Blockbuster Press

Blockbuster filed for bankruptcy today. Though the video rental store hopes to emerge reorganized as a more viable enterprise, it is doubtful it will be anywhere near as impactful as it was before Netflix and other digital alternatives intermediated its unique selling proposition.

Blockbuster was a ubiquitous store of the 1990s. By 2001 it operated nearly 8,000 outlets. I was a card-carrying Blockbuster member, but, in truth, I rarely frequented the chain. Instead of renting video tapes, I turned to Tommy, a mailroom employee at work, to provide what charitably can be described as bootlegged copies of films. Three films to a tape, for $10. Eventually, through Tommy’s efforts and my own taping off cable, I amassed a sizable cache of films, more than 500. I have nowhere near that many these days. That’s what happens when your kids grow up and out and there’s no longer pent up demand to watch Beaches or Superman or The Parent Trap upteen times.

Being no more than a casual customer of Blockbuster made it somewhat difficult to follow the nuances of one of the more dynamic companies of the last three decades. Good thing I had staff members who were more regular patrons. The same thing can be said for Starbucks. I’m not a coffee drinker; I probably can count on two hands the number of times I’ve been inside a Starbucks. Again, my coffee-caffeinated staff kept us up to date.

When I first shifted my career from newspaper journalism to business to business reporting for a restaurant publication based in Manhattan, none of the staff writers had been inside a Wendy’s. This was 1977. There were no Wendy’s in the greater NY metro area. Yet we were supposed to write stories about this fast-growing Columbus, Ohio-based chain that was seen as a real threat to McDonald’s, especially with young adults. Had the foodservice industry known about our knowledge deficiency I am sure it would not have entrusted us to report accurately and intelligently.

Of course, the press rarely lets you see behind its black curtains. We prefer exposing the foibles of others. Two amusing stories surfaced this week, both revealing how dumb people in business can be.

In launching its Canadian service Wednesday, Netflix staged a media event in Toronto. It hoped to show ordinary citizens excited about the video service. Trouble was, Netflix hired actors to play the part of ordinary citizens, to especially pretend to be excited if a member of the press approached them. Caught in the ruse, Netflix issued a red-faced apology.

Earlier this week, Assif Mandvi of The Daily Show with Jon Stewart reported on union efforts to picket Wal-Mart in Las Vegas. The United Food and Commercial Workers, Local 711, is fighting Wal-Mart’s use of non-union labor. According to Mike Giddings, a spokesman for the 7,000-member Local 711, the retailer’s workers receive minimum wage and have no protection should the company cut back their hours.

It was an argument sure to resonate with many sympathetic to the workers’ plight, especially when Mandvi noted the picketers walked the line in temperatures well above 100 degrees. It was then he dropped the “gotcha” as deftly as any Mike Wallace 60 Minutes piece. Turns out the picketers were not members of the union. They were hired, temporary non-union workers, earning minimum wage whose hours were summarily cut back from five to three days a week when the union’s treasurer left town for a few days. Tripped up by his own complaints, Giddings provided a human portrait of a deer caught in headlights. See for yourself in this clip http://www.thedailyshow.com/watch/mon-september-20-2010/working-stiffed (if the clip doesn't load on The Daily Show page, search for Working Stiffed.)

For nearly four decades I made my living asking questions. For 30 of those years I, in turn, was the voice of a national magazine on retailing, fielding questions from reporters from around the country, even internationally, about the retail industry. Occasionally I even appeared on television and spoke on radio. All those interviews, by far, were the most harrowing part of my job. Not because I had stage fright. Rather, it was because you really never knew how your responses would be used by a reporter. So every word I passed I first had to parse in my brain on seven second delay, to make sure I would not say something out of context.

Take my advice—if a reporter asks you a question, politely decline to answer. Trust me. It’s not worth your 15 minutes of fame, or infamy.

A Bite Out of the Big Apple?

Word is spreading that Wal-Mart is looking for sites in New York City. The usual suspects—unions, social activists, politicians, all looking to score points with their constituencies and small business owners—are lining up to block the world’s largest retailer from planting a toehold in any of the five boroughs.

It’s a classic fight that has transpired across the country, most notably in Chicago where Wal-Mart has one store and is angling to place another within the city limits. It has scores of them ringing the Windy City.

It’s also a classic tale of elitism. Of out and out snobbery. I’ve said it publicly so I might as well put it in print—there is no difference between the operating practices of Wal-Mart and Target, or most other large scale retailers, with the notable exception of Costco. Only size differentiates them, Wal-Mart being several multiples larger than any other retailer. They pay low wages. They limit medical benefits. They employ far greater women and minorities in their stores compared to the percentage of women and minorities in positions of management, both at store and headquarters levels. Their sizes virtually assure that some managers are bigots or poor adherents to corporate policy, so the inevitable discrimination occurs in hiring and promotion. Because it is the largest company, Wal-Mart is the target (pun intended) of legal challenges. Back in the 1970s, when Sears was top dog, it bore the brunt of most discrimination lawsuits. Such is the burden of being number one. (Full disclosure: my wife has a modest holding of Wal-Mart stock.)

Target is among the largest U.S. corporations, with revenues exceeding $65 billion. Yet Target enjoys a warm and fuzzy reputation with shoppers, particularly the power elite. They lovingly, disarmingly call it “Tar-Zhay” and feel comfortable inside its stores. Their snobbery makes their skin crawl when inside a Wal-Mart.

The impact a Target or Wal-Mart has on a market can be equally devastating. Or exhilarating, depending on your point of view. There’s no doubt any small business that offers the same merchandise but at higher prices runs the risk of being closed down. It’s equally true that many retailers thrive in the shadow of one of the big box stores.

In downtown White Plains, NY, Target and Wal-Mart compete across the street from each other. On any given day, Wal-Mart has considerably more traffic, strong evidence that even in upscale Westchester County there is a solid customer base for a store that promises, and often delivers, savings on life’s necessities.

The current brouhaha over Wal-Mart was first reported in Crain’s New York Business earlier this week. Wal-Mart was said to be a possible tenant in the Gateway II project in the Jamaica Bay area of Brooklyn, a mostly working class neighborhood. Here’s Crain’s original reporting, though I can tell you with certainty that it parallels events and comments throughout the country over the last 20 or more years:

“’We don't like how they treat workers as it relates to salaries and benefits, and we're not going to have them in our community,” says City Councilman Charles Barron, D-Brooklyn. “They will have the fight of their lives.”

“United Food and Commercial Workers Local 1500 is planning a protest in the next week and is already arguing that Related's (the developer) earlier traffic study presented to gain land-use approval did not take into account a Walmart being situated in Gateway II. The union is planning to send canvassers out to the neighborhood to drum up opposition to a potential Walmart.

“’Walmart was never, ever mentioned once through the entire land-use process,” says Pat Purcell, assistant to the president of UFCW Local 1500. “The area cannot sustain a Walmart, a Target and a BJs. In this area, it's a job killer; it's just the wrong use.”’

Twice before Wal-Mart abandoned projects in Queens and Staten Island. I can’t forecast what will happen at Gateway II. But I can predict that unless more large-scale food retailers open more stores in the inner city featuring wide assortments at competitive prices, Wal-Mart will eventually take a big bite out of the Big Apple.