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    Published on: October 9, 2002

    The Bush Administration has ordered the Pacific Maritime Association, which represents employers at 29 West Coast ports from San Diego to Seattle, to reopen dock facilities.

    President Bush invoked the Taft-Hartley Act to impose an 80-day cooling off period.

    Operations are expected to resume late today. Some estimates are it could take six or seven weeks to clear the backlog of cargo.

    The 10,500 members of the International Longshore and Warehouse Union had been locked out by management as part of a long labor dispute.
    KC's View:

    Published on: October 9, 2002

    The Chicago Tribune reports on an apparent disparity between what people want from fast food restaurants and what they are willing to pay for.

    They want healthier dishes that are better tasting. They do not, however, want to pay higher prices…nor do they want to give the restaurants more time to prepare their food.

    This disparity is creating a kind of sea-change in the fast food business, as so-called “fast casual” restaurants emerge, specializing in better tasting, healthier cuisine. Names like Noodles & Company, Corner Bakery, and Panera Bread Co. are becoming emerging powers, responsible for much of the growth taking place in the sluggish fast food business.

    That’s not to say only newcomers are exploiting this new market. Existing powers such as Subway, Chili’s and Outback Steakhouse are working to adapt their concepts to this new trend, and even giants like Wendy’s and McDonald’s are working this side of the street. In Wendy’s case, it is offering new alternatives through both new names such as Baja Fresh Mexican Grill and Café Express, as well as through its traditional Wendy’s units.

    McDonald’s, on the other hand, which has become the poster child for sluggish sales in part because it is so big it seems to get hurt the most, is expanding concepts like Chipotle Mexican Grill, Boston Market, Donatos Pizzeria and Pret a Manger sandwich shops.

    The downside of all this activity, according to the Tribune, is that consumers’ unwillingness to lay out more bread for healthier and better tasting bread means that profitability may be a long way off for this segment of the business.
    KC's View:
    While many mainstream supermarkets have dismissed meal solutions as a now-dead fad, this new activity suggests that there may be new concepts and approaches that could reignite interest in the meal solutions arena.

    Or maybe old ideas. We keep remembering the “Supreme Court” concept that was tested and failed a number of years ago, essentially offering a menu of quick-serve, healthier options within a supermarket’s walls. Clearly there were limitations in how well that concept could work, but suspect that there may be life left in that baby yet.

    Beyond that, we think maybe retailers ought to be looking at both the semantic and actual differences between “fast food” and “fast casual” to see what consumers are responding to, and then start incorporating some of those messages into their offerings.

    Ironically, as the Tribune was running this story, the Detroit Free Press ran a similar piece about the “Gourmet To Go” trend, which has upscale restaurants like Charlie Trotter’s in Chicago tapping into the take out business in a big way.

    These new alternatives are a lot more expensive than Big Macs, and therefore have a longer way to go to profitability, and certainly are unlikely to achieve the kind of visibility that a Chipotle or Corner Bakery might have in years to come. But still, they speak of a new yearning by consumers, and yet more competition for mainstream supermarkets.

    Published on: October 9, 2002

    The November 2002 edition of Prevention reports that “poor diet is the biggest cause of a weakened immune system in healthy individuals,” which in turn causes people to be more prone to catching colds and the flu.

    So, on page 110, Prevention defines the top five foods that can help shoppers build their immune systems, and explains how and why they work.

    The five foods that the magazine recommends are: beef, sweet potatoes, mushrooms, tea, and kefir.
    KC's View:
    What a great way to cross-merchandise these kinds of foods…which is exactly what The Rodale Beat is all about.

    The Rodale Beat is designed to give MNB users terrific ideas from Rodale Press’s roster of magazines -- such as Men’s Health, Prevention, Organic Style, and “Runner’s World -- that can be utilized in-store to build sales.

    Published on: October 9, 2002

    The four-decade old Weight Watchers company is enjoying a resurgence, Fortune magazine reports, in part because it became an independent company not owned by Heinz.

    Before Heinz sold it to a European investment firm in 1999, the strategy was to use the Weight Watchers name to build sales for a line of prepared and packaged foods. These days, the company instead is promoting its “points” system that allows people to eat normally within a specific range, and building its business through its meetings and membership fees and sale of ancillary items such as cookbooks and diet calculators.

    And while Weight Watchers is perceived as being for women, the company is developing a strategy that will appeal to men, as well.
    KC's View:
    Seems to us that the key to Weight Watchers’ success is that it isn’t just selling stuff, but rather is building a sense of community among people who share common and powerful interests and motivations.

    We’ve always felt that this is a much-ignored potential for many supermarkets, which have a built in customer base that both shops frequently and probably shares more interests than they realize. The building of community is relegated to the folks who run the loyalty marketing programs, but even they don’t have the resources or the mandate to exploit this strategy.

    In a time of heightened competition and enormous threat from big box stores that are sales machines (sort of like sharks with scanners), it seems to us that community-building is one way for many of the smaller boxes to fight back.

    Published on: October 9, 2002

    Three Zagara's Specialty & Natural Foods in the Philadelphia area have been sold to former employees of the company, according to reports in the local press.

    Zagara’s has been owned since 1999 by Genuardi’s, which bought the company known gourmet and natural foods, fresh-baked breads and exotic vegetables and meats. Genuardi’s was bought by Safeway in 2001, which now apparently has decided to divest the operation.

    For the moment, Safeway retains ownership of one Zagara’s in the area.

    Terms of the sales of the Zagara’s units were not disclosed.
    KC's View:
    We remember being told by the folks at Genuardi’s that there was something of a culture clash between their company and the even-smaller Zagara’s even before Safeway came into the picture; one can only imagined how that worsened once the bigger company got involved.

    The clear message coming from Philadelphia has been that Safeway has been forcing Genuardi’s into its way of doing things, not taking the best ideas from the smaller company that expanding them throughout its other divisions. And we’ve yet to read a story anywhere or hear from anyone who has said that this strategy has worked; on the other hand, all you ever hear is that Genuardi’s sales have suffered as a result.

    If this is true, then the Zagara’s business must have been really hurting. We wish the new owners good luck with their independent operations, and look forward to hearing how they develop their businesses.

    Published on: October 9, 2002

    CNet News reports that two privacy groups, Junkbusters and the Electronic Privacy Information Center (EPIC), have sent letters to the US Federal Trade Commission (FTC) as well as the consumer protection agencies of 14 states and the District of Columbia, complaining that Amazon.com isn’t doing enough the protect its customers’ privacy.

    The groups say that Amazon customers ought to have the right to view and delete their personal records.

    According to CNet, Amazon reserves the right to sell its database, as well as refuses to allow customers access to and the ability to adjust or delete their records.
    KC's View:
    Not only don’t we have a problem with Amazon maintaining detailed information about our buying purchases, we embrace the notion that it will use that knowledge to market to us more effectively.

    However, we would definitely have a problem if it started selling our records to other companies, or even providing them free of charge to anybody who happens to be interested. We suspect, though that this isn’t likely to happen, because it would undermine Amazon’s relationship with its committed user base.

    Published on: October 9, 2002

    Reuters reports that some 30 people who suffered from E. coli infections during last summer’s outbreak are seeking financial settlements with ConAgra Foods, which recalled close to 19 million pounds of contaminated ground beef last July.

    No lawsuits have been filed, and the company reportedly is hoping to head off the issue before it gets to the courts.
    KC's View:

    Published on: October 9, 2002

    Consumer products manufacturers lost 9.9 percent of their total annual sales due to invoice deductions in 2001, according an Invoice Accuracy study released by the Grocery Manufacturers of America (GMA). The study found that 82 percent of the deductions were resolved in the retailer’s favor, 14 percent were collected from the retailer and four percent were written off by the manufacturer.

    Survey respondents said the complexity of pricing, promotions and deal structures, poor internal and external communications and a lack of information synchronization were the biggest obstacles to achieving invoice accuracy. Invoice accuracy is defined as when a customer’s purchase order completely matches the manufacturer’s invoice.

    Promotions, billbacks and pricing errors are the primary causes of invoice deductions, cited 65 percent of the time by study participants, while 17 percent of deductions were reportedly caused by a combination of shortages or damages in products, coupons and penalties. However, not all deductions are triggered by errors – 64 percent of participating manufacturers said their companies use authorized invoice deductions as a preferred method of payment to their retail customer.

    Other study findings include:

    • Fifty-six percent of respondents said they measure invoice accuracy, which is consistent with the results of the 2000 GMA Invoice Accuracy Survey.

    • Sixty-four percent report measuring purchase order accuracy on the front-end, when the invoice is received by the manufacturer, and 57 percent report measuring invoice accuracy on the backend as the invoice is sent to the customer.

    • Respondents said that upgrading their information systems and increasing the use of electronic data interchange communications would most improve invoice accuracy in their companies.

    The study, conducted by Prime Consulting Group, inc. for the Grocery Manufacturers of America, collected data from 25 consumer products manufacturers and focused on 10 “best of breed” companies that ranked highest in efficient invoice accuracy practices.
    KC's View:

    Published on: October 9, 2002


      Fleming Cos. named Jim Thatcher to be President, Fleming IGA, in charge of supporting more than 600 IGA retail locations supplied by the company. Most recently, Thatcher was President, Southern Operations for Fleming Retail. He joined Fleming in 1997 as President for the company's Utah Food 4 Less stores. Thatcher previously served as Vice President, Operations for Kash-N-Karry, a subsidiary of Food Lion, and spent 21 years with Albertson's.

    • 7-Eleven, Inc. announced the appointment of Russ Klein as managing director of marketing and Robin Michel as managing director of merchandising. Jay Giesen has been named managing director of Vcom, the company’s “advanced function ATM” initiative.

    KC's View:

    Published on: October 9, 2002


    • CVS Corp. (CVS) , the No. 2 U.S. pharmacy chain, said that total sales in the third quarter ended Sept. 28 increased 8.6 percent, to $5.88 billion, from $5.41 billion a year earlier. Same-store sales increased 8.3 percent in the five-weeks ended Sept. 28, compared with a 7.9 percent rise CVS reported for its August same-store sales.


    • 99 Cents Only Stores reported total sales of $172.1 million for the third quarter ended September 30, 2002, an increase of $28.1 million or 19.5 percent over sales of $144.0 million during the third quarter of 2001. Total retail sales for the first nine months of the year were $465.5 million, an increase of 28.1 percent over 2001. Total sales for the nine months ended September 30, 2002 were $503.1 million, up $97.7 million over last year or an increase of 24.1 percent.


    • Rite Aid Corp., the No. 3 U.S. drugstore chain, reported that September same-store sales increased 8.7 percent in September from a year earlier. Total sales in the four weeks ended Sept. 28 rose 6.1 percent, to $1.18 billion from $1.12 billion a year earlier. Pharmacy same-store sales increased 11.3 percent, while general merchandise same-store sales increased 4.4 percent.


    • PepsiCo Inc. reported a 55 percent jump in profit for its fiscal third quarter. The food and beverage company reported net income of $969 million, or 54 cents a share, for the quarter ended Sept. 7, up from $627 million, or 34 cents a share, a year earlier. Sales for the quarter grew 6.6 percent to $6.34 billion from $5.98 billion a year earlier.


    • Marks & Spencer Group PLC reported total sales growth of 11.1 percent or 10.0% same store sales increases for the 12 weeks ended Sept 28. General merchandise sales were up 13.9 percent, and food sales were up 7.5 percent.

    KC's View:

    Published on: October 9, 2002


    • Associated British Foods Plc will buy Novartis AG's food and beverage business for the equivalent of $267.2 million (US). The acquisition includes the Ovaltine brand, which will see itself now brought into the same ABF division that sells Twinings teas.

    KC's View:

    Published on: October 9, 2002

    MNB, by its very nature, often is written on the fly; lately, more than ever, it’s been written in hotel rooms, on airplanes, in airport lounges, and at odd, early morning hours. (For example, as we type these words, it is 2:37 a.m. Pacific Time...we’re giving a speech in Phoenix to a sales organization meeting later this morning.)

    Sometimes, unfortunately, this means that the Content Guy is surviving on too much caffeine (we’re on our third cup already this a.m.) and can make mistakes that suggest his typing fingers are moving faster than his brain.

    This happened yesterday. Twice.

    • In a story about the NACS convention, we related what we thought was a humorous and absolutely true anecdote about being propositioned in the parking lot of the Orlando convention center, and suggested some surprise that it happened in the home of Disney, and had never happened to us in what we called “seedier” cities such as Chicago or Las Vegas.

      Well, we took some good natured ribbing about our characterization of Chicago from residents of that area, so we think it is important to say that we love Chicago. It is one of our favorite cities, and calling it “seedy” was an unfortunate and inaccurate characterization.

      (Interestingly, nobody wrote in to complain about how we described Vegas…)

      We also got teased a bit about our lack of knowledge of the Orlando exotic entertainment scene. Apparently, this is a good deal more common than we realized. Go figure.


    • The other comment that we got grief about was our statement that, despite all the growth being experienced by Kohl’s department stores, we found them to be “useless.”

      We got several comments about this one, including our favorite email of the day from MNB user Richard Sokolnicki:

      If you use the word ‘useless’ to describe Kohls, does that make
      MorningNewsBeat ‘elitist?’


      Maybe. (We like to think of MNB as being for elitists -- elitist thinkers, that is.)

      The point we were trying to make, and apparently stumbling over, was that while Kohl’s obviously has broad appeal, we find the product mix to be both puzzling and unappealing. The men’s clothing and shoe selections don’t grab us, and there are better prizes on some of the cookware down the street at Bed Bath & Beyond. And Mrs. Content Guy isn’t crazy about the kids’ clothes, and has never shopper there for herself.

      But that’s just us. As we noted yesterday, the parking lot at Kohl’s is always packed, so we concede that we may be out of touch with the mainstream on this issue.

      But elitist? We don’t think so…unless buying virtually all your clothes from LL Bean and Eddie Bauer makes you so.

      Still, maybe “useless” was the wrong adjective…

    KC's View:
    No excuses. But we thought an explanation was in order.

    Y’know what’s really great? MNB has the kind of passionate, engaged usership that will write in to give us grief when people disagree with what we say.

    Not to mention a usership that is patient with our occasional rants.

    Published on: October 9, 2002

    On the subject of our continuing coverage of the West Coast port lockout, we got the following email from one MNB user:

    “I hope that this lockout comes to an end, but I wonder what relationship there is between Bush getting stronger in his confidence that Congress et al will support his focus on going to war. If he was going to intervene, it could have been days and billions of dollars ago. He seems to be concerned as to how this strike is going to affect the entire country, but in the meantime it has further eroded an already weak economy on the West Coast that will take even longer to recover, for it's not just products not being infused into the economy, its jobs, and lost revenues of the cities where this is occurring.”

    And MNB user Don Dulle added:

    “This brings up an interesting point. I just wonder about the products on this big over-sea ships going to waste, could we, did we, or would we ever grow them ourselves here in the U.S. I think it would be great to feed ourselves and become less depended on those out of country producers. If these products were grown in California or somewhere else in the U.S., it would not matter if the docks were closed. This is from a guy who loves the good ole USA and would like to us take care of us.”




    Regarding the $28 billion punitive judgment that Philip Morris was hit with the other day, MNB user Jeff Philpot wrote:

    “What scares me is not that there are people in the jury box these days so willing to discount the attributes of personal responsibility and common sense, but that they can make a mockery of the courts by awarding $28 billion for ignorance. How can anyone claim they don't know the dangers of tobacco? Come on people, grow up and face the consequences for your actions.”



    In response to our story about McDonald’s thinking about putting staffers outside its stores to speed cars through the drive-through lane, one MNB user wrote:

    “The fact that McDonald's is thinking about putting staffers outside to take orders leads me to believe they have been paying more attention to it's competition. In the Chicagoland area there is a fast food chain called
    Portillo's that should be the blueprint for all. They've been around for about 40 years but instead of pushing quantity of stores, they have slowly expanded and appear to stress quality. Though the food is fantastic, it's their efficiency and atmosphere that make it the place to eat. They are always extremely busy and cars can easily back up in the drive through. However, they have been utilizing outside order takers for years now where different employees take the order, relay the order back inside, collect money and hand you your food. The lines move quickly, there are very few mistakes and the food is ready and hot. Inside is impressive as well. They have a large indoor seating area with different themes - from the 30's Prohibition era to the 50's to an old miner's western time - which makes eating inside more fun, especially for the kids. But it is even more amazing to see how efficiently they get the orders ready and how so many people can move seamlessly around the kitchen area. Portillos has obviously taken its time to get it right and seems to have its focus on expanding slowly and responsibly rather than open 100 chains a year. So it is no surprise to me that Mickey D's is contemplating outdoor staff - I'm willing to bet that quite a few McDonald's execs have been eating lunch at Portillo's lately and they may have some other ideas forthcoming.”




    And, in response to our stories about this week’s National Association of Convenience Stores (NACS) show, MNB user Bill Duncan wrote:

    “Used to work with NACS back in a much simpler era. Used to enjoy the conventions. I think C-stores, more than any other business, personify the American Dream...or at least used to, from the entrepreneurs who built the chains on their ambition, guts and cleverness, the store managers and area supervisors that work tirelessly and move up the ranks quickly (if they are any good), the many immigrant and minimum wage employees who get their start in c-stores, and the great emphasis on new ideas and innovations that powers the better c-store chains. Used to be a whole lot easier to be convenient. Now I think it's easier to be inconvenient. Our standards are a lot different today than 20 years ago. But as usual, there is an abundance of great ideas and an equal lack of nourishing food at the show.”




    Finally, there was the inevitable email that came in about the Giants-Braves game the other night, this one from MNB user Scott Johnson:

    “As one who was there last night as the Braves painfully fell to the Giants here in Atlanta it was, of course, a disappointment to see the Braves be a Bridesmaid once again. But as a lover of the game, I think it is wonderful that the mighty and powerful (Braves, Yanks & defending champs D’backs) have fallen and are out due to the heart shown by the teams less likely to be at the dance. It’s good for baseball.”
    KC's View:

    Published on: October 9, 2002

    In the first game of the American League Championship Series, the Minnesota Twins defeated the Anaheim Angels 2-1.
    KC's View: