target expects to open 124 Canadian locations in 10 provinces by the year’s end.
Target’s Canadian launch comes as some big-box retailers -- including Best Buy Canada and Sears Canada-- have recently announced layoffs, citing a rise in online shopping and a shrinking demand for super-sized stores.
Target Canada President Tony Fisher announced the Canadian launch on Monday, telling reporters touring the Guelph store that the company is offering a new type of shopping experience.
“There’s an engaging team who will engage with you while you're shopping, to ask ‘can I help you find something?’” he said. “That’s going to be a new shopping experience that’s going to be totally unique in Canada.”
Some shoppers said they hope more competition will also bring better customer service.
“I definitely think it’s going to give Wal-Mart a run for its money,” said one woman outside the Milton location. “Definitely going to get them step up their customer service which has been lacking for years.”
Target plans to open another 21 stores throughout Ontario this month, although the dates haven't been announced.