business news in context, analysis with attitude

Yesterday, guest columnist Glen Terbeek wrote a fascinating piece on the issues of centralization vs. decentralization, analyzing the competing needs for consolidation and localization. MNB Jim Swoboda responds:

“Once again, Glen hits the proverbial nail on the head.

“As long as the old measures and rewards are in place, the real changes that need to occur simply can not happen. Think about it...what motivates people? They will do what whatever they need to do to pay their mortgage, put their kids through college and maintain a standard of living. Whatever you reward for is what they will deliver.

“Many of the key organizations in today's grocery environment still measure and reward based on old practices. Some examples include, but are not limited to, forward buy income, diverting income and punitive supply chain fees. As long as the eye is off of the ball, which it is taking care of the consumer, the challenges will continue.

“The management book, ‘Who Moved The Cheese?’ asks a great question. However, the BIG question is ‘What is the cheese?’”

And, about these centralization issues facing Safeway, MNB user Al Kober writes:

“Safeway’s wanting to buy out other good companies was a great company strategy for growth. It is to their credit that that showed the initiative to research and purchase some of the nations best operations. The error was made when these store were brought into the Safeway fold. Those companies, Vons, Genuardi's, Randall's, Tom Thumb, had a very local presence and the community loved the way the stores were stocked, the services they provided, the local fresh brands and national brands they carried. They had a great reputation for high quality and carried high quality meats and produce. Safeway has been very successful on the west coast with their program. The mistake they made was thinking that the Texas and Pa. customers would respond to their merchandising as well as the west coast customers did.

“To their credit , I believe they are addressing that very issue and will be able to regain those local communities, by recognizing and responding to the needs on a community by community basis. Its not too late to recover their losses in most of the areas, but for Dominic's it may be too little too late.”

Regarding the ongoing competition between traditional supermarkets and companies like Wal-Mart and Costco, one MNB user writes:

“No competitor of Wal-Mart or Costco will gain customers from them until they meet them on a few of their price sensitive items. In my area Wal-Mart sells milk every day 2 per cent $1.99 gal. Costco 2/$3.89. Until recently, Safeway was $3.89 for 1 gal. Coke & Pepsi products are usually lower every day in Wal-Mart & Costco than Safeway & Albertson ad prices except when they get real HOT during a holiday period.

“Safeway especially is so concerned about its gross margins & the effect on its stock price that they haven’t been competitive for over a year. Sooner or later the only way to get your sales back is to buy it with competitive prices. All the superior quality in the world will not do it if your pricing is out of line like milk above.”

And yet, can’t both Wal-Mart and Costco undercut Safeway on milk prices no matter how low it goes?

We’re not sure that getting into this fight with Wal-Mart and Costco is conducive to long-term health…

Regarding yesterday’s story analyzing dollar stores, one MNB user writes:

“Dollar stores are undoubtedly the hottest concept to hit retailing in a long time, and they ain't about people on budgets or the result of a soft economy. It's human nature to want to look to get something for (almost) nothing. And the purchases tend to be incremental--never seen anyone in a Dollar General with a shopping list!”

Good point.

Yesterday, in a story about how new claims for unemployment benefits hit their lowest level in 21 months, we said that we hate to be “either cynical or pessimistic, but it still seems like an enormous number of people we know are out of work or in danger of losing their jobs. It’s hard to take this kind of government statistic too seriously, because we’re convinced the numbers are cooked somehow…”

And MNB user Jane Larson responds:

“Cynical Kevin, your instincts are correct. Unemployment figures are based solely on the number of people drawing benefits. This does not include the staggering number of people who have run through all their benefits and extensions. It's going to be a grim holiday season for many. Perhaps each MNB subscriber can help by dipping a little deeper and giving a donation to their local food shelf.”

And finally, from the “you can’t please all the people all the time” file, we offer the following email from an MNB user:

“The Content Guys allegiance to America's Favorite Pastime comes into clear question when he slavishly reports every football score (yawn) from the weekend but never mentioned the Mets’ acquisition of Tom Glavine. What gives?”

Hey…we were trying not to chortle.

But chortling we are.
KC's View: