Wells expanding (if regulators don't chop it to bits first)

Plus: The future of rewards programs; top bribery/extortion quotes of the week; Foxcroft teen wants to borrow your car

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Good morning! Today is Friday, April 5, 2019. Here are today’s big stories in Charlotte-area business news:

Rewards program explosion:

Walk into just about any retailer or quick-serve restaurant in Charlotte, and you’re bound to be bombarded with an offer to join a loyalty program.

It seems as though we are in the middle of an explosion in rewards programs, as retailers attempt to squeeze more business out of their customers. But if you’re loyal to everyone, aren’t you really loyal to no one?

To get the lowdown on rewards programs – what they mean for consumers, what businesses should offer them, where things are heading – the Ledger turned to UNC Chapel Hill business professor Katrijn Gielens, who specializes in retail strategy. The highlights:

Why businesses like rewards programs: “They want people to generate repeat sales. They want to get a competitive edge over their competitors. But the question is, will it help? … The main problem you see with loyalty cards is they are fairly commoditized. The biggest risk you have is it becomes yet another price promotion tool.”

Is Big Bagel mining your data? Is it worth it?

Smartest programs offer something extra: “One of the things you will see is they are trying to add an experience, an extra service – elements that are uniquely tied to what the store offers that you cannot find anywhere else. Like North Face, which allows you to go on trips you cannot find anywhere else, or personal care brands that give tutorials on how to use the product.”

It’s all about your data: “The discount may be the price you pay to get access to the information about your consumer. … You can track your customer’s entire purchasing behavior. It gives you a really rich type of information that allows you to come up with solutions that are geared toward that particular customer. … Most consumers still feel OK about that. What becomes problematic is when that information is being passed on to other firms you are not aware of.”

Sometimes those predictive analytics feel invasive, Gielens says – like when Target algorithms a few years ago used purchase data to determine that a Minnesota teen was pregnant before her father even knew. Flashback from Slate:

It was scary when a statistical model deployed by the guest marketing analytics team at Target correctly inferred based on purchasing data that one of its customers—sorry, guests—a teenage girl in Minnesota, was pregnant, based on an arcane formula involving elevated rates of buying unscented lotion, mineral supplements, and cotton balls. Target started sending her coupons for baby gear, much to the consternation of her father, who, with his puny human inferential power, was still in the dark.

The future lies in geolocation and price customization: “We are moving toward price individualization, in which different people at the exact same time may be offered a different product based on your personal purchase history. That requires a loyalty card that tracks what you have been buying and at what price point. That’s something they are working on, how far they can stretch it.”

For example… “Say you have an app for a grocery store. You walk into the store, and through beacons, technology will know you are there. Say you walk to the cereal aisle. They know, OK, person x in the cereal aisle likes Kellogg’s. We have a new flavor. Give him a nice price, so he can try something new. While you’re standing there, the person standing next to you pays full price, because they know he’s not interested in trying new cereal.”

For businesses, Gielens says loyalty programs can be expensive and tricky to administer. Want proof? Marriott is offering it. It has been working to combine its rewards program with Starwood’s into a new program called Bonvoy. The results have been ugly, the Los Angeles Times says. Among other horrors, free nights aren’t posting, and customer service is poor:

Marriott International Inc. representatives acknowledged via email that the new combined reward program has been plagued with problems, including members who haven’t been able to get room upgrades or free nights they’d earned.

Marriott is investing in technology fixes and increased hiring and extra training for call-center workers to fix the program, the representatives said.

But Bonvoy members, who book some of the world’s most luxurious hotels, are not waiting patiently. Many are protesting online.

[Member Shubhayan] Mukherjee, who joined the Starwood program in 2000, was so incensed about Bonvoy’s failures that he helped create a website, Bonvoyed.com, where members can air their gripes. The site, created last month, already has more than 600 entries.

His Bonvoy problems began, Mukherjee said, when he traveled to Russia last summer to see World Cup games and found he couldn’t get his usual free breakfast, among other perks.

Hoping no glitches stand between me and a free Bruegger’s bagel.

Wells Fargo growing — if D.C. overlords allow it:

The valedictory tour of former Wells Fargo CEO Tim Sloan kicked off on Thursday, with his stop at a luncheon of the World Affairs Council of Charlotte.

And he tickled the ivories with a familiar tune that is sweet, sweet music to Charlotte’s ears, saying Wells wants to continue adding jobs here. From the Observer:

“This is a great place to live, it’s a great place to do business and it’s a great place to attract an incredible team member base,” Sloan said. “It’s one of the reasons why, when you’ve looked at Wells Fargo over the last few years, this has been the state, this has been the region, where you’ve seen the largest growth in our team member base.”

The Biz Journal adds:

Wells Fargo earlier this week signed a long-term lease to take the full building at 300 South Brevard, a 360,000-square-foot tower at South Brevard Street and East Martin Luther King Jr. Boulevard in uptown. Bob Bertges, director of Wells Fargo's corporate properties group, said the bank needs space for about 1,900 more seats within the workforce in uptown alone. That means a need for at least 1,900 new jobs in the near future — and likely more.

"This is a state and a city that we want to continue to expand in," Sloan said.

It doesn’t get much better than calming Charlotte’s insecurities by affirming the city’s status as a low-cost, desirable place to expand and create jobs. Somebody has to live in all those new South End condos and apartments.

