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    Published on: October 11, 2002

    Executives from the Food Marketing Institute (FMI), ACNielsen and The Lempert Report today announced the launch of Facts, Figures & The Future, a monthly e-publication that provides retailers with the most comprehensive review and analysis of the latest consumer trends, its impact on the retail environment and insightful future thinking.

    Each full-color e-publication will contain approximately 10 reports that include easy-to understand charts, explaining the impact of the most important consumer trends to the supermarket.

    “Drawing from the depth and breath of our consumer information database and the integrated capabilities of the entire VNU organization, ACNielsen analysts will share both rich content and insights,” says Tim Callahan, president, ACNielsen US. “Facts Figures & The Future will provide retailers with a 360° view of the consumer.”

    Consumer Trends Expert Phil Lempert will serve as editor of Facts, Figures & The Future.

    ACNielsen will supply current data and analysis from their resources including Homescan and Consumer Pre*View Information. These services monitor consumer behavior and attitudes and analyzes its impact on current and future purchasing of non-durable goods such as groceries and health & beauty items.

    The first Facts, Figures & The Future issue includes these facts, figures and their impact on future trends:

    •Hispanic Marketing: How Hispanic Shoppers [both those who are acculturated and those not yet acculturated] differ in their behavior from White shoppers;
    •Dollar Stores: The top 10 Dollar Store Categories and where supermarkets are losing sales;
    •Where Shoppers Are Shopping: A monthly look at the breakdown of shopping trip frequency and dollars spent by retail channel;
    •Alternative Store Shopping: Results of the latest consumer survey detailing the attributes of supermarkets vs. warehouse clubs;
    •Organic Shoppers: Who they are, and who they will be after the October 21st Federal Guidelines are instituted;
    •Whole Health Merchandising: Store within a Store vs. Integrated Merchandising – which is more effective in sales by category;
    •New Product Trends.

    Facts, Figures & The Future will not contain any advertisements and is sent via e-mail the second Monday of every month. FMI members receive the publication for free, while others can subscribe on the FMI Web site, thru the FMI Daily Lead, ACNielsen Web site and on SupermarketGuru.com.
    KC's View:
    You can also access Facts, Figures & The Future by clicking on the button on the right hand side of the home page…which we think you ought to do, because there’s no substitute for understanding the consumer.

    We like to think of this as a connect-the-dots approach to marketing…not thinking or acting in a vacuum. And we know from our work with Phil Lempert and The Lempert Report that nobody does it better.

    Published on: October 11, 2002

    In the third part of this series of articles by the Hartman Group’s Michelle Barry, she writes about the differences between the core, mid-level and casual consumers of whole health products and their shopping experiences in the stores that cater to their needs.

    By understanding what they are looking for, not just in products but in the stores where they shop, retailers can begin to tailor their offering for specific demographics and specific needs.
    KC's View:
    For more on this topic, go to:

    http://www.hartman-group.com/HB/new.html

    …or simply click on the HartBeat logo on the right hand side of the page.

    Published on: October 11, 2002

    The hot rumor this morning is that Royal Ahold CEO Cees van der Hoeven plans to resign from his position.

    However, Dow Jones reports that the retailer has denied that there is any truth to the rumors, describing them as “absolute nonsense.”
    KC's View:
    We’d be shocked if this were true…but the markets were all a twitter with these rumors this morning.

    Published on: October 11, 2002

    The rumor that Safeway Plc in the UK was in discussions with Wal-Mart to be acquired by the company and integrated into its Asda Group once again gained momentum in European markets this morning.

    While Asda isn’t commenting, Reuters reported that a spokesman for Safeway said, “We are not in talks with anybody, we’ve had no approaches and our aim is to remain independent.”
    KC's View:
    Now this rumor is one we can see happening.

    But we have a better idea. Let’s combine the two rumors and start our own:

    Safeway (UK) To Be Acquired By Royal Ahold!

    Actually, that one may make a sort of sense…wonder if they’ve ever considered it?

    Published on: October 11, 2002

    The Idaho Statesman reports that in Boise, Albertsons’ home market, the grocery chain is feeling the pressure from Wal-Mart and other competitors that has reduced its market share from 65 percent to about 37 percent.

