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    Published on: September 26, 2002

    Reactions to California’s passage of a comprehensive paid family leave law included this email from one MNB user:

    “I think paid family leave is win-win for all.

    1. It is financed by payroll taxes, not the employer.
    2. Gives employees an alternative to seeking help to care for a loved one.
    3. Less stress for employees needing to take care of loved ones.

    “My wife had a hysterectomy recently. My employer was gracious enough to let me work at home during her recovery time. Not every employer, or employment situation, is like mine. And, not all families have extended family members close by to help. Sure, it only pays 55% of one's salary, but paid family leave is not intended to let someone take an extended vacation. It does give a worker (and management) the option to take care of a loved one, and not take a complete hit on losing their salary.”

    And we got a bunch of emails responding to our story about the Food Marketing Institute (FMI) opposing any increase in the minimum wage.

    MNB user MacKenzie Malcolm wrote:

    “I've been following this for years, first as a restaurant manager, then as a graduate student, and finally now, in my current capacity as a corporate food service contract manager.

    “The food service industry does itself a huge disservice by opposing efforts to raise the minimum wage. If profit margins are "razor thin", or if small businesses "can't afford" to pay workers a decent wage, then they shouldn't be around. Raising prices may cause current shoppers to purchase less (which wouldn't necessarily be a bad thing considering the number of Americans who are overweight!), but low-wage workers who get a little earnings boost can buy a little more. I think it evens out.

    “I find these lobbyists to be hugely insensitive to the legions of low-wage retail workers who have to deal with the public, with a smile, every day. Don't get me wrong - I am by no means a "redistribution of wealth" type of person. But $6.65 an hour? That's peanuts! Give me a break.”

    And on that note, we’re outta here.

    More tomorrow…
    KC's View:

    Published on: September 26, 2002

    In lieu of a party for our upcoming one-year anniversary, which would be difficult to pull off since MNB has thousands of subscribers from all over the world, we’re going to have a contest.

    Here’s the deal. Every time you submit via email the names, companies and email addresses of five people to get the MNB Wake Up Call (we’re going to trust you that you’ve checked with them on this), we’ll put your name in a hat. You can enter as often as you like, as long as you keep coming up with five different people.

    The contest ends on our anniversary, November 19, at which time we will pull the names and announce the winners…

    • The first 15 names to be pulled out of the hat will receive brand new, totally cool, “be-the-first-one-on-your-block-to-own-one” t-shirts. Wear ‘em jogging, or to the gym, or wherever you want. These are very nifty.

    • The next 10 names to be pulled out of the hat will be the recipients of equally cool, totally awesome baseball caps…just like the kind we wear here at MNB world headquarters.

    • And finally, the grand prize winner will receive a t-shirt, a baseball cap – and a $50 gift certificate to!

    So, enter early and often…
    KC's View:

    Published on: September 26, 2002

    • Nash Finch Company has promoted Jerry L. Nelson to be its president and chief operating officer.

    • Nash Finch Company also announced that David J. Bersie has been promoted to be the company’s corporate senior VP, food distribution, taking over Nelson's previous day-to-day distribution business duties.

    • Randy J. Jaeger has been promoted to VP, food distribution, with responsibility for the company's distribution customers in the Midwest and Southeast.

    KC's View:

    Published on: September 26, 2002

      Belgian supermarket company Delhaize Freres et Compagnie-Le Lion SA, which does 70 percent of its business in the US, said it expects same-store sales in 2002 to fall one percent, and total store sales to be down two percent. Last month, company CEO Pierre-Olivier Beckers had warned that U.S. sales would rise only one percent for the full-year, down from an earlier two percent growth estimate. Analysts say that that both the faltering economy and tough competition from Wal-Mart are taking their toll on Delhaize.
    KC's View:

    Published on: September 26, 2002

    Reuters reports that Kmart Corp. has agreed to give some of its creditors confidential information about intellectual property rights that it sold to one of its subsidiaries for a modest fee just before it filed for bankruptcy protection earlier this year.

    Included in the sale to the subsidiary were the rights to its red “K” logo.
    KC's View:

    Published on: September 26, 2002

    Just a couple of weeks after Sainsbury’s in the UK unveiled a new loyalty card program that works in concert with other retailers such as BP petrol stations and Debenhams department stores, the company has made a series of decisions.

    First, it has decided to cut back on newspaper and television advertising for the new program, because estimates are that as many as 50 percent of the households in the UK will have signed up for the program within a few months of launch, way ahead of projections.

    Second, it has stopped allowing people to sign up for the card online, because its server simply couldn’t handle the traffic volume at its site.
    KC's View:
    These are the kinds of problems that most retailers like to have…and somewhat remarkable since as the program was being launched, Asda published its own study saying that people don’t really want loyalty marketing programs. Asda, of course, was just trying to blunt the impact of the new program, but apparently has been unsuccessful at stopping people from signing up.

