Loose Lips Sink Retail Chains?
By George Anderson
It appears as though retailers and politicos in Washington have something in common. To borrow words from Sen. Trent Lott of Mississippi, "We can’t keep our mouths shut."
In retail as in Washington, leaks of information appear to becoming increasingly common.
Wal-Mart recently found itself having to answer some questions about its sincerity in looking to care for its associates when an internal memo describing means to cut healthcare
costs found its way to media outlets. The document was intended for the company’s board and not public distribution.
The chain and others, including Sears and Home Depot, have also had to deal with ads offering special deals for the holiday season finding their way to web sites such as Black Friday 2005 (www.bfads.net) and GottaDeal (www.blackfriday.gottadeal.com) well before they are intended to be made public.
Last year, according to a report in the Baltimore Sun, the owner of the Black Friday site, a teenager named Michael Brim who attends California State Polytechnic University, received a call from lawyers at Home Depot telling him to cease and desist with publishing their ads.
Retailers have taken in recent years to copyrighting ads to discourage early public disclosure. The legal position taken by retailers is that prices in the ads are protected under the copyright. None have yet to take a case to court to see if their legal position would hold up.
Sears is another company not happy with Mr. Brim. He said he received a 54-page letter from the retailer’s lawyers threatening legal action if he did not remove scans of an insert for Black Friday from his site. He complied, although the ad does remain on other web sites.
Moderator’s Comment: Why does information not intended for public disclosure by retailers keep finding its way to news outlets and the internet? How
harmful are sites such as Black Friday 2005? Do retailers do themselves more harm or good with consumers with stories that they have threatened web sites such as those run by
Michael Brim? –
George Anderson – Moderator
“Cattle rustling is always an inside job.” Retailers have a high proportion of unhappy employees and many retail executives don’t value confidentiality anyway. Information is often routinely broadcast to a wider internal audience than necessary or is broadcast more days in advance than necessary. Eisenhower didn’t tell the media the date of D-Day, and used Patton to create a fake invasion force, in order to confuse the enemy about the true landing site. BTW, I am sure that copyrighting ads can probably stop people from broadcasting them as-is, but I’m fairly sure that the content can’t be prevented from broadcast. So the Pathmark ad showing 15 items on a page can’t be put on a web site without permission, but a simple listing of the items and prices can’t be stopped.
Assumption #1 in business (and life too) is that there are no true secrets. There’s just information held by fewer people waiting to spread. The activities of today’s large businesses cannot take place without the participation of many individuals, so they should never, ever be surprised to learn that the word leaks out.
That’s reason enough to commit to do the right thing in the first place. Sure, Wal-Mart is entitled to be cost-effective on its health-care expenditures. The leaked memo wouldn’t even raise an eyebrow except that the company’s prior handling of the matter had already raised criticism.
As far as the web kids trading advance word about upcoming promotions: We should ask ourselves, why are the “maligned” retailers so touchy about this? It’s free promotion to their most price-conscious customers and potential customers. Don’t they see why getting the lawyers involved just makes the retailers look mean-spirited?
If on the other hand, the chains made their promotion plans with Assumption #1 in mind, they might turn the “unwanted” publicity into a windfall.
Since most executives care more about the return to investors than how their employees are treated, this will continue to happen. BUT, keep in mind, this is not a new trend. Big companies and overpaid executives have always behaved this way.
Think way back to the George Pullman era. The difference today is that employees are generally more educated and have many more resources available to them. These resources are enablers for the common man. Think about it. If I felt my employer treated me fairly and always kept my welfare in mind, I would never bite the hand that fed me. But, with executives not producing any positive results and cutting jobs and benefits, and then walking away multi-millionaires, it is human nature to strike out. An example from the world of Sears/Kmart: Alywin Lewis issues a directive that employees can’t carry bags from competitors. He also could not believe that Sears employees would advertise that they shopped somewhere else. Now, if that does not prove that Mr. Lewis is putting his head in the sand, I don’t know what does. Do you think you can issue dictatorial edicts like that and people won’t resent it? These type of “loose lips” will continue. The only way to stop it is by treating your employees like you treat your board of directors and shareholders.
Welcome to the real world. Please tell me what multi-billion dollar retailer does not hire people to go to work inside their competitors. Security guards often are poorly paid and moonlight for private investigators…Or the office cleaner who is in need of a little cash. You can figure it out from there. Much of the value of hiring new employees is the vast amount of knowledge they bring from their former employer. All those “Code of Ethics” policies are not worth the paper they are written on. Often people will have a new job lined up for weeks before they announce their resignation and leave their old company well prepared.
Kill benefits, heighten stress over job security, substitute computerized efficiency for human empathy and then wonder why confidential statements somehow get leaked to the internet. Hmmmm….that really is a tough one.
Score one for the little guys! Retailers, I mean. All of the ads and prices listed are from national companies. Having access to competitive pricing early can be a good tool for their large competitors but an even better one for small guys looking to tweak their sale prices.
As to the whys of information leaks, this is another edge for small operators. Larger companies have more potential leakers, and the “vision thing” doesn’t make it to all of the troops. Jamie’s idea of “doing the right thing” in the first place makes sense, but a push needs to be made to instill that in the troops on the ground.
By the way, the Sears ad is still there, just in a list form, and with Sears intentionally misspelled.
It’s definitely inside jobs most of the time. Why put sensitive things in electronic form, which can be so freely disseminated? I recall dealing with a sensitive issue once that involved litigation, and was constantly asking people to cool it with all the emails that ran around the office like wildfire. Reminds me of the case of a limo driver I knew back in Rye, N.Y. His ex-wife’s boyfriend was always harassing him. Police wouldn’t/couldn’t do anything. Then one day the harasser called the limo driver and threatened to kill him. Of course, my pal the limo driver wasn’t home that day, so the idiot harasser left the threatening message on his phone machine.
“Information wants to be free.” That’s the mantra you hear today whether it is news or music or retailer promo information. Info may want to be free, but that doesn’t mean it should be. Unfortunately, most information owners think they can try to enforce the old rules. They can’t. The old rules of information flow no longer apply. These days you have to expect that information will spread and play by those rules. You build your walls in more defensible places, and you try to use those same information channels to your advantage instead of getting burned by them.
And of course, be nice; there’s less to hide.
A recent article by Steve Lohr in the New York Times contained the following: “There is one company that even Wal-Mart eyes warily these days: Google, a 7-year-old business in a seemingly distant industry. ‘We watch Google very closely at Wal-Mart,’ said Jim Breyer, a member of Wal-Mart’s board. The worry is that by making information available everywhere, Google might soon be able to tell Wal-Mart shoppers if better bargains are available nearby.”
Oh no! Informed shoppers and a level playing field! Evidently WM’s definition of information not intended for public disclosure includes “competitors’ prices that are lower than ours.”
The information age is in full swing, and to ignore or be unprepared for it is a bit silly. Just think how influential blogs were during recent elections. Government leaks are daily and expected, and to be surprised by business leaks is naive. The rule is becoming clearer: If you don’t want it leaked, don’t do it. Sunlight is the best disinfectant.