But, but, but: The trouble, though, is that Sloan is no longer in charge. He retired (“retired”) under pressure last week. Even the Wells board isn’t fully in charge, as regulators and politicians continue to press the San Francisco-based bank for big changes. Some have even called for it to be broken up after the recent string of scandals.

Who’s coming in to lead Wells Fargo next? Let the speculation continue. American Banker had a piece this week that tossed out a dozen names. That follows Bloomberg’s conjecture last week, which produced five names.

Bad ideas from Nextdoor: Foxcroft edition

Open and shut

Remember a few years ago when the hottest trend in new office space was the idea of the open floor plan? The thinking was that a workplace without a bunch of walls would encourage collaboration, taking companies to new heights of productivity.

Now, though, more data is coming in that throws cold water on that approach. This week, a survey showed that workplaces with open floor plans have caught on far less in the U.S. than in Europe:

Despite the U.S. being responsible for kicking off the open floor plan trend, the U.S. has the fewest employees (25 percent) working in an open floor plan. The U.K. leads in open floor plan adoption with 41 percent of employees working in that type of space, followed by France at 38 percent, and Germany at 36 percent.

That follows a groundbreaking Harvard Business School study last year in which researchers found that workers in offices with open floor plans saw a 70% plunge in face-to-face interaction — which was replaced by more emailing and instant messaging. Turns out — shocker — that people aren’t into having constant work conversations and prefer to withdraw when there are no boundaries protecting them from chatty co-workers.

But there is one advantage to open floor plans: lower real estate costs. The HBS authors explained:

Many managers and executives seem to believe that open offices will both lower costs and improve interactions. My hope is that this research throws a bucket of ice water on the idea that there’s no tradeoff—that you will naturally both save in real estate costs and get more collaboration from this kind of design.

If the cost motive were sufficiently strong, there might be other things a manager could do to mitigate the potential negative impact on interactions: hybrid or flexible spaces; train people differently; allow work-from-home time; set a tone and work culture that tries to deprogram us from our natural instincts to respond the way these organizations did. There are those who love open offices, in part because organizations mitigated the downside with other deliberate managerial actions.

In case you need further evidence, Dilbert is all over it, too.

This week’s top bribery and extortion quotes:

Nike shakedown: Just do it

Mr. Avenatti said he and Mr. Geragos would need a $12 million retainer, with a guarantee of up to $25 million. When [Nike outside counsel Scott] Wilson pushed back, saying he had never received a $12 million retainer from Nike, Mr. Avenatti asked if Mr. Wilson had ever “held the balls of the client in your hand where you could take five to six billion dollars market cap off of them?”

Wall Street Journal on the attempt of celebrity lawyers Michael Avenatti and Mark Geragos to extract money from Nike by threatening the shoe company with bad publicity. Authorities charged Avenatti with extortion last week. (WSJ/paywall)

A million routes to success

Well, I’m gonna tell you somethin’. And this is not to influence you in any way, shape or form. But if-if-if we get this — if we get this current (financial examination report) business put to bed and we get John (Palermo) there so he can help you be that, as I say, the most successful insurance commissioner in my lifetime — there will be at least a million dollars somewhere in your re-election. I can tell you that. At least a million.

John Gray, a consultant for Eli Global chairman Greg Lindberg, speaking to N.C. Insurance Commissioner Mike Causey, according to a federal indictment filed this week. Authorities indicted four people, including the head of the N.C. Republican Party, for their roles in the scheme.

You won’t believe which bank held $1.5M in Robin Hayes bribery money

The biggest political and crime news of the week: the alleged bribery scheme hatched by Republicans to influence the North Carolina insurance commissioner on behalf of a Durham businessman.

Officials and the businessman devised a plan to funnel most of the money through an independent expenditure committee, separate from the Republican Party, called North Carolina Growth and Prosperity. And what bank did they select to open that account with? You’ll never guess.

From the indictment:

The Grand Jury finds probable cause to believe that the following property is subject to forfeiture on one or more of the grounds stated above: … approximately $1.5 million in proceeds deposited into two bank accounts held in the name of North Carolina Growth and Prosperity at Wells Fargo Bank, account numbers *0817 and *0809.

In brief

Food and booze news

A weekly wrap-up of the week’s eating and drinking developments

  • N.C. State bar Players’ Retreat in Raleigh is in Garden & Gun magazine’s Final Four best bars in the South. The other three: The Griffon (Charleston), Bluegrass Tavern (Lexington, Ky.) and Callahan’s Irish Social Club (Mobile, Ala.). (Raleigh N&O) BREAKING FRIDAY MORNING: The PR advances to championship round.

  • Panthers NFL draft party: Another chance to hang and drink on-field, April 25. Free tickets available starting today. (Panthers)

  • New restaurant promises made-to-order Pad Thai in under 3 minutes. Thai Express to open at Steele Creek’s Rivergate Shopping Center later this year. (CharlotteFive)

  • Burton’s Bar & Grill is opening in Blakeney. Website says June opening. (Charlotte Agenda)

  • Community Matters Cafe, a project of the Charlotte Rescue Mission, opens next week at 821 W. First Street uptown. Ledger recommendation: Meatloaf sandwich.

  • Bruce Moffett to open Southern/New England seafood restaurant in Plaza Midwood: N.C. Red opens in old Penguin space April 17 (Team coverage: Biz Journal, Charlotte Magazine, Charlotte Agenda)

Got a news tip? Think we missed something? Drop me a line at editor@cltledger.com and let me know.

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The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.