    Whether everybody who signs up actually uses the system is another question.

    When we were in Ireland earlier this week, there was much admiring discussion among retailers we spoke to about the Nectar program.

    Published on: September 26, 2002

    Jane E. Brody, the highly respected personal health columnist for The New York Times, weighed in yesterday with her opinion on whether their should be the teaching of nutritional basics in schools. Her vote: absolutely.

    “…in more and more schools nationwide, children from kindergarten through high school are being taught that ‘nutrition’ comes in boxes of fast foods, candy wrappers and soft-drink cans and bottles.

    “In many schools, fast-food companies have co-opted the lunch program, and children have ready access to soft-drink and snack machines. In the classroom, too, children in 12,000 schools are required to watch a 12-minute television program every day with two minutes of commercials from companies like McDonald's, Hershey, PepsiCo, Coca-Cola, KFC, Frito-Lay, Domino's and 7Up.”

    Brody concedes that in exchange for this kind of access, these companies often are contributing vast sums of money to school districts so that they are able to buy things that ordinarily the students might have to do without. However, she notes that there isn’t even any attempt to offer balanced advertising or promotion of healthier products, and suggests that young people are less able than adults to differentiate between editorial content and advertising, giving it all roughly the same heft of credibility.

    And while there are examples of how the trends might be shifting, like the recent vote in Los Angeles to ban all soft drink sales in public schools, there are plenty of examples of how the influence of fast food and soft drink companies are becoming more, not less, influential. She describes the $8 million, 10-year agreement in 1997 between the 53-school Colorado Springs district and Coca-Cola that “includes cash bonuses for extra sales and incentives like a new car for a senior with high grades and a perfect attendance record.”

    Brody calls for national mobilization by parents. “What is needed now is legislation at the national level, laws with enforcement teeth. So if you are a parent concerned about your child's health, pay attention to the nutrition messages the children receive at school and at home and write to your representatives in Congress about the need for national action.”
    KC's View:
    Certainly it would seem to us to make sense for both retailers and manufacturers to attempt to play a more active role in the classroom in terms of helping to educate kids about nutrition. What if prominent retailers in various markets offered to underwrite a kind of “nutrition professorship” for the schools, essentially paying the salary of a single teacher who could develop programs and recommendations for school-age kids? This could be great public relations for the retailer, and even build loyalty among these potentially valuable future customers.

    Published on: September 26, 2002

    • The US Department of Agriculture (USDA) this week announced that it is strengthening toughening food safety policies, randomly testing for E. coli at all meatpacking plants with the authority to shut down plants where contamination is detected.

      The decision comes in part as a reaction to the large number of E. coli recalls that have taken place in recent months, and in part because of a congressional study that said the USDA has been lax in its enforcement policies.

      A zero-tolerance policy, however, is objected to by the meat industry, which believes that to be 100 percent E. coli free all the time is virtually impossible. “The goal of any food safety policy should not be to hit a target that is out of reach,” J. Patrick Boyle, president of the American Meat Institute, told the Associated Press.

    • Mark McClellan, the top health policy adviser for the Bush administration, has been nominated to be commissioner of the Food and Drug Administration, filling a post that has been vacant for almost two years, according to the Washington Post.

      There has been a political struggle about the commissioner’s job taking place between the White House and Sen. Edward Kennedy (D-Mass.), who chairs the committee charged with vetting the nomination. Kennedy has set as a minimum standard for the post NOT having worked in the drug industry, and McClellan meets that requirement; McClellan also is not seen as an ideologue, and has worked in both the Clinton and Bush administrations.

      Kennedy said yesterday that “Dr. McClellan has impressive credentials both as a physician and as an economist, and I look forward to learning more about his views on issues critical to the FDA.”

    KC's View:

    Published on: September 26, 2002

    We spent almost all of yesterday on a variety of airplanes, traveling from Dublin to London to Chicago and finally to Grand Rapids, Michigan, where today we’ll spend time with D&W Food Stores and its estimable CEO, Jeff Gietzen, as we continue working on our Japanese video documentary.

    More on our impressions of D&W tomorrow. For the moment, some quick observations on our trip so far:

    • Have been flying United Airlines almost exclusively, and have seen no discernable evidence of its troubles in terms of the service or the people. In fact, all the flights we’ve been on have been pretty full. It must be all the other flights that are empty.

    • In fact, we saw a new service on our united flight from London to Chicago – lattes being served in First and Business Class. Y’know why? One of the light attendants bought a hand “milk frothing” machine, and took it upon himself to make up lattes. They were good, and the effort was appreciated. (We all should have employees with this kind of initiative.)

