retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: January 3, 2003

    We did a story yesterday that prompted an interesting reaction.

    The piece reported that the Conference Board’s measurement of consumer confidence fell to 80.3 in December from 84.9 in November. In addition, we reported, ABC News/Money Magazine reported that its weekly Consumer Confidence index dipped to -21 in the week ended Dec. 29 from -19 in the prior week.

    The most interesting email we got in response to this came from MNB user Bill Blakely:

    “Why don’t you stick to supermarket stuff? We have enough news media out there reporting only the negative data. If you and others would consider all the economic indicators, including personal income, you would be reporting a growth economy and perhaps customer confidence would be going up rather than down.”

    Along the same lines, we got an email from MNB user Mark Heckman:

    “Clearly, over the last year, the consumer has managed to keep a soft economy from becoming even softer, but I think the media hype as a reaction to these "negative" numbers and some of the other so-called economic indicators can create a self-fulfilled prophecy, if not viewed in context with some of the positive results and news that gets buried against the more "dramatic" negative news.

    “A good example of this continues to be the headlines associated with layoffs, but yet those companies and industries that continue to grow and hire get no play. Housing starts continue to set records, which fuels a number of economic sectors, but you have to go to "page three" to find these positive stories.

    “I think it critical over the next few months for media sources to be a concerted effort to look objectively at economic news and work to balance the story. If not, it will undoubtedly lead to a further decline in consumer confidence.”

    Of course, not everyone agreed. One member of the MNB community wrote:

    “To our President we must say - It's still the economy stupid.”

    We have several reactions to all this:

    • We think reporting economic trends is “supermarket stuff,” since how much money people have and how much confidence they have in the economy will influence what they spend and where.

    • True, negative economic indicators do tend to get more publicity than the positive ones. Sort of like how these days the US military gets a lot more publicity than the Peace Corps. However, we think we’ve been assiduous about stressing the fact that consumers have been a bright light in a darkening economic picture…though we’ll try to be better about posting good news as well as bad.

    • We do think that blaming the media for lessening consumer confidence is a bit disingenuous. Sure, the media writes about it. But lessening confidence may have a lot more to do with people getting laid off, businesses closing, and entire sectors being ravaged by tough economic times. (Anybody spoken to an advertising executive lately?)

    For the record, we have two economic stories above. One is about the US Bureau of Labor Statistics not wanting to file regular layoff reports anymore. But the other is about how consumers spent more on Christmas presents than they planned.

    We think that’s called balance.

    We also think it is a useful discussion, because it keeps all of thinking and asking questions and reconsidering preconceptions.

    Onto other subjects…

    On the matter of companies cutting back on personnel to save money, lessening their ability to provide sufficient customer service, MNB user Lois Bredow wrote:

    “I believe that this kind of thing will continue to happen because the bottom line is always the first consideration in business. Executives decide that paying personnel is an area for cost-cutting. Either by paying current personnel at a low level, cutting the number of employees or not hiring new people as needed to service customers.

    “I had an experience on vacation with such a thing. I purchased a piece of plywood and had the store cut it into the necessary sizes for my project. I detected an attitude from the young man because I am a woman. (The reason I say this is that I observed him dealing with a male customer who did not get any of the attitude I got). He was to make on 27" cut all the way across the panel and then cut that piece into 21" pieces. When I got home and began building the drawers, two of the four pieces were 20". I was able to continue and use the pieces as they were, but it was not as I wanted it. I did not want to go through the hassle of returning to the lumber yard and get two new pieces, so the store never found out how I felt about it. I will certainly be checking any measurements personnel make there in the future. Anyone can make mistakes, but I do think that seasoned employees and people who are there to provide a service rather than just to collect a pay check do provide better service. Better service is also provided when there is enough staff to meet people's needs. (There is not enough help in the lumber yard I was at. Looking to find someone is always a problem there.)”

