The announcement that Kmart and Sears will be closing another 43 stores was no big surprise — more retail stores have closed in the United States this year than any year ever — but hidden in the details there was another trend that might surprise some. The company as it shrinks is planning on not just fewer stores, but also smaller stores. Many stores, that is, will be shrinking in place. I saw that happen a few years ago when a mall Sears store was reduced to one floor. That location has since closed completely, but Sears indicates that we can expect to see more stores that keep the same main entrances but have less space inside. Stores are simply too large and complicated for shoppers to figure out. After a century of ever-increasing retail space, are we ready for smaller, more focused stores? My guess is that we are.
Monday, July 3, 2017
If what I am seeing in advertising is any indication, hot dogs have completed the transition to a one-day-a-year food for most of the people who eat them. Brands that haven’t advertised all year have been in saturation mode for the past six days in an attempt to get their share of this year’s hot dog market. It is a surprisingly fast transition in cultural terms. I can easily remember when I ate hot dogs regularly, sometimes five days in a row until the package was empty. A sharp price increase broke that pattern for me, and many other consumers were dissuaded by a series of manufacturing scandals. I no longer buy hot dogs at all, and I haven’t seen one since last summer. Hot dogs have become a gimmick. No one would consider them a practical thing to eat, but they symbolize the Independence Day holiday more than any other food item. Hot dog manufacturers in the recent advertising emphasize that hot dogs have been improved this year. I feel certain the improvements are greatly exaggerated, but regardless of any number of minor changes, hot dogs are not the easiest form of food to handle safely. Given that, there is a serious problem with eating them so infrequently. Eaters are relatively likely to find that they can’t stomach a couple of hot dogs this time around. The bad experiences make people vow to eat even fewer hot dogs, and that, in turn, makes stomach distress even more likely next time around. What is needed to save the hot dog from this downward spiral is a new kind of hot dog, one that turns the tradition on its head. The traditional hot dog was made from the worst scraps of meat — a mix of brains, skin, and internal organs that was too awful to be used in any other way. This was cheapened still more a quarter of a century ago by mixing in such extras as soy protein isolate, gum, concentrated wood smoke, and chemicals. What’s needed now is a hot dog that is designed first and foremost not to make anyone sick — made with no meat at all, no soy, no chemicals or wheat gluten. I’m not sure exactly what it would be made of, but it is surely not too much to ask. The physical form of a hot dog is so nondescript — just a tube shape filled with goop hardened by cooking until it is just barely solid — and the flavor so nonspecific, there must be fifty ways to make them that don’t lean on high-risk ingredients at all. An exact flavor match is not necessary — indeed, the new hot dogs will need to look, smell, and taste different enough that the people who got sick on the hot dogs of 2017 can be persuaded to try again in a future year. Such is the ritual importance of the hot dog on the 4th of July and so great is the risk of annually eating the current output of the hot dog factories that this hot dog redesign is almost inevitable.
Thursday, June 29, 2017
Sunday, June 25, 2017
Authorities in Italy have spent the weekend working out how to liquidate the two insolvent banks in Veneto that observers have been worrying about all year. The failed banks are Banca Popolare di Vicenza and Veneto Banca. Though not affiliated, the two banks are being liquidated together because they are facing the same regional economic problems and are in about the same financial condition.
“Good” assets — which are not quite so good as that term usually implies — are being transferred today to Intesa Sanpaolo. Having committed to liquidate the two Veneto banks while protecting depositors and keeping branches open, the government had few good options. A proposal by a hedge fund consortium was widely reported earlier in the month but rightly ignored. The hedge funds were seeking a controlling interest in the two banks but were willing to cover only a tenth of the capital shortfall. Such a plan would have postponed today’s liquidation by a few months at best, and it ran the risk of degenerating into litigation and chaos. Intesa Sanpaolo will apparently act as the government’s agent in managing and liquidating some of the assets it is not purchasing.
In retrospect, it would have been better if the two banks had been wound down five years ago. As it is, the bank liquidation will cost taxpayers an estimated €17 billion, of which €5 billion is being paid today. It was only two years ago, though, that auditors discovered problems in the loan portfolios and misselling of bonds, and not until last Friday that the European Central Bank referred the two banks for liquidation. Government lawyers then spent the weekend drafting a decree for the liquidation and transfer.
Ultimately not all of the branches will be able to stay open, but Italian regulators would prefer to have them close more quietly at another time rather than during such a visible crisis. Intesa is chipping in an estimated €60 million to protect bondholders, funds that would have been legally difficult for the government to provide. The fate of bondholders was an important political consideration because the banks fraudulently sold bonds to thousands of retail depositors, telling them that the bonds were certificates of deposit.