Friday, October 31, 2014

Why Shopping at Costco (Too Much) Makes Me Feel So Good

Oct 27 2014

You don’t have to be a heartless entity to win big. Nice folks canfinish first

"I'm tired of hearing about the minimum wage, I really am."--New Jersey Governor Chris Christie.
To me honest, I’m a big fan of wealth. I love to see individuals succeed wildly. I love to see companies succeed. I hate companies that do so as a result of virtual slave labor, which Walmart does right here in America. Hate is perhaps too strong a word; I’m not a hater. Despise.
Walmart makes hundreds of billions of dollars on the backs of its employees. The pay is actually fine, unless employees want to eat, sleep with a roof over their heads and maybe see a doctor once on the while. The latter has just been made more difficult as Walmart cut employee health benefits while hypocritically getting into thehealthcare business.
Walmart has increased stores and profit while they’ve actually cut their workforce. The result was predictable: longer checkout lines, less customer service throughout the store, and overall disarray. Walmart consistently places last among department and discount stores in the American Customer Satisfaction Index and has either tied for or been in last place for the 6 years running. But hey: low, low prices.
Walmart workers labor under the threat of intimidation and retaliation for complaining about working conditions or wages. They work on holidays—they must. Walmart has ingeniously figured out a way to not pay their employees holiday overtime. Employees must wear “uniforms” which, naturally, they can buy at Walmart. How convenient!
Walmart pays their workers such a low-wage that U.S. taxpayers pay an estimated$6.2 billion in public assistance, which includes food stamps, Medicaid and subsidized housing. A single Walmart “cost taxpayers between $904,542 and $1.75 million per year.” According to the Americansfortaxfairness.org, “The company, which is number one on the Fortune 500 in 2013 and number two on the Global 500, had $16 billion in profits last year on revenues of $473 billion. The Walton family, which owns more than 50 percent of Walmart shares, reaps billions in annual dividends from the company. The six Walton heirs are the wealthiest family in America, with a net worth of $148.8 billion. Collectively, these six Waltons have more wealth than 49 million American families combined.
Costco—winning customers over by putting people before profits

Costco, the second largest retailer behind Walmart, is at the other end of the spectrum. Costco is closed on Thanksgiving. And Easter, Memorial Day, Labor Day, Independence Day, and of course, Christmas Day (but not Hanukkah—that’s eight days!) Would they make more money if they were open those days? Of course, but they care more about their employees than their profit. What are they thinking?
Voted the #1 company to work for, Costco has a full spate of employee benefits.Eighty-eight percent of Costco employees have company sponsored health care, for which the company covers 90% of the cost. I can feel the commitment and workplace satisfaction when I need help from their staff. In that way Costco reminds me of Home Depot. Perhaps that’s why their employee turnover rate stands at a paltry 12 percent—unheard of in retailing. Recession in 2009? Costco handed out raises.
Costco doesn’t see its employees as an expense as much as an investment. It’s known for treating employees well. Some say great. The CEO, W. Craig Jelinek, doesn’t create an atmosphere of intimidation, just the opposite. In fact all of the doors at Costco headquarters in Issaquah, Washington, remain open. Colleagues can literally walk up to him and have a conversation.
Costco went public in 1985, and over the years, Wall Street repeatedly asked it to reduce wages and health benefits. They instead boosted them every three years. How has this fairness to its employees affected the bottom line? The stock price hasdoubled since 2009.
Will this kind of success send a message to businesses in this country that treating your employees with kindness, fairness and dignity and allowing them to make a living for their families makes good business sense?
It will if you shop at Costco instead of Walmart.
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Denny's Is Suddenly Cool Again

