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    Published on: December 3, 2002

    In Monday Night Football action, the Oakland Raiders defeated the NY Jets 26-20.
    KC's View:

    Published on: December 3, 2002

    On Monday, we reported that the efforts by D’Agostino’s Supermarkets to acquire Kings Super Markets in New Jersey from Marks & Spencer Group for $160 million had collapsed, apparently because New York-based D’Agostino’s was unable to secure the financing it needed in tough capital markets. One member of the MNB community wrote:

    “It is probably the best thing that could have happened to D’Agostino’s, as it will save it from bankruptcy. I don't believe a New York operator can operate in Jersey and visa versa, and it was overpaying. A good price for Kings is $80-90 million, a fair price but overpaying just a little would be $100-110 million. Anything over that, and a company is grossly overpaying. The entire (Kings) chain makes about $15 million a year and over $6 million comes from one store, which is Short Hills and that store is going to be facing some new competition and is also in need of a remodel very badly. There is no return on investment for a buyer, as this company shows no value to the customer whatsoever. The real world is that Marks and Spenser overpaid and now it wants its money back and then some. If Kings were really worth something then Ahold would have bought it, as the price is not even lunch money for it…

    “As far as Gristedes, look for it to tie the thing up and beat them down to an under $100 million price tag and probably finance $150 million and put 50 mil in its pocket for administrative troubles.”


    Interesting analysis. We’ll see how it works out.



    We posted a story yesterday with highlights of an Associated Press interview with Albertsons CEO Larry Johnston, in which he suggested that while warehouse clubs and Wal-Marts are price-driven destination shopping experiences, his company has the advantage of location. MNB user Jude Sturman wrote in to suggest that there’s another way to look at this:

    “Interesting Johnston thinks "location" is the primary reason for shopping at Albertson's. Location should actually be viewed as a negative result from a store survey. It implies drivers like freshness, quality, customer service and price are not as appealing as driving distance.”

    So this means, in essence, that “location, location, location” is a poor substitute for “fresh, clean, friendly”? That actually makes sense…




    In response to yesterday’s story about Wal-Mart’s record day-after-Thanksgiving sales numbers, MNB user Dave Wiles writes:

    “OK, Wal-Mart made a number. The best day after Thanksgiving ever. Now that is a good thing. But (Don't you just love those buts!) now they have to do the same thing next year or that will be a DOWN YEAR.

    “I am glad I am not tagged with that number.

    “This year's success is next year’s base number.”





    We posted a dialogue yesterday between users talking about the high price of cereals and some of the other alternatives available…and MNB user Sherry Chard joins in:

    “I now buy grains in bulk and use them in cereals and cooking. Organic food usage is on the rise. I have an illness called "multiple chemical sensitivity"--something fairly new and also growing in alarming numbers worldwide. Organic foods are a huge part of my treatment. All of us need to learn to eat healthier and avoid all of the pesticides being used and additives that our government allows to be put in our food. It has to stop!”





    Yesterday, we posted a story about how Publix Super Markets reportedly is beginning to advertise its online shopping efforts in a number of online venues, using portals such as AOL and Yahoo! as well as sites such as Epicurious.com to generate traffic for its site. One report we read on this noted that Publix does not currently collect email addresses of its brick-and-mortar customers…which, if true, we simply don’t understand. That seems to us to be the lowest fruit on the tree for any retailer…that asking shoppers for their email addresses is easy to do, and that responding to those who give out their email addresses is a simple and effective way to communicate with shoppers.

    This comment generated a lengthy and thoughtful email from one member of the MNB community:

    “Why not collect e-mail addresses indeed? As I was reading this question my perusal of the Monday MNB was interrupted by the prompt telling me I have mail. It turned out to be a message from my favorite grocery store - Super Saver. And yes, boneless-skinless chicken breasts at $1.28 lb. does sound like we'll be enjoying yard bird for supper. If I was a Publix customer and they'd put that on sale, I'd be left out in the cold on that one.

    “My wife and I (without mentioning specific numbers), have been AARP members for more than a couple of years, and we're consistently surprised at the number of retailers who think we (and the rest of the folks our age) are somehow computer dead heads and skip by things like this, things that represent a (somewhat) personal touch and put useable information where it's most easily extracted. Here are some of the little things I see just in our family and close friends, things outfits like Publix need to notice:

    “Three generations of females who stay in close touch and share bargains when they find them, from clothes to food. And there's three generations of guys who do the same thing. For instance, when Harbor Freight e-advertised 6-inch digital calipers at $19.95, I e-mailed all the DIY guys in the family. What a bargain!

    “My wife and I have five kids, four through school and married, one more finishing a degree in engineering and sidestepping matrimony till the degree is finished. Aside from time on the telephone for daughters spread from Omaha, NE to Billings, MT, wife and daughters are forever sending e-mail messages, baby pictures, recipes, etc. Add our three sisters and their married kids and grandkids into the fray and you begin to see some numbers. Many of our close friends are in the same numbers game with family and friends. You send one of us a good deal and there's a chance it will soon pop up on everybody's computer.

    “This is especially true for us older customers. Open your eyes. You'll see us at about the same time, on the same day of the week. Most of us prefer to shop early, before the crowds. We tend to be loyal, we can afford what we want and we're twice as easy to get along with as any other group. And we have more time to share stories (good or bad) and bargains then any other group. Believe me, if you don't want our e-mail addresses - you should, and after a while we'll begin to wonder why you don't. Is it because you don't care as much as other retailers, or are those other guys just smarter?

    “It doesn't take a huge investment in technology to start connecting more closely with your customers. A PC, a little software, somebody who can type, a modem and VOILE!!! You're looking more like a good friend and less like ‘shopping with the dinosaurs.’”


    Pay attention…there’s a lot of wisdom in this email.




    Responding to yesterday’s piece about testimony about allegedly abusive labor practices by Wal-Mart, MNB user Glenn Cantor wrote:

    “What does it say about the American worker when Wal-Mart is taken to task for pressuring its employees to meet business goals? Why would any worker be satisfied producing anything less than their company's goals?”

    It’s called “unionization.” We think.




    Finally, the MNB community dialogue continues about the value of branding to retailers in general, and Martha Stewart’s brand value to Kmart specifically. MNB user Doug Gammage of Watt International writes:

    “Interesting comments by an un-named reader on Martha Stewart's brand value in the context of meaningful consumer brands.

    “Whether brands belong to manufacturers or retailers is of less significance to today's consumer so long as brand values are clearly defined and effectively communicated.

    “The departure of Philippe Stark and Todd Oldham from Target suggests that Target's brand is under redefinition or perhaps that those particular designers pushed Target beyond the elasticity of their brand.

    “If one looks at the top 10 retailers in terms of market value growth in the last decade (Wal-Mart, Home Depot, Safeway, Target, Walgreens, The Gap, Kohl's, Lowes, Kroger, and CVS)* one would observe that each had consistent expectations which were consistently (in the 90's at any rate) met.

    “The challenge, as always, is to define a unique position in the market place, communicate it, and then back it up. Sounds easy, doesn't it?”


    Sure.
    KC's View:

    Published on: December 3, 2002

    Joseph Ukrop, founder and chairman emeritus of Ukrop’s Supermarkets, has passed away. He founded the company in 1937; the retailer currently has 27 units in Virginia and an international reputation for marketing excellence.
    KC's View:
    Our condolences to the entire Ukrop family, which continues to be the class of the industry.

    Published on: December 3, 2002


    • Starbucks Corp. reported net revenue of $301 million in the four weeks ended Nov. 24, up 27 percent from $237 million a year earlier. Same-store sales were up 10 percent.

    KC's View:

    Published on: December 3, 2002

    The Wall Street Journal reports that Home Depot plans to install self-serve aisles in about half its 1,487 stores by the end of next year.

    The move follows a 17-store test that the company said was successful in speeding up the checkout experience.
    KC's View:
    You have to do everything else at Home Depot by yourself, why not check out?

    This is a store format that screams out for more human contact, not less…but instead, Home Depot makes the same mistake that so many supermarkets make, in our view -- taking the human equation out of the shopping experience.

    Published on: December 3, 2002

    The Detroit Free Press reports that a disgruntled group of Kmart shareholders group is suing PricewaterhouseCoopers, the company’s auditor, saying it ignored clear signals that the retailer was headed to bankruptcy even as it received millions of dollars in consulting fees.

    The group hopes to have its action declared a class action suit. Kmart is not commenting.
    KC's View:
    Unfortunately, in the age of Enron, nothing seems impossible…

    Published on: December 3, 2002

    A new study from Michigan State University suggests that people looking for jobs will find the going a little easier during the early part of 2003.

    The MSU survey revealed that more than half of almost 400 human resources officers said that they would begin hiring again in the first quarter of next year, and would continue doing so into the second and third quarters.

    However, the hiring won’t be across the board. Companies with fewer than 300 employees expect to boost their hiring by between four and 14 percent; companies with between 300 and 1,600 employees expect a three percent increase. At companies larger than 1,600 employees, the expectation is that there will be staffing cuts of as much as nine percent, as they continue to look for cost savings and increased efficiency.

    Retailing is seen as a prime hiring area.
    KC's View:
    While MNB has fewer than 300 employees -- way fewer -- this report should not be seen as a suggestion that anyone looking for a job should send us a resume.

    Not yet, anyway.