    In response to yesterday’s note about Phil Lempert’s “Today” show appearance explaining to consumers how to get their kitchens in shape, MNB user Norma Gilliam wrote:

    “This certainly is timely. Just earlier in your column, you mentioned that consumer confidence is down and that many people feel worse off than last year. More people will be eating meals at home than ever before, so it is a good idea to get their kitchens in order and get ideas on cooking meals. Who knows, maybe this will even lead to eating more healthy meals! This past year has already shown families spending more time together and eating the evening meal at home. Just this pas New Years Eve, many people did not go out, but rather spent time at home. Supermarkets should continue to offer meal selections and ideas in order to capture these dollars.”

    We agree.

    That’s it for this week…have a great weekend, and we’ll see you Monday morning.

    KC's View:

    Published on: January 3, 2003

    • Safeway Inc. appointed Rojon Hasker to be Senior Vice President, Marketing and Merchandising. Hasker was most recently President of the company's Phoenix division; she joined the company in 1972 as a clerk in one of Safeway’s Alaska stores.

    • Winn-Dixie Stores named Brad Spooner as its director of operations. Spooner is a former district manager with Randalls Food Markets, the Houston-based division of Safeway.

    KC's View:

    Published on: January 3, 2003

    • Starbucks Corp. reported that same-store sales were up seven percent for December, following 10 percent increases in both October and November. The company reported net revenue of $418 million in the five weeks ended Dec. 29, up 22 percent from $343 million a year earlier.

      Starbucks opened 111 new stores in December, boosting its worldwide total to 6,193, including 4,763 in North America.

      Remarkably, Starbucks generated $37.5 million in sales just in people adding stored-value to their Starbucks cards.

    KC's View:

    Published on: January 3, 2003

    • United Natural Foods Inc. completed its merger with Northeast Cooperatives, the privately held natural food distributor in the Northeast, and appointed Rick D. Puckett as the company’s vice president, CFO and treasurer.

    • It’s tough to get a can of beer in Germany these days. A new and complicated deposit system for canned drinks and other throwaway packaging in Germany has caused many supermarkets there to threaten a boycott on selling canned beer. According to local reports, 14,000 shops have suspended sales of canned beer rather than deal with regulations that they opposed to begin with.
    KC's View:

    Published on: January 3, 2003

    Toyota Motor Corp. has unveiled two models in its new scion brand of cars, both of which are under $16,000 and which use design features to appeal to young people. The cars reportedly are light on basics and heavy on options –- allowing consumers to customize their vehicles to a great extent.

    The goal, according to Reuters, is to focus on the 63 million children of Baby Boomers who are likely to buy 4 million vehicles a year by 2010.

    The brand will launch in California in June 2003, and go nationwide next year.
    KC's View:
    Okay, so you’re asking yourself right now if the Content Guy has lost his mind, doing a car story on a food site.

    Well, we haven’t. At least not yet.

    It seems to us that this kind of marketing approach needs to be paid attention to by everyone in the retailing business, because these folks are the customers of the future. Toyota clearly is spending a lot of time and money trying to figure out what they want and what they’ll pay for it…and it is critical that food retailers do the same kind of due diligence. Or, at the very least, figure out what makes these cars and the buying experience involved with ordering one unique…and then seeing if there is a way of adapting elements of the Scion experience to the food store.

    Sure, this is a relevant story. As long as you think developing stores with consumer appeal is relevant.

    Published on: January 3, 2003

    Netflix Inc., the Internet DVD rental company, reported an 87.9 percent increase in subscribers in 2002, with 857,000 at the end of the year.

    Netflix has more than 12,000 DVD titles that it rents to subscribers for a flat fee of $20 a month, sending them through the mail with no late fees or return dates. Members are limited to three DVDs checked out at a time.

    Netflix was pretty much competition-free until a couple of months ago, when Wal-Mart announced it was getting into the business.
    KC's View:
    We know people who swear by Netflix…but who were instantly intrigued by the notion of Wal-Mart offering a similar service.

    Just a hunch, but we think it will be instructive to watch how Netflix copes with this new competition, coming up with ways to differentiate itself from the Bentonville Behemoth.

    Published on: January 3, 2003


    CNN reports that America West will begin charging customers for meals on some flight, and suggests that if the experiment works, it will be taken up by other airlines as well.
    KC's View:
    Actually, we’re only going to start worrying if they start charging for parachutes.

    We think that there are certain supermarkets -- depending on both location and demographics -- that could turn this into a marketing opportunity, creating and selling easily transportable meals for people to bring on airplanes. They’d be better than most of the crap served at 30,000 feet, anyway.

    When we’re traveling and spending time in supermarkets, we make it a policy to pick up dinner before going to the airport. Our favorite is sushi…and it generally makes the other passengers crazy to watch us nibbling on California roll while they clamor for a lousy bag of pretzels.

    Published on: January 3, 2003

    The answer may be found in a story in The New York Times earlier this week that profiled the San Francisco Opera Company, which like many such institutions is being challenged by a tough economy.

    Consider this quote from Pamela Rosenberg, general director of the S.F. Opera:

    “We are not going to get through this economic downturn and come out the other end by replacing quality with mediocrity. If we are going to be worthy of support, we have to make a difference in people's lives.”
    KC's View:
    Words to live by. And thanks to MNB user Gail Ginther for bringing it to our attention.

    Published on: January 3, 2003

    Happy with the success of its Chipotle franchise at a time when the overall company is experiencing its first quarterly loss ever, McDonald’s Corp. has decided to double expansion plans for the Mexican food concept, spreading into New York, Atlanta and Seattle.

    Chipotle now has 233 stores in 11 states and about 5,000 employees.

    "We saw it as an exciting concept, something special and unique," McDonald's spokeswoman Lisa Howard said. "It's burritos and tacos with gourmet ingredients in a hip, energetic environment."
    KC's View:
    The company also saw sales of about $145 million that were growing…as opposed to what seems to be happening in its traditional hamburger joints. That’s a small percentage of the company’s overall sales (less than one percent), but the trend is encouraging.

    There will be some who will say that expanding Chipotle will distract the company from focusing on its signature restaurants, but we think this is foolishness. We believe that not only can McDonald’s work on improving its hamburger restaurants at the same time it expands Chipotle and other alternative concepts, but that it must if the company is to survive.

    We just noticed yesterday that the Boston Market -- also owned by Mickey D’s -- in the building next door to our office has been closed. We’d suggest that this would be an ideal location for a Chipotle…

    Published on: January 3, 2003

    The Dallas News reports that Wal-Mart’s plan to build a 113,000 square foot supercenter at Hedgcoxe Road and Independence Parkway, killed more than two years ago because of neighborhood opposition, has risen like the phoenix.

    Wal-Mart reportedly has resubmitted its proposal to local officials with scaled back details, though some neighbors say that the new proposal doesn’t live up to Wal-Marts previous commitments.

    "There are some major differences that concern us," a local homeowner told the paper. We understand they own the land and they have the right to do what they'd like. We worked hard a few years ago to get them to understand working with us is better for everyone involved. It sounds like they're going off on their own without any input from us."

    The new preliminary site plan calls for a 40,000-square-foot Neighborhood Market store, retail shops, restaurants, and a gas station. Wal-Mart says it does not deviate greatly from plans agreed to by neighbors in the past.

    According to the paper, the site is already zoned for retail use, and city planners expect few roadblocks when the proposal goes before the Planning and Zoning Commission later this month.
    KC's View:

    Published on: January 3, 2003

    A new study by the Centers for Disease Control and Prevention (CDC) reveals that more than 44 million Americans were obese and 16.7 million had diagnosed diabetes in 2001. The nation's obesity rate climbed to 20.9 percent in 2001 from 19.8 percent the year before, and the rate of diagnosed diabetes rose to 7.9 percent from 7.3 percent.

    Mississippi is the state with the highest rate of obesity and Colorado the lowest. The highest rate of diagnosed diabetes was in Alabama; the lowest was in Minnesota.
    KC's View:
    Clearly, if you want to lessen your chances of being obese or diabetic, being north of the Mason-Dixon line is a good thing…

    Published on: January 3, 2003

    The Seattle Post-Intelligencer reports that Safeway’s private label financial institution, Safeway Select Bank, is being closed.