    So far, Albertsons has not faced off with Wal-Mart in as many markets as Kroger has. But now that a head-on battle seems to be coming, both in Boise and elsewhere, the retailer is sketching out its strategy for the coming skirmishes.

    One thing it won’t do, according to company spokesmen, is get into a price war. Albertsons believes that its shoppers patronize it for the services it offers, not the prices it charges.

    Albertsons is looking to improve its bottom line by auctioning off 56 properties in 19 states this month and next.

    The company also is introducing a loyalty marketing card that will allow it to track customer behavior, believing that this will give it a leg up on the competition.
    KC's View:
    It is tough not to get into a price battle with Wal-Mart, but we think that it is the right way to go. Kroger’s declaration some months ago that it would cut costs in order to match Wal-Mart on prices was met with skepticism, even some derision, within the industry. Albertsons seems to be intent on not making the same mistake.

    The thing is, to make this approach work you have to have services to offer.

    Published on: October 11, 2002

    Winn-Dixie president and CEO Al Rowland told analysts that the company plans to build an upscale store in the Jacksonville, Fla., suburb of Ponte Vedra. Rowland said that the company was intrigued by the opportunities that an upscale format might allow it to take advantage of, and that he did not know how many such units Winn-Dixie might eventually operate.

    He also noted that an upscale format would allow the company to learn some things that it could apply to its mainstream units.
    KC's View:
    This sounds like Winn-Dixie is looking to develop a strategy similar to what HEB has done with its County Market stores…develop a more up-market approach that can serve as a laboratory for strategies and concepts.

    Which is, in our mind, a very good idea.

    Retailers that operate a multitude of formats and appeal to different consumers with different kinds of stores will in the long run have a competitive advantage.

    Published on: October 11, 2002

    Reuters reports that Mark Hansen, chairman and CEO of beleaguered Fleming Cos., has sent a letter to the company’s employees saying that “the current status of our business is strong and, therefore, our depressed stock price in is not reflecting our strengths.”

    Fleming is selling its retailing units, is facing investor lawsuits accusing it of misleading the markets about the health of its retail division, and has seen its stock price tumble in recent months.

    Referring to Fleming’s connection to Kmart, Hansen wrote, “Simply put, we are not dependent upon any single channel of distribution, no any single customer, customer category or format for our long-term success. The stock will take care of itself, and investors will be rewarded for their faith and patience.”
    KC's View:

    Published on: October 11, 2002

    The McKinsey Quarterly, in a Forbes.com profile of Tesco Plc and an interview with the company’s deputy chairman, David Reid, provides analysis of the qualities that have made the retailer successful in its e-commerce operations, and projections about where it may be going:

    • In general, the company is characterized by “excellent management and an obsession with operational efficiency and productivity gains, which the company uses to keep prices low or to improve service rather than to increase its operating margins.”


    • In e-commerce, the company got in early and started small, which allowed it to take the time and make the effort to get the systems and processes right.


    • The company continues to have faith in its store-pick model, though Reid concedes that as volume builds, it is inevitable that the comp[any eventually will move to a warehouse pick system.


    The magazine says notes that the company hopes to communicate its philosophy to Safeway as they work together on the Safeway.com e-commerce site.
    KC's View:
    We’ve spoken to a couple of people who have expressed skepticism about the Tesco-Safeway connection, saying that they believe that what happened to Genuardi’s when Safeway bought it could well happen to their joint online venture.

    We’re not sure about that. The Tesco-Safeway business is collaboration, not an acquisition, and we suspect that Tesco wouldn’t waste its time if it felt that its contributions weren’t being respected, or its money wasted.

    Published on: October 11, 2002

    Starbucks has signed a deal with Target Stores that will have its ubiquitous coffee shops in every new Target unit that the company opens, usually between 100 and 120 a year.

    In addition, Starbucks shops will be put into many of the company’s existing stores as they are remodeled or relocated, which would account for close to 100 or more locations a year.

    While financial terms were not disclosed, the deal reportedly has Target operating the units, and Starbucks getting a percentage of sales.
    KC's View:
    Alliances may be the key to retail differentiation in the modern competitive cauldron. And not just in the food industry…

    Published on: October 11, 2002

    The specialty consumer electronics retailer The Sharper Image has signed a deal that will have about 20 of its products sold from dedicated kiosks in Circuit City stores nationwide.
    KC's View:
    Okay, this isn’t a food story. But it did remind us of the story from a couple of weeks ago when it was announced that Dunkin’ Donuts was going to start putting stores into Home Depot units.

    The Sharper Image-Circuit City relationship actually seems a lot more obvious. But it illustrates how creative and strategic alliances may be the way businesses look to gain footholds or expand their visibility (and profitability).

    Published on: October 11, 2002

    Reuters reports that in Japan, where McDonald’s improved a dismal situation by instituting an aggressive price-cutting campaign, the burger chain’s sales have once again plummeted.

    Sales were off because of concerns about mad cow disease, though a price cut seemed to work some magic -- more than 121 million people shopped at McDonald’s during August.

    But now, concerns about mad cow seem to have once again taken hold, with same store sales in September down more then 11 percent.
    KC's View:
    Question of the day. If you were worried about the safety of a hamburger, how low would the price have to be to get you to ignore that inner voice saying, “Don’t eat it”?

    Published on: October 11, 2002


    • BJ's Wholesale Club Inc. reported that same-store sales were up just 0.5 percent for September, and that it will close stores in both Ohio and Florida that have proven to be unprofitable. The company also has cut its earnings outlook for the remainder of the year because of what it called economic uncertainty and waning customer confidence.


    • Sainsbury reported that its 476 UK supermarkets had sales growth of 2.4 percent for the 16 weeks ending on October 12. Same-store sales were up 2.7 percent, which did reflect a slowdown from the previous quarter.

    KC's View:

    Published on: October 11, 2002

    Just in case you missed it (and this is the kind of news people will be talking about around the coffee pot), former U.S. President Jimmy Carter has won the Nobel Peace Prize for his peace-mediation efforts and promotion of human rights.
    KC's View:

    Published on: October 11, 2002

    In response to yesterday’s story about the US Food and Drug Administration (FDA) warning Oregon officials that if the state’s voters pass a ballot measure requiring that products containing genetically modified organisms (GMOs) be labeled as such, it would “impermissibly interfere with manufacturers’ ability to market their products on a nationwide basis.”

    One MNB user from the Pacific Northwest wrote:

    “How dare the FDA even attempt to persuade Oregon's governor to take any sort of stand or make any sorts of statements against what the people of Oregon desire...is our government not "of the people, by the people and for the people", or was President Lincoln just blowin' smoke...and too bad for those manufacturers involved - bunch of crybabies – they shouldn't be making frankenfoods in the first place!”

    We agree that the FDA may have miscalculated in sending such a letter; it may be just the move that pushes Oregon voters in the direction of passing the ballot measure.

    But the problem, we think, goes back to the “frankenfoods” reference. You can be pro-labeling without thinking that GMOs are horrible for you. But the FDA and manufacturers are justifiably concerned with the “frankenfoods” designation, which doesn’t seem to have any justification in the science we’ve seen. No wonder they’re scared of labeling…

    The level of discourse has to be raised, and the result might actually be public policy that makes sense.


    On the same subject, another MNB user wrote:

    “It seems to me that the solution to this GMO labeling issue is simple. Manufacturers who want to promote and market their product as "GMO Free" can print that on their label, kind of like "Sugar Free" or "Cholesterol Free." Then it can be assumed that a product without that on the label does contain ingredients that have been genetically modified. This is NOT a food safety issue that should require government mandates.”

    The problem with this argument, as we understand it, is that the manufacturers who make non-GMO products say (with some justification) that their products always have been GMO-free, and that they haven’t changed anything; therefore, why should they change their labels? (Unlike fat-free products, which have been specifically engineered and changed to earn that designation.)


    And MNB user Gene Grabowski, vice president of communications and marketing for the Grocery Manufacturers of America (GMA), wrote:

    “I always respect your opinions and often agree with them. But your call on biotech labeling of foods couldn't be more wrong. The FDA has examined this issue three times in the last decade -- seeking input from the virulent critics of the technology -- and each time concluded that no scientific evidence exists to warrant mandatory labeling of biotech foods. We label foods based on science in this country, not political science.

    “Furthermore, what would happen if all the food that may contain biotech ingredients were labeled? Because nearly 80 percent of foods now may contain biotech, nearly everything would be labeled that it "may" contain biotech. How is that useful to the consumer? She still won't have any definitive answers. Plus, several studies show that
    labeling for biotech would cost families a minimum of $140 a year in their grocery bills (for new labels, tracing, testing, etc.) -- for absolutely no value.

    “Kevin, you are wrong.”


    Maybe. But let’s be clear about our position…we’re not arguing with the science. We’d have no problem eating products with GMOs, nor with feeding our kids such products. But we think that the political reality is that consumers may demand such labels, and that manufacturers will be ill-served by fighting with the consumer on this issue.

    Gene’s line about “science” vs. “political science” is a good one; we wish we’d thought of it. But we’re not sure we’d be so dismissive of the “political” power of giving consumers what they want.




    Regarding our story about the improved fortunes of irradiation, now being referred to as “cold pasteurization,” a member of the MNB community wrote:

    “I'm sure Louis Pasteur is rolling in his grave! And it appears online dictionaries have already updated their definitions of the word ‘pasteurization’ (which is by origination and definition a HEAT and/or elevated temperature process) to include radiation with gamma rays (which of course where used back in the late 1880's when the ‘pasteurization’ process was invented by the famous French chemist. So if our government is going to simply change the meaning of words, then ‘truth’ and ‘reality’ also mean ‘whatever the U.S. government wants the American people to know and believe’ and the phrase ‘by definition’ means ‘according to the FDA.’”


    On the same subject, MNB user Norma Gilliam wrote:

    “Having been part of the meat industry for many years has led me to believe that the irradiation process would be brought into retail light eventually.

    With so much focus on food safety and food processing production (more productive workers and technology to produce more in a faster way), it was inevitable that this would happen. The major recalls of the past year have caused a lot of consumer skepticism. Then, if you look at all the crazy lawsuits people have filed, why wouldn't a retailer take the approach to offer irradiated meat products?

    “People overlook the fact that spices have been irradiated for years, and that our service men have eaten MRE in the field as well. They just have never connected these things. How many times a day does someone "nuke" food in their microwave? The biggest detriment has been the wording and term "irradiated food." This scares people because they know that you can die from irradiation poisoning.

    “The government taking the step to allow "other" terminology will help a lot. I believe that fear will be one of the driving forces to get seniors, small children and those with compromised immune systems to purchase irradiated meat products. Any more scares in the produce area will drive this market as well. I would hate to see the day when all our food was treated this way because people do not realize that irradiation will kill E. coli and salmonella, but it also kills off all the good bacteria as well. Even if food is irradiated, you still must practice good food safety or you can get sick. It's not only the processor that has to take responsibility, the consumer will have to as well.”





    On the educational front, we got an email from the wonderful Anne O’Broin, a member of the MNB community in Ireland who happens to be one of our favorite people in the world. She wrote regarding yesterday’s story about how shoppers at Wal-Mart’s Asda stores In the Cornwall section of the UK are now able to find signs in both English and Cornish, the local language that appears to be undergoing a revival.

    We wrote that Cornish is a member of the Celtic family of languages that includes Irish, Scots, Welsh and Breton.

    Anne was more specific and complete:

    “There are 7 Celtic languages – Irish, Breton, Welsh, Scottish, Manx, Galician, and Cornish.”

    Thanks.




    We speculated yesterday that Wal-Mart, being hit with a number of lawsuits charging it with widespread wage abuses, might end up facing Congressional investigations about its behavior.

    One MNB user disagreed:

    “Won't happen. They shop at Wal-Mart too and realize that what you read is slanted towards achieving a particular point-of-view.

    “Besides, as long as Wal-Mart has the strong "Good Citizen" image in the South, Mid-West and Southwest, who's there to believe all that Northern labor propaganda?”


    True…but we never would have believed that the Clinton Administration, which had an excellent relationship with the high tech community, would’ve gone after Microsoft.



    On the subject of legal judgments against big tobacco, MNB user Kate Baille wrote:

    “An interesting wrinkle in the ultimate culpability of the Tobacco companies was reported in the Globe and Mail this morning. An application by a non-smoking waitress with terminal lung cancer due to second-hand smoke to receive Worker's Compensation (a government insurance program for workers disabled on the job) has been approved.

    “Toronto already has extremely strict smoking by-laws. Publicly, smoking is only allowed in bars (not restaurants). In anticipation of many more claims in the wake of this one, the government of Ontario may tighten them even further. The fact that second-hand smoke has been identified as a disabling factor in the workplace (and in this case a killer) opens the gates to litigation against the Tobacco companies on much wider grounds.




    We made a comment yesterday about our kids only wanting to drink milk from Stew Leonard’s…to which one MNB user responded:

    “Your kids are probably right about the taste of their milk. There are two possible reasons for this.

    1. Kids taste buds are more sensitive to flavors. They are more likely to note subtle differences than us adults who have used and abused our taste buds for many years.

    2. Certain milk companies take different steps in the processing of their milk that makes a taste difference. Ask anyone who has tasted Mayfield milk, the best selling branded milk in the Southeast and a Dean Dairy division. They take an extra step in the processing of their milk; it's called an Arovac, that is basically a vacuum-type process that takes out any unusual tastes (ie: green onions from the pasture) that may be in the milk providing consistent great taste.

    “So, if your kids taste a difference in their milk, they could very well be right.”


    Go figure.




    On the subject of fast food that is healthier and better tasting, one of our recent stories mentioned the Panera Bread Co…which prompted a review from MNB user Bob McMath:

    “I have been hearing great things about that new group of fresh made sandwiches and bread, etc., and have been telling my wife that we should visit one. We spotted one the other day on the toll road coming back to Ann Arbor from the NPE-East in Washington. Although we didn't need gas, we pulled off and went in to the rest stop. We ordered a cup of French Onion Soup (covered with cheese) in a bread bowl. Also an Italian Sandwich on their what we used to call a "Torpedo roll." We intended to split the two between us.

    “It was late afternoon/early evening. Here is our impression!

    “The sandwich was on a relatively short piece of roll, when cut in half. The ends were getting stale, and both of us had the impression it was perhaps on a piece of roll that had not been made fresh that day, or not in that restaurant stop. We didn't note any baking, nor smell any baking as we passed by in the line. Perhaps it was there, but we saw no such activity. The sandwich contained two slices each of various types of deli meat, one slice of roast beef, one slice of cheese and one thin slide of tomato and one piece of lettuce. It was pasted on the bottom half of the roll with a dab of mayonnaise or sauce. Otherwise, completely dry. My wife took her half, and the crust on the roll we found so crispy that we found it a little hard on the soft mouth tissue, as well as flaking all over our table and laps. Jean finally just picked up her meat and contents and ate that, leaving at least 1/4 of her bread on the plate.

    “The bowl of onion soup we ordered was not on the tray when we came down the line to picked it up. So we called that to the attention of the person finishing up sandwiches and putting them out to be picked up. When the soup came, it was, to our surprise, in a shallow cardboard bowl. It seems the person from whom we ordered it didn't get the order right, but by then the line behind us was so long, we decided to take what we got. The cheese was a very small quantity of grated cheese on top, and the soup itself was salty indicating that the product had been boiling for quite some time and had boiled away part of the liquid during the long cooking/holding process.

    “Obviously we are not going to rush back to another one of the restaurants. But more amazing, I cannot possibly see what all the excitement about the baking/restaurant chain is all about? So this brings up what I would probably say would be the chains reaction. It was a lone poor example of the stores it is rushing to put up all over the place. And the fault would be with the "help" who work there who were not properly trained.

    “But that gets us back to a major problem of a great many stores and restaurants that are hiring young people to man their local operations. Even in some places like Wal-Mart! They are not properly trained, supervised and motivated. They frankly "don't give a damn" to quote Rhett Butler in Gone With the Wind. The people in our local Taco Bell near our office making the stuff in the back change nearly every week. The results of the orders we get as we visit it at least once a week vary with what the new guys put on the plate or in the salads -- some are fat and full, some are just plain skimpy on contents. Sometimes we have to ask the money taker to ask the kids to add something they left out on the salad or taco, or to give us the tomato salsa in the cup which comes separate with each taco salad. Fortunately I love Mexican food and the lunch there is relatively cheap.

    “But as many stores and restaurant chains seem to be doing -- they are rushing to build new outlets, without proper supervision, and we are bringing up a generation of kids and future workers who just don't have any pride in what they do, or the place in which they work.”
    KC's View:

    Published on: October 11, 2002

    In game two of the National League Championship Series, the San Francisco Giants defeated the St. Louis Cardinals 4-1, taking a 2-0 lead in the best-of-seven series.
    KC's View: