Walmart Charged with Bribery in Mexico

The allegation of bribery in Mexico by Walmart’s Mexican company will be in the news for quite some time.  It has all the making of a great mini-series:  who made payments to whom with whose knowledge for what purpose.  Each of these pieces of information will be significant.

My understanding of the U.S. Foreign Corrupt Practices Act (FCPA) is that anyone working for a US company (even a subsidiary in another country) may not make payments to a government official to gain business.  The New York Times story stated that “executives at Wal-Mart de Mexico authorized payments to Mexican government officials in exchange for expedited zoning and construction permits.”

Once exception according to the FCPA is that “facilitating payments” can be given to a local government official to speed up the process.”  My understanding is that facilitation payments are considered to be modest amounts of money.  Reports say that $24 million was paid in bribes.  So questions about who paid whom, for what purpose, and for what amount of money will have to be established.

There are at least 81 companies under investigation for bribery charges right now.  Most companies charged with bribery settle cases rather than have long court cases with lots of media coverage.  Given the drop in Walmart’s stock when these allegations were made public, a long drawn-out trial would be disastrous to their public image.

Since this is true for all companies, very few have gone to trial so there is little precedent interpreting the boundaries of what constitutes a facilitation payment, whether specific individuals such as the CEO can be held liable, or whether the US corporate headquarters can be held liable for the actions of an independent subsidiary in another country.

Watching this story unfold over the next few months will provide interesting reading even if no legal precedents are established.

Netflix Compounding Problems

Netflix’s announcement about their new pricing policy generated a storm of consumer comments – almost all negative.  There was a major price increase for service that consumers had been receiving.  Providing a choice to separate the mail and streaming services was fine but the major increase in price was not popular.

Today Netflix sent an email to consumers about their most current business decision to completely separate the services and rename the mail service.  Netflix started with the mail service, consumers have been receiving those red envelopes in the mail with the Netflix name and that is the part of the company to get a new name – Qwikster.  Why rename the brand that built the company?  Netflix’s rationale is that you get the DVDs in the mail quickly.

If you stream a video don’t you get it quicker?  Why rename the brand that established you?  Probably because it is no longer as important to Netflix and they see digital streaming as their future.

Netflix’s letter to consumers was all about the company and the company’s reason for separating the two.  The price issues was not addressed except to say (we are finished with that).

So the company founded on the opportunity to fulfill a consumer need and a company that skyrocketed to success by fulfilling this company need in an efficient and convenient way has ignored consumer needs in their price change and in this current letter to consumers.  The price change and division is all about the company and not about the consumer.

My prediction?  This is a great move for their competitors.  I tried called Netflix this morning and there was a 26 minute wait to get through.  Their Facebook entry about this change already had 1400+ posts. Loyal consumers are no longer happy with Netflix.  The consumers are taking time to express their displeasure because they have liked Netflix and would like to stay with Netflix.  If they did not like the company they would not bother expressing their concern.  If Netflix does not respond appropriately it does not make any difference what their new business model is because they will lose the majority of their customer base.

Digitizing Business Processes

Bob McDonald and Filippo Passerini from P&G just talked about the journey to digitize 88 non-overlapping business processes at the Fortune Brainstorm Tech Conference.  The goal is to use digital information to run the business in real time.  The process have evolved from getting monthly and quarterly reports to determining when information is needed for making decisions and ensuring that the required data is available.  This means some data is necessary hourly or daily.  Having access to data when necessary changes the discussion from sharing information to get a good view of the company to talking about why this state of the business exists and what will we do.  They attribute their good quarterly numbers, at least in part, to the ability to be flexible and respond to changes in the marketplace quickly.  P&G not only innovates by creating new products, but also by reinventing business processes.

Valued Consumer? I think not.

While out of town I realized that I had left my frequent shopper card at my local retailer.  Today I went there to retrieve my card.  There is no name on my card but the magnetic strip obviously links to my account which has my phone number because I can also log in with my phone number at the store if I forget the card.  When I went to retrieve my card I was told that if there is no name on the card, they just throw them away!!!  Now how valued a customer does that make me feel???  I guess that retailer does not value me as a customer so their value to me has just plummeted.

Upcoming Shopper Insights’ Conference

The Shoppers’ Insights Conference takes place in less than a month.  This is a great opportunity to hear industry leaders provide insights on how consumers are making decisions in today’s market, how they respond to social media, and what techniques work best to generate insights about how consumers view and/or use your products.  If you want more information, check out the website:


Free Trade Symposium

CSUSM and WTCSD are hosting a symposium on free trade.  Dan Griswold, author of “Mad ABout Trade,” Gawain Kripke, Senior Policy Advisor on International Trade Policy with Oxfam America, and Chris Miller, International Business Development with Bank of America are the speakers.  The event will generate lively discussion and interaction.  Here is the link for more information:

Changes in Consumer Storage

A RetailWire Post ( today reports that consumers are “deloading” their pantries. This is one more example of changing consumer habits during the economy. This particular change is not a surprise.

Cost savings was a major motivation for companies to re-examine and streamline their supply chains resulting in lower inventory and more turns. Given the economic pressures consumers are feeling today it is not surprising that cost savings is a major motivation to streamline costs by lowering their inventory and increasing turns.

This is just one of many changes that consumer purchasing is taking. Using historical data to predict future consumer spending is increasingly problematic because past behavior is less likely to predict future behavior in today’s marketplace.


Today on RetailWired  Tom Ryan submitted a post describing David Dillon’s, CEO of The Kroger Co., walk around activity.

“With the help of dunnhumby, Kroger Co. believes it has more sophisticated data on its consumers than any of its competitors. But chairman and CEO David Dillon also frequently does “shopalongs” alongside core customers, goes incognito on store visits, visits stores unannounced and even visits consumers in their homes to inspect their cabinets.”

Observing consumers while they are confused, considering choices, grabbing the first product they see, or checking prices reveals important elements of their decision making process that are not necessarily revealed by using any other research tool.  In addition, having the opportunity to ask questions while consumers are making choices or appear confused reveals what the issues are when they are in that situation rather than having them remember what they were thinking about when responding to a survey instrument or when in a focus group.

Real time information during that decision making process can reveal deep insight that is critical for determining whether a company is meeting its goals for consumer interaction or what could be done to facilitate consumer decision making.  More companies are embracing this practice.

Social media allows direct access to individual consumers.  Using social media effectively demands deep insight into your consumers.  Walking around observing and talking to those consumers is a great way to develop a personal understanding of their shopping experience.

Tracking Consumer Information

In a survey of 1,800 women by Q Interactive,  65 percent of the participants were delighted at receiving targeted online ads, exclaiming “Cool! How did they know I wanted this?”  What they particularly liked was receiving gifts to show they are appreciated. To build an online relationship with women, brands need to “give me something” according to 58 percent of women; “get to know me better first” for over 19 percent; and “tell me something valuable” for over 17 percent.

Apparently if the return is worthwhile, women are not bothered by online sites collecting information about their interests.  I wonder if this true for women across the board and whether it is true for men?  I’ve read one article that says people in the US are willing to give away private information if they value what they get in return.  That behavior is different from people in Europe who are not willing to give away information regardless of what they would get in return.