    Published on: December 3, 2002

    The Washington Post reports a new study suggests that immigrants to the United States are an increasingly critical part of the labor force, accounting for half of new employees during the past decade.

    The study, conducted by the Center for Labor Market Studies at Northeastern University, says that 80 percent of new male workers in the past decade were immigrants who arrived during that time,
    KC's View:
    The interesting thing is that there is a climate of anti-immigration that exists in the Us at the present time, largely because of concerns about terrorism and open borders that can leave this country vulnerable to attack. And yet, this study clearly suggests that to close US borders is to shut off much of the labor force that drives the nation’s industries.

    Not an easy decision to make…but it illustrates how none of these kinds of determinations can be made in a vacuum.

    It also suggests how important it is for employers to invest in the education of their employees, teaching them how to speak English and how to survive in what to them is a foreign culture. Providing such an education will be a cost of doing business.

    Published on: December 3, 2002


    • Publix Super Markets will open two new stores in Nashville, Tenn., tomorrow, doubling its presence in the market. The company currently operates 725 units in Florida, Georgia, South Carolina, Alabama and Tennessee.



    • Safeway Plc has announced that only a few hundred people in the company will get Christmas bonuses this year -- store managers and fresh food department staffers who have met specific goals. Everyone else…nothing. Betcha this will do a lot for company morale, especially when the checks get handed out to a chosen few…Whatever happened to :all for one and one for all?”



    • Safeway is selling gift cards in denominations ranging from $10 to $200 for retailers ranging from Nordstrom, Starbucks, Sears, Blockbuster, Borders Books & Music, AMC Theatres, Bed, Bath & Beyond, Circuit City, Old Navy, Wherehouse Music.

      The cards are available at all Safeway-owned units, including Vons, Pavilions, Randalls, Dominick's, Genuardi's, Carrs, Pak 'n Save Foods and Tom Thumb. Perfectly positioned for the short Christmas shopping season…



    • North Carolina-based Lowes Food Stores has begun targeting Hispanic shoppers with a new print campaign in select markets. The campaign will be rolled out to additional markets next year.



    • Greenpeace has charged that Nestlé is selling genetically modified products in China that are not labeled as such. Nestle has not yet commented on the charge, though the Shanghai Agricultural Bureau has said that the company has applied for permission to sell genetically modified food.



    • USAToday reports this morning that while it is generally perceived that mom-and-pop stores are being driven out of business in this country, the opposite is true. The US Census Bureau, which defines such businesses as those without employees, reports that there were six percent more of them in 2000 than there were in 1997. As the owner of a “pop shop,” it’s nice to know that we’re being trendy. However, it’s been a long time since 2000…and we wonder what the statistics would show today.

    KC's View:

    Published on: December 3, 2002

    Published reports say that as BJ’s Wholesale Club reworks its marketing and merchandising approaches to be more consumer-friendly -- as opposed to targeting small business, which is the approach being taken by Sam’s Club -- it will expand the role of pharmacy in its HBC sections.

    The first step, according to the company, will be to expand pharmacies in 40 existing BJ’s units, in the hope that pharmacies can be added to these locations. At the same time, BJ’s will build two new pharmacies in existing units, bringing the total it operates at the present time to six.

    HBC and prescription sales are seen as a way for BJ’s to boost both traffic and profitability.
    KC's View:
    We were always taught that pharmacy is usually the last department in a store to become profitable, as well as one of the most loyalty-inspiring departments once consumers have made the leap.

    The problem here is that BJ’s may have to do some significant marketing to get people to come to its stores as often as they might need to in order to get prescriptions filled. It is hard to imagine in the best of circumstances turning to a wholesale club as the convenient choice to get a prescription.

    We’re not saying it’s impossible. Just tough.

    Published on: December 3, 2002

    While 76 percent of all meals are prepared at home, according to NPDFoodworld, a division of The NPD Group, Americans are spending less time in the kitchen preparing those meals than ever.

    Preparation times are decreasing. For the year ending February 2002, half of all meals were prepared in 30 minutes or less.

    There are fewer dishes per meal. Nearly half of all main meals are one-dish affairs. At-home suppers that included at least one side dish fell from 66 percent in 1991 to 56 percent in 2002.

    People aren’t eating dessert. Americans are dropping desserts from their in-home meals. Only 14 percent of supper meals now include a dessert, down seven percentage points from 1990.

    And, out of home alternatives are gaining, with fewer meals being prepared from scratch. The total number of annual main meals prepared and eaten at home has decreased from 702 in 1991 to 651 today, while meals purchased away from home increased from 184 to 209 during the same period. And, 35 percent of main meals in 2002 were prepared completely from scratch. This is down from 41.3 percent a decade ago.
    KC's View:
    These numbers certainly put the challenge out there for retailers and manufacturers, which now have to find strategies and products that will appeal to these shifting trends.