    • We’ve always found that entities like United’s Red Carpet club are incredibly valuable to us, since we do so much of our work on the fly. We know that such obvious distinctions been great customers and regular customers always have been considered problematic in general retailing, but we think that, if we were a retailer, that might be a top priority. Can’t the great retailing minds in this country come up with a way to create a “club atmosphere” for the best shoppers…or, at least, the shoppers willing to pay for the privilege? Wouldn’t this be a valuable point of differentiation?

    • When we got off the plane in Grand Rapids and checked our email, we found the following note from MNB user Doug Karel:

      Well, Krispy Kreme opened yesterday here in Grand Rapids, MI, with great success. I went last night to buy my first one and with the free samples they hand out, I enjoyed it and ended up buying 2 dozen to share with family and friends. I now am seriously considering filing a lawsuit
      against the Content Guy because his recommendations are going to lead me to becoming obese!

      “Just joking…”

      Well, we now have something else to do here in Grand Rapids…

    KC's View:

    Published on: September 26, 2002

    The Seattle Times reports that Costco wants to create a 106,000-sq. ft. Costco Fresh store on the site of an old Kmart in Bellevue, Wash.

    Costco Chairman Jeff Brotman told the Times that the store would offer “huge selections of all types of gourmet products” at low prices, including groceries, wine and beer.

    The format originally was proposed some two years ago, but Costco abandoned its plans when neighborhood activists in New York City -- where it planned to first open the units -- objected. The company believes it will encounter no such opposition in what essentially is its own backyard.

    If it gets through the planning and zoning process smoothly, the company expects the new Costco Fresh store should be open by late spring 2003.

    Costco seems to be in a testing mode lately, as it also is building a new store in Washington State that will focus on home furnishings.
    KC's View:
    In the recent study that suggested the near future holds limited growth potential for the warehouse clubs is true, then it seems to us that these kinds of moves by Costco make sense. The company is isolating the categories that it believes can support stand-alone warehouse formats, and essentially is building satellite stores that will be so-called category killers.

    It’s a good lesson for traditional food retailers, which often don’t have the killer instinct in the very category for which they are – or should be – known.

    After all, if Costco is willing to create different kinds of formats for different kinds of markets, why shouldn’t mainstream food retailers do the same? And wouldn’t it also make more sense to focus in more expertly and relentlessly on the food categories that can allow these mainstream retailers to really differentiate themselves from big box stores?

    Published on: September 26, 2002

    Supervalu, the Minnesota-based wholesaler and retailer, has announced that it is expanding the latter part of its business by acquiring four former Superfresh stores and converting them to the Shoppers Food Warehouse format.

    Two of the units, in Maryland and Virginia, have already reopened under the new banner; the other two, also in those two states, will do so later this fall. Terms of the deal were not disclosed.

    "Shoppers Food Warehouse is an important part of Supervalu's retail growth strategy," said John Hooley, Supervalu’s executive vice president and COO.

    Ironically, the acquisition of more retail locations comes in the same week that Fleming Cos., Supervalu’s main competitor, announced that it will sell off its 110 retail units in order to concentrate just on wholesaling and to raise money that will allow it to pay off debt and calm an increasingly skittish investor community.

    Included in Supervalu’s retail fleet are more than 40 Shoppers Food Warehouse stores in the Washington, DC, area; and more than a thousand Save-A-Lot stores, 257 of which are owned by Supervalu and the remainder of which are licensed.
    KC's View:
    A little one-upsmanship here by Supervalu? Maybe. Certainly, it is a clear indication of how the two major wholesalers are different.

    Published on: September 26, 2002

    Fleming Cos. announced that it has laid off some 350 executives in the last few months, cuts that should save the company some $40 million.

    The announcement came just a day after Fleming management said it will sell its 110 price impact stores that operate under the Food 4 Less and Rainbow Foods banners.

    The company expects that proceeds from the sale will generate in excess of $450 million net of taxes, which will allow Fleming to continue to reduce its debt.

    Investors, at least, seemed pleased with the Fleming moves, as the company’s shares rose 16 percent on Wednesday. Of course, the shares had been trading at 30-year lows in recent days, so the increase still didn’t make up the long-term difference.

    In addition, Fleming is facing yet another investor lawsuit charging it with making misleading statements about its performance. This is the fourth such suit filed against the company in recent months.
    KC's View:
    No huge surprise about the layoffs, except for the fact that Fleming has been denying it for weeks.

    Here’s the question that must be addressed. Fleming is making these changes to address investor issues, but how will they affect the retailers that are its customers? If they in any way hurt the kinds of products and services that these retailers offer their customers, then once again the investor community will have been placed on a higher pedestal than the shopper…, which in our view is always a mistake.

    We’re sure Fleming believes it is doing the right thing. But we’re also sure that in many cases, the ultimate customer is not at the top of everybody’s list in terms of concerns.