  • OCT. 28, 2014, 3:19 PM
Denny's just reported its highest quarterly same-store sales growth in more than two years.
The diner chain is now on track to achieve its best annual same-store sales increase in eight years. 
Denny's turnaround is a bright spot in the fast food industry, which has been plagued by declining traffic over the last several years. 
Here's what Denny's has been doing to win back customers.
1. The company has been remodeling restaurants to support a rebranding campaign. In the first three quarters of the year, Denny's had completed 129 remodels, Denny's President and CEO John Miller said in a call with analysts Monday. Within the next four years, 70% of the Denny's 1,289 restaurants will be updated.
"The remodels have boosted same-store sales and traffic, resulting in mid-single-digit gains, despite the challenging economic environment," Miller said in a third-quarter earnings call with analysts.
2. Denny's has simplified its menu and added healthier options. 
"We rolled out a new core menu which included two premium sandwich entrees with new high quality 7-grain bread in addition to over 20 other menu changes for simplification and for margin improvement," Miller said.
3. The company is rolling out a millennial-focused fast casual concept on college campuses called The Den.
The Den's menu, which is smaller than Denny's traditional menu, offers breakfast all day, gourmet burgers, burritos, sandwiches and salads.
The company now has seven Den locations and four set to open soon.
Denny'sEugene Gologursky/Getty Images for Denny’sDenny's in New York City.
4. McDonald's prices have been increasing, which may be benefiting Denny's, IHOP and other rivals that have historically been more expensive than McDonald's. 
McDonald's said its prices increased 3% through the end of June compared with the previous year, Bloomberg's Leslie Patton reports. 
A Double Quarter Pounder with cheese, fries, and a drink now totals about $7.50 at some Chicago locations, Patton writes.
That's too costly for customers like 58-year-old Mark Hiner, who told Patton he no longer takes his grandsons to McDonald's, instead visiting rivals like IHOP, Denny's, and Chili's.
"Those meals are the same price," Hiner told Patton. "And they’re better."
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Cash-Strapped Americans Are An Ominous Threat To Retailers

  • OCT. 30, 2014, 2:05 PM
Wal-Mart shopperReuters


Americans aren't shopping like they used to. 
Low-income and middle class retailers including Wal-Mart, JCPenney, Target, Macy's, and Family Dollar have reported disappointing earnings this year. 
Executives at these retailers say that Americans are increasingly unwilling to spend money on discretionary items, despite modest gains in the job market. 
"Low-end and middle-income retailers are still suffering because people are buying so close to need," Brian Yarbrough, consumer analyst at Edward Jones, told Business Insider. "In the past, retailers could depend on people spending a little more." 
The Federal Reserve Board reports that all groups of consumers had a lower mean income in 2013 than they did in 2007. Mean wealth also declined for all the groups. 
Yarbrough said that even fluctuations in the weather can make a big difference for retailers, like JCPenney, which recently said that unseasonably warm weather was hurting sales of its fall fashion assortments. 
"Today's consumer is waking up when its 35 degrees and realizing it's time to buy long sleeves or a winter coat," Yarbrough said. "They're not going to spend the money before they absolutely have to."
Macy's CEO Terry Lundgren has said that customer malaise is hurting his business. 
"The consumer has not bounced back with the confidence that we were all looking for," Lundgren said at the Goldman Sachs Annual Retail Conference, weeks after the company reported sluggish second-quarter sales. 
Lundgren also said he doesn't expect things to get better in time for the holiday season. 
"The performance I think we had in the second quarter, and we expect to have in the second half, is going to be a continuation of what we’ve been able to do over the last several years — and that is to capture market share and get the most out of the consumers that are in our stores," he said. 
macy's black fridayKim Bhasin / Business InsiderMacy's CEO Terry Lundgren has said that consumers aren't recovering.

Earlier this year, Family Dollar CEO Howard Levine said that economic conditions were worsening for his shoppers. 
"The low-end consumer has not benefited in this recovery at all; in fact I think (they) have slipped further back," Levine said. 
Even Wal-Mart is acknowledging that its customers are becoming choosier about how they spend.  
Wal-Mart CEO Doug McMillon recently told investors that the brand has a renewed focus on offering the cheapest products. 
"Price matters to our customers and it always will," McMillon said. "As a company, being a low cost operator is in our DNA. This will never change and we will be the price leader, across a broad assortment, everywhere we operate."
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Digital disruption, emerging technologies to drive retail revenue in 2015

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Oct. 30, 2014
Innovating the customer experience to adapt to shifting consumer preferences and emerging technology capabilities will be top of mind for leading retail brands in 2015, according to predictions by real-time omnichannel personalization firm Certona.
"The retail industry is at a tipping point, as customer experience claims a greater influence over retail conversion than any other business process or output," Certona CEO Meyar Sheik said in a statement. "However, improving and personalizing the customer experience requires the right mix of new technologies, processes and strategies designed to address the changing marketplace of consumer demands and needs."
According to Gartner research, "In many industries, hyper-competition has eroded traditional product and service advantages, making customer experience the new competitive battlefield. Competitors and alternatives abound and product innovation is subject to accelerating commoditization. Customer experience innovation remains the secret to lasting brand loyalty."
With the increasing power of the consumer and resulting disruption of traditional business operations, Certona predicts the following changes across the retail industry in 2015:
  • E-commerce, m-commerce and in-store commerce will evolve closer into simply commerce. The battles between brick-and-mortar stores and digital channels such as Web and mobile will abate, and instead, each channel will be designed to direct the customer down the most likely path to conversion.
  • Access to APIs will pave the way to more personalized consumer experiences: Merchants will actively pursue open APIs to develop more predictive apps that allow sharing of information and leveraging new functionality in real time to better personalize the user experience.
  • Discounts will be in high demand by customers, threatening retail margins. Retailers will be forced to offer discounts and free shipping to meet consumers' demands during the peak shopping season. However, retailers will also have the opportunity to make up the gap in revenue with personalized offers and recommendations. Ultimately, this will allow brands to deliver in-demand discounts, while recovering margins through recommended add-ons.
  • Customer data will claim its position as a company's DNA. Businesses with datacentric cultures will thrive, while companies that ignore the discipline of data science will lose to competition.
  • Mobile device makers revamp hardware and software strategies to specifically cater to mobile commerce. In response to consumer demand for streamlined commerce, device makers will make strategic decisions based on improving geotargeting, integrating payment technology, user authentication, messaging and inter-app communication.


Certona is a provider of real-time omnichannel personalization for brands including Charlotte Russe, GameStop and Steve Madden.
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The Chipotlification of American Fast Food

How trends from the fast-casual craze are trickling down into the struggling fast-food universe
OCT 30 2014, 4:19 PM ET

Gene Buskar/AP
On Wednesday, Taco Bell launched a new mobile app that allows its customers to order and pay for their meals from the clinical distance of a smartphone. An app user would then be able to skip the line and pick up his or her "fourth meal" (Taco Bell speak for "snack") upon arrival. The app even offers special deals and saves customers' favorite orders and payment settings, neatly kept for future bingeing.
The publicity rollout for the app employed typical Taco Bell panache⎯the company downed its own website and blacked out its entire social media presence in promotion of the Live Más app.

Twitter/Taco Bell
This funereal effect seemed to imply that Taco Bell was being reborn through its app. The videoannouncement was no less messianic. 
The Live Más app will "reinvent the way we interact with consumers," said Taco Bellresident disruptor Jeff Jenkins, who likened the revolutionary particulars of the app to the invention of the drive-thru window.
The app would also "unlock the Taco Bell kitchen," "deliver experience," "innovate," and cure "menu anxiety," that worrisome sense of urgency to order quickly when someone is standing behind you.
Ordering ahead of time is a sweet perk, but as I downloaded the app and was immediately struck by its slick, pavonine orgy of light, I came to realize that the biggest development here isn't the convenience of ordering ahead or being privy to insider deals. It's the new ability to customize your order, which is reflective of a larger trend in fast food.

Adam Chandler
Earlier this fall, we noted how Millennials are spurring the fast-casual craze, which has become the fastest growing segmentof the restaurant industry. The fast-casual standard-bearer has been Chipotle, which, in addition to using locally sourced food, also allows a consumer the chance to customize their meals. Ditto for the hamburgers at places like Five Guys. Millennials have demands: Sometimes, it's spicy and mild hot sauce, other times, it's a burger with A1 and caramelized onions.
Customizing a meal at Taco Bell, however, has never been an option. Moreover, to stand in line and ask for different toppings on relatively uncomplicated food items seems quite the opposite of Taco Bell culture. Until now.

Adam Chandler
Using the app, I set up one of the staples of my normal Taco Bell regimen, which involves the Cool Ranch variety of theinfamous Doritos Locos taco. But suddenly, I had options. Options I never (perhaps out of self-preservation) even dreamed of. I could add rice, a bevy of different sauces, and even potatoes to my Doritos Locos taco.
Suddenly, my eyes trained on the option to add bacon. And so I did. Next, I ordered a Cheesy Gordita Crunch, a standard in the repertoire of life expectancy stunters, but with extra lettuce and some onions added in. With one drop-down menu, decades of my Taco Bell life had changed.
Taco Bell isn't the only restaurant tinkering with customization. On Wednesday, McDonald's, which has been struggling mightily (especially with the younger set), announced that it was using San Antonio as a market to test a new menu that, as the San Antonio Express reported, "lets customers mix and match individually priced entree orders with different side options, instead of the typical fries and soft drink. Alternatives include a side salad, sundae, three cookies and more." Meanwhile, starting in 2015, another McDonald's program in Southern California will allow consumers to pick different buns and toppings for their burgers by using a touchscreen.
As fast-food restaurants adapt to the rise of fast-casual and contend with their own public relations headaches, customization seems to be the quickest shortcut to stealing some of Chipotle's thunder. My order confirmed, I made my way to the nearest Taco Bell, one of the most chaotic outposts imaginable, just off of Union Square in Manhattan. A few blocks shy of the store, I tapped the app to let Taco Bell know I making my run for the border.

Adam Chandler
When I arrived, with great entitlement, I skipped the line and waited dutifully for my order to appear. It didn't.
After about 10 minutes, I went to the counter and told the cashier that I had ordered a meal using the mobile app. A fruitless few taps on a computer screen and the waving over of a manager later, it was explained that the mobile system wasn't quite working for them yet and that they were very sorry.
Then they asked me for my order, which was scribbled out on an old receipt.
"You said you want bacon on a Doritos Locos taco?" the cashier asked. I guess I did, but I had never wanted to say it aloud
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3PL Consulting Can Drive Down Transportation Costs, Improve Service

Shippers everywhere face the perpetual question: What’s the best way to get our products to customers efficiently and at the best cost? By Mark Wagner


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Efficiency, Safety Improvements Hallmark of Food Manufacturer’s…
An international producer of healthy, convenient and affordable foods was struggling to maintain an efficient, cost-effective supply chain. The third-party logistics (3PL) provider…

October 28, 2014
Numerous factors affect this answer. From cost and service, to carrier relationships and capacity constraints, the factors themselves are a moving target as the market fluctuates with varying and more-sophisticated consumer demand.
Small and midsize shippers are particularly hard pressed to answer definitively, as resource and financial limitations can derail progress toward transportation optimization.
Therefore, the practical goal of reducing costs and improving service often ends up just out of reach.
Which raises more questions:
  • What are the existing cost-reducing approaches? How effective are they?
  • Where are the gaps?
  • If traditional approaches continue to fall short, what new options are there?
Two areas that shippers try to leverage are mode selection and freight consolidation. Within each, shippers rely on tried-and-true methods to reduce costs. Some methods work, some need work.
Let’s look at the current landscape, starting with mode selection.
Mode Selection
For a common starting point, mode selection is defined as “the operational process of selecting the lowest cost transportation mode to service shipments on a daily basis while considering service.”
Among the primary modes in the small and midsize shipping world (parcel, less-than-truckload (LTL), one-way truckload (TL), private fleet truckload and intermodal/container), LTL is a lower-cost option, but presents some of the biggest issues and risks. Transits depend on the network of terminals that a given carrier operates. With more touch points, the LTL mode limits service times and can have consequences related to claims.
Although LTL carriers offer numerous advantages (cost savings over hiring an entire truck and trailer for an exclusive shipment, better rates than parcel carriers), it’s wise to examine which mode is best for your particular shipment.
Freight Consolidation
Freight consolidation is the operational process for reducing transportation costs by combining smaller shipments into larger ones to benefit from shifting to a lower cost transportation mode.
Usually, transportation costs decrease as shipment sizes increase to the point of efficiently utilizing transportation modes that can cost effectively service larger shipments.
To illustrate this, the cost per pound for parcel is usually the highest, followed in order by LTL, truckload, and intermodal/container.
Shippers employ three techniques to leverage freight consolidation:
  • Time Consolidation—Holding freight for a set time to accumulate the largest shipment possible for mode selection while also considering service.
  • LTL to Multistop Truckload—Combining multiple direct LTL shipments into a multistop truckload if there is potential to reduce costs while meeting service requirements.
  • LTL to Pool Distribution Network—Converting multiple direct LTL shipments into a blended mode that utilizes both LTL and truckload services, along with a consolidation location to reduce costs. For an inbound pool distribution network, multiple LTL shipments are redirected and shipped via LTL to a location for consolidation into truckload shipments, which are delivered to a common destination.
The big-picture view of mode selection and freight consolidation shows a range of traditional approaches shippers employ to generate savings.
Some shippers leverage internal resources to manually create shipping plans. The savings generated, though, are often offset by inefficient processes and the lack of technology.
To capitalize on their own resources, some shippers invest in TMS optimization technology. The rub, though, is that many shippers lack volumes to justify the expense in the technology and training required to maintain it.
Also, because transportation is typically not their core competency, shippers risk investing in the wrong technology. As a result, they underutilize it and add unanticipated costs to already burdened budgets.
Outsourcing transportation management to third-party logistics (3PL) providers remains a viable option for shippers with sufficient freight volumes and optimization potential to offset the expense. This route increases the likelihood of higher-quality solutions, but the investment might exceed any savings realized.
Clearly, these approaches have benefits. But the drawbacks expose a three-way battle: service vs. cost vs. efficiency.
For many shippers, there is another alternative that alleviates this battle and improves the value they’re seeking from a transportation-management strategy.
Taking a New Road
Freight can be viewed as a simple game: Pick up the freight, haul it, deliver it.
Fortunately, the flexible rules of this “game” allow shippers to develop more than one strategy.
To maximize a mode selection and freight consolidation strategy, hiring a 3PL provider as a supply chain advisor and unbiased partner to create shipping plans is a creative alternative.
These advisors use the latest technology and deploy top transportation-optimization professionals to create customized shipping plans.
And because they gain in-depth knowledge of shippers’ transportation networks through the load planning and optimization process, advisors can also identify other improvement opportunities.
Partnering with an advisor on a consultative basis doesn’t require investing in the overhead associated with expensive technology and talent needed to utilize these tools.
This relationship produces benefits beyond the numbers, as shippers can redistribute resources in areas such as purchasing.
Time Is on Your Side
As a shipper, you know the one thing that would make your life easier—time.
Seems as if you’re always up against the clock, and getting shipments off your dock and delivered to customers is of utmost importance.
And that’s the proper focus.
But time doesn’t stand still, and finding those elusive hours to execute the transportation strategy—Are your dollars well spent, or is your transportation budget being eroded by poor mode selection and freight consolidation? Does your manual process for creating shipping plans really save money, or is it time to consider optimization technology?—is nearly impossible.
That’s where partnering with the right advisor can pay off. With the expertise to navigate today’s unpredictable marketplace, advisors can develop the right strategy to maximize your transportation dollar, lowering costs, and improving service.
Changing the “been there, done that” formula to an approach in which a supply chain advisor guides you to a tailored solution that yields the benefits of tactical freight optimization is critical to not only maximizing your investment but also improving your overall supply chain performance.
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