    Kiosks and 125 in-store branches are being shuttered, deposits are no longer being accepted, and the operation will be completely shut down once regulatory approval is received. Savings and checking accounts will be sold to E*TRADE Bank.

    The decision to close Safeway Select Bank was made by Canadian Imperial Bank of Commerce because it did not want to wait four or five years to achieve profitability with this venture.

    Safeway continues to lease space to banks including Wells Fargo.
    KC's View:
    Originally, the private label banking initiative was seen as part of an overall strategy to extend the Safeway label to new and different consumer services, including gasoline.

    But these are tough times, and long-term gratification just doesn’t seem to be good enough.

    Published on: January 3, 2003

    The Washington Post reports that the US Bureau of Labor Statistics will stop publishing its monthly Mass Layoffs Statistics report, which detailed information about factory closings across the country and layoffs in places where more than 50 employees were let go.

    The decision was a financial one, according to the Department of Labor; the report cost $6.6 million a year to produce, and there are just “finite resources.” A spokesman said that it was more important to use funds to get people back to work as opposed to reporting when people are out of work.

    Some state and organized labor officials were critical of the decision, saying that it had provided useful information in a time of economic transition.
    KC's View:
    Hey, every million dollars is important when you’re facing possible wars on two continents…

    Actually, we think there is some logic to the argument that it makes sense to use finite resources to put people back to work…as long as there are programs in place to make sure this happens.

    We also suspect that if the economy were in better shape, that report would still be published. Then again, if the economy were in better shape, perhaps resources would be less “finite”…

    Published on: January 3, 2003

    The Associated Press reports that the US Commerce Department has softened the requirements for using the “dolphin safe” label on tuna fish, saying that it may be used as long as it can be certified that no dolphins were killed or seriously injured during the catch, even if the tuna was caught by using dolphins to encircle the tuna.

    The old rule said that any tuna caught using dolphins as targets were barred from bearing the consumer-friendly label on cans sold in the United States.

    The ruling will allow Mexico and Ecuador to ship tuna to the United States.

    However, the decision was criticized by environmentalists, who said that international safeguards are insufficient to assure that fishermen are living up to both the spirit and the letter of the rule.
    KC's View:
    It seems appropriate to have a tuna story on a day when Bill “Tuna” Parcells returns to the NFL to coach the Dallas Cowboys.

    Our question is this: Who does the certifying?


    Published on: January 3, 2003

    The International Mass Retail Association (IMRA) released a study saying that 2002 holiday shoppers spent an average of $1,558 per households on presents during the holiday season just past, as opposed to the $863 they expected to spend when surveyed a couple of months ago.
    KC's View:
    Go figure. This stat would seem to be out of synch with some of the other economic numbers we’ve been seeing reported, especially the generally lousy holiday traffic reported by many retailers.

    If these numbers are borne out by the facts, it will suggest that once again the American consumer is doing his and her best to salvage a weakening economy, almost regardless of what they do down in Washington.

    Which is probably a good thing…

    For more about these economic reports, see Your Views, below.

    Published on: January 3, 2003

    • McDonald’s is testing DVD rental kiosks at 14 Washington, DC, area locations. The Washington Post reports this morning that the kiosks are being installed outside the units, and represents an expansion of a test that began in San Francisco.

      The machines, called TikTok DVD Shops, accept only credit cards and charge customers 99 cents to $1.50 per day. Customers can keep the movies for up to a week, or two weeks in some cases. Those who don't return a movie on time are charged the entire cost of the DVD.

    • The British government is under fire because of allegations that it tried to “bury” a report that showed that genetically modified crops could contaminate non-GMO crops in adjacent fields. The BBC reports that the government has denied trying to downplay the report, though a spokesman did admit that releasing it on Christmas Eve was a bit of unfortunate timing.

      In a phrase that could only be uttered with a straight face by an Englishman, the British environment minister, Michael Meacher, reportedly described the Christmas Eve publication as “another case of cock-up rather than conspiracy.”

    KC's View: