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    Published on: October 28, 2002

    Stew Leonard’s, the “world’s largest dairy store” that has three stores and generates some $300 million a year in sales, is in negotiations for property that would allow it to open a fourth store on Long Island, New York, in early 2004.

    In advance of the new store, there is currently a Stew Leonard’s Wine Shop operating in Farmingdale, NY,, near the probable site of the soon-to-be-built unit.

    For legal reasons, the wine shop in Farmingdale is not actually owned by the retailing entity, but rather by Stew Leonard, Jr. The company’s wine shop adjacent to its Yonkers, NY, store is owned by Beth Leonard Hollis, daughter of the company founder and sister to Stew Jr. as explained by Newsday, “the Connecticut entrepreneur has skirted state laws barring chain ownership of liquor stores by taking personal ownership of the store, which has the corporate name Vineyards of Farmingdale LLC.” A company spokesman said that the Farmingdale store has a separate buying operation from the other wine shops in the chain.

    In addition to Yonkers, the company operates retailing stores in Danbury, Connecticut, and Norwalk, Connecticut, the original location. Unlike most supermarkets, Stew Leonard’s only carries about 1,000 SKUs, many of them perishables and private label, and features a directed traffic flow that is heavy on entertainment values.

    This year, Stew Leonard’s ranked # 22 on Fortune magazine’s list of the top 100 places to work in the US.
    KC's View:
    Legal technicalities aside, opening up a wine shop to raise the flag for the company well in advance of its store opening in Farmingdale makes a lot of sense. If Stew Leonard’s runs true to form, it’ll also open up some sort of garden center there sometime next summer, maybe sell Christmas trees during the 2003 holiday season, and get that community and nearby consumers whipped into a total frenzy for the 2004 opening.

    This retailer doesn’t play defense. It’s all offense…and in this market, that’s the only game in town.

    The other benefit will accrue to local wine drinkers, who will get the benefits of a first class liquor operation.

    Published on: October 28, 2002

    Interesting story in the Minneapolis Star Tribune over the weekend about Kowalski’s, the St. Paul-based upscale independent retailer, has expanded its fleet with five Minneapolis units that it acquired earlier this year.

    In each of these stores, Kowalski’s is pursuing its traditional approach to retailing -- focusing on perishables, customer service and quality, and not trying to compete with the price-oriented formats that tend to dominate the landscape.
    KC's View:
    The Star Tribune reports, quite correctly, that it is the stores that are neither upscale nor low-priced that are really getting squeezed these days…though it remains difficult even for the good upscale operators to make it

    We’ve hade a chance to visit with the folks at Kowalski’s a couple of years ago, and learned that this is a company that thrives on breaking the mold, being different – and then working to develop an economic structure that will support both. It’s also a company that works assiduously to create solutions for shoppers by offering them an environment of ideas.

    Interesting company, interesting approach.

    Published on: October 28, 2002

    Reuters reports that Elsa Murano, under secretary for food safety for the US Department of Agriculture (USDA), has said that consumers should be careful about consuming organic foods.

    "We must remember that bacteria and parasites are also all-natural," she said at a symposium for researchers and government officials. "Foods that have fewer or no preservatives can pose a challenge to consumers if they don't know what all-natural implies and how these foods should be handled and prepared."

    Among her other statements, according to Reuters:

    "As a microbiologist, I know that preservatives are used in foods for a reason ... to preserve food against the growth of microorganisms," she said. "Perhaps there's not the evidence to show that one (method of growing food) is safer than the other .... When you don't have those preservatives, you have to be aware of the fact that that's going to cost you something. That's what I think is the challenge for the food industry, especially those folks who produce organic foods and all-natural foods and so forth, to make sure they produce them and process them in such a way that it will not reduce the safety of those products.”

    Murano’s comments came as the USDA has mandated new labels that more clearly define what is organic and what is not.
    KC's View:
    This goes into the “you just can’t win” files. But Murano makes a good point, and one that retailers and manufacturers need to be cognizant of.

    Published on: October 28, 2002

    Did you know…

    • That rumors continue to fly in the UK that a bid is about to be made for fourth-ranked supermarket chain Safeway Plc? Asda is at the center of the speculation, but no bids have been made as of this posting.

    • That Target Corp. will spend between $3.3 billion and $3.5 billion to open 94 new stores in 2003, including 32 superstores?

    • That Royal Ahold plans to integrate its operations in Central Europe and create a new operation, Ahold Central Europe? The new organization will be responsible for more than 400 Albert Heijn supermarkets and Hypernova hypermarkets in Central Europe with combined sales that are the equivalent of about $2.6 billion (US). This is part of Ahold’s move to closely examine its core businesses for optimal efficiencies.

    • That the US Federal Trade Commission (FTC) is continuing to study whether Nestle should be allowed to acquire 67 percent of Dreyer’s Grand Ice Cream for $2.4 billion? The concern, according to USAToday, is that the purchase will give Nestle too much power in the super premium ice cream business. Possibly at issue: Dreyer's deal with Unilever to distribute Ben & Jerry's nationally.

    • That Grocery Gateway, which just last week announced that it signed a deal in which it will use Sobey’s as its grocery supplier, is negotiating with Home Depot Canada to carry its home improvement products? The deal will help the e-grocery company expand its product offering, as well as giving Home Depot exposure to the grocery company’s largely female customer base.

    And the beat goes on…
    KC's View:

    Published on: October 28, 2002

    The Associated Press reports that Wendy’s is investing $12 million in Pasta Pomodoro, a fast-casual chain with 24 restaurants, mostly in Northern California. The company’s goal is to double or triple the size of the chain by 2005.

    This year, Wendy’s already has invested up to $10 million for a 45 percent stake in Cafe Express, a Houston-based restaurant that offers upscale meals in a fast-food format. And it bought California-based Baja Fresh Mexican Grill.
    KC's View:
    The question in the fast food business these days doesn’t seem to be who can serve the fast food the fastest, but who can diversify the fastest, creating or acquiring new banners and new approaches.

    One has to wonder if this trend will extend to other kinds of food retailing. We have to believe that it will…and that one of the more natural extensions or combinations will be with mainstream supermarket companies moving into the convenience store business.

    Published on: October 28, 2002

    Lebensmittel Zeitung reports that Belgium-based Delhaize plans to enter the German market next year, initially with two stores – a supermarket and a c-store.

    If the openings are successful, Delhaize reportedly will expand its German presence.
    KC's View:

    Published on: October 28, 2002

    Reuters reports that the University of Michigan's October consumer sentiment index fell to 80.6 from 86.1 in September.

    While consumer spending, which drives about two-thirds of the U.S. economy, has been healthy, analysts are concerned that because consumer sentiment has fallen for five straight months, consumer spending could go into a tailspin right before the holiday season.
    KC's View:

    Published on: October 28, 2002

    Phil Lempert has just returned from the International Zesty Food Convention, and he appears on NBC’s “Today” show tomorrow morning to share with Katie Couric and Matt Lauer the hottest trends in spicy food.
    KC's View:

    Published on: October 28, 2002

    While this story doesn’t have anything specifically to do retailing, it does illustrate how businesses are tailoring their offerings -- or even creating new products -- to appeal to a younger demographic.

    This week, the Chicago Tribune will launch RedEye, a daily, 25-cent tabloid newspaper with content tailored to 18-24 year old residents of the Windy City. If it works, the Tribune Co. will expand the concept to 11 other cities where it has traditional newspapers.

    The Tribune is making the move to compete more effectively with the ,i>Chicago Sun-Times, which has a younger audience and yet is getting ready to bring out its own entry in the war for younger readers.

    The goal is to attract young people who don’t read newspapers, but who may find appeal in a newspaper geared to their interests and speaking directly to their mindset.
    KC's View:
    We bring this up because we think that especially in food retailing, the notion of creating stores that appeal to different age demographics is a largely untested strategy, Certainly, it is more expensive to build a store for young people than it is to put out a tabloid newspaper for them…but still, we believe that this is an opportunity that needs to be tested.

    Think about how many young people for whom the average supermarket must be completely irrelevant or, at the very least, an anachronism. There are exceptions, of course, but most retailers don’t seem to take that demographic group very seriously.

    Published on: October 28, 2002

    UK retailer J. Sainsbury and NTL, a British cable company, have launched a new joint venture that offers consumers to purchase food using an interactive television system, and then have them delivered to the home.

    The service makes 15,000 SKUs available to shoppers.
    KC's View:

    Published on: October 28, 2002

    In addition to a US Federal Trade Commission (FTC) probe into whether Wal-Mart’s proposed acquisition of the Amigo supermarket chain in Puerto Rico will create competitive issues, a group of food retailers there filed a lawsuit to block the purchase by Wal-Mart. The retailers argue that by buying Amigo, Wal-Mart will have a negative effect on both consumers and competition.
    KC's View:

    Published on: October 28, 2002

    • Barnes & reported that for the three-month period ended Sept. 30, its losses were $17.5 million, compared to a loss of $38.3 million in the year-ago period. The company had third quarter revenue of $102.58 million, compared with $96.84 million a year ago.

    KC's View:

    Published on: October 28, 2002

    Last week, we reported that Wal-Mart has been stopped (at least temporarily) from building superstores in a couple of California communities that have legislated against stores of a certain size. This piece generated some email.

    One MNB user wrote:

    “I would like to hear from someone well versed in the legal mumbo-jumbo of ‘land-use.’ Primarily as it pertains to what a city, county, what-have-you, can do to restrict one's building on a piece of property they own.

    “I can understand the need and desirability to puts limits on how close you can build to the neighboring structure, or how close the street, but I fail to see the legal justification to be able to say ‘You can't put over 20,000 items for sale in your business.’

    “I can see where there may be a need to rule that you must have "X" number of parking space per square foot of building area but to say, point blank, ‘You can't build a building over 155,000 square feet’ when you might have a land area of three to four times that much to build on. Doesn't make sense!

    “And how can there be any connection between either limitation as to your ability to build a structure for your business.

    “Looking at my handy "Wal-Mart Road Atlas" I find Inglewood in the flight path into LA International and close-by is the Hollywood Race Track and Great Western Forum.

    “Hmmm..... Maybe a Wal-Mart Supercenter might be an improvement to the area.”

    Coincidentally, we happened to live in Inglewood for a few months while attending Loyola Marymount University in Los Angeles. It was a quarter-century ago, though, we things have changed there…it’s grown up. A lot.

    Still, our apartment building was right in the path of the Los Angeles international Airport runways…we used to kid that the planes would tip their wheels against the roof of our building to slow themselves down when landing.

    It’d be a shame, however, if only the denizens of Beverly Hills were able to legislate against stores of a certain size, and not citizens of Inglewood. We’re not particularly in favor of protectionism, but it at least ought to be equally available to everyone.

    Another MNB user wrote:

    “To take a different perspective....

    “Imagine if Starbucks could have no more than 6 tables, or Krispy Kreme 3 types of donuts....”

    This user has just described our idea of hell…

    We posted a story last week about deciding to take manufacturer coupons. This report prompted an email from MNB user Mike Spindler, president of

    “Most online grocery services take coupons. Almost all are good on your
    ‘next trip,’ as will be the case at Most of our clients do it.”

    Mike also responded to a couple of pieces we ran about retailers figuring out ways to help consumers during the holiday season:

    “On your series entitled "what can we do to help you through the holidays"..... It’s a great time of year to have an online shopping with either pickup or delivery service.

    “The customer can order ahead and either pick up or have it delivered, eliminating the increasing hassle of fighting through crowed aisles, battered shelves and longer than normal holiday lines with fuller than normal carts.

    “The customers who do not order ahead and either pick up or have their groceries delivered, have fewer people in line (cause the smart ones all did it online).

    “The grocer can get through the aisles more easily to restock, has fewer irate customers in line and might just save some labor cost surcharges for nights, weekends and holiday pay.

    “The grocer has a service very few other grocer's in their area are offering and its a great opportunity to switch the consumer ....permanently.

    “There are some tricky issues that have to be dealt with online at the holidays, but dealing with them is generally well worth it. Clearly this is a commercial for MWG, but it is also right on the money.”

    Yeah, it is a bit of a commercial for MyWebGrocer, but we’re letting it through for a couple of reasons. First of all, it makes sense. Second, we believe in full disclosure: MyWebGrocer happens to be a valued sponsor of MNB, helping to make it possible for you to get this service every morning for free, That doesn’t get them special editorial treatment…but it doesn’t deny them the right to express their opinion, either. Third, we happen to believe in their message and their service…and think if you’re interested in e-grocery, their site is worth checking out.
    KC's View:

    Published on: October 28, 2002

    In one of the most exciting World Series in years, games six and seven lived up to the previous five. In game six, the Anaheim Angels came back to defeat the San Francisco Giants 6-5, and then went on to beat the Giants 4-1 in the seventh and deciding game.

    Both teams proved one thing for sure. Those California guys sure know how to play baseball.

    In NFL action:

    KANSAS CITY 20 Oakland 10
    MINNESOTA 25 Chicago 7
    Atlanta 37 NEW ORLEANS 35
    Cleveland 24 NY JETS 21
    Pittsburgh 31 BALTIMORE 18
    BUFFALO 24 Detroit 17
    Tampa Bay 12 CAROLINA 9
    Tennessee 30 CINCINNATI 24
    Seattle 17 DALLAS 14
    SAN FRANCISCO 38 Arizona 28
    Denver 24 NEW ENGLAND 16
    Houston 21 JACKSONVILLE 19
    WASHINGTON 26 Indianapolis 21
    KC's View:
    It’s about three months until pitchers and catchers report…

    We can’t wait.