business news in context, analysis with attitude

We got a lot of response to the Tuesday morning piece we had about the power of category management to corrupt the way retailers ought to be running their stores…by allowing vendors to determine selection and inducing retailers to focus only on efficiency and not marketing innovation.

MNB user Rick Cognetti wrote

"I have found that the power companies love to category manage. They all push the 80/20rule. 80% of the profit is done by 20% of the SKUs. This style certainly is not conducive to being a full line destination point in a particular category but is a very good start to a complete set. I prefer to use my top 2-3 suppliers in a category as managers, have them evaluate and recommend goods. I follow their results up with an independent consultant and compare results. This concept has enabled me to stay ahead of the curve in Nutrition and Diet. We carry the top lines but also cater to a broad spectrum of consumer. You have to carry Centrum, but also need to have a full line of fish & flax oils. It all is great fun!!"

MNB user Andy Leebrick wrote:

"If a retailer completely turns the category management controls over to a manufacturer then they deserve to lose. The retailers who see success while collaborating with the manufacturer during the cat man process are the ones who play an active role. The manufacturer has access to vital information that the retailer may not. The art is in discerning what information is critical to drive that particular retailers business objectives and then applying it to a business plan that is actionable."

Another MNB user chimed in:

"The natural evolution of all players in a market reviewing syndicated data (or what everyone else is doing), is a homogeneous, offering with little or no innovation.

"The overused practice of retailers handing this process to key vendors only accentuates the myopic results: What better outcome could the large national manufacturers (usual category partners due to staffing, data access and category consumer research) hope for than everyone with the same, fast-moving, efficient, nationally distributed assortment.

"Food retailing can't afford to get any more "efficient". We are saving our way to extinction.

"Retailers first need to take ownership of this process. Period. Secondly, we must approach this with a true customer focus; not to be mistaken with "Efficient Consumer Response" (ECR), maybe instead Interesting Consumer Response. We have allowed Wal-Mart's success with price and the associated efficiencies to completely dictate our business strategies. How many times have we all said, "We're not Wal-Mart and we can't beat them at their game". The problem appears that we have so long competed against each other on item and price that all we know is Wal-Mart's "game". We had better re-focus on our own customers (who by the way usually rank price about 5th on their list) and figure out our "game" plan. It certainly isn't copying each others assortment, price, marketing and formats until the customers choice is Wal-Mart or anybody else with a convenient location.

"Essentially category management can't help if the strategy around our tactics is flawed. Category management can and should only create tactics to support a clearly communicated (to both employees and customers), differentiating mission."

MNB user Frederic Arnal added:

"I have always equated category management with putting the fox in charge of the hen house. But this practice really shouldn't be surprising given the role of most supermarketers. They like to think of themselves as merchants but, in reality, they are part of the manufacturer's distribution chain. True merchants (and we all know who they are) create assortments and unrealized needs for target markets leaving the distribution game to others. As you frequently point out, they brand themselves."

In our lead story yesterday about Kmart and Fleming deciding to go their separate ways, we noted that if, as rumored, Wal-Mart decided to get into the wholesaling business, maybe it would want to supply Kmart.

A number of people wrote in to point out that Wal-Mart is, in fact in wholesaling through its ownership of McLane. We appreciate the effort, and should have been more specific in our commentary. In referring to Wal-Mart's wholesaling plans, we were in fact talking about a story that came out a couple of weeks ago about Wal-Mart considering the possibility of opening a full grocery wholesaling division that would cater to independent operators, which is different than the McLane c-store business.

However, while we were not misinformed we were, at the very least, imprecise in our language. Sorry about that.

We also had a number of emails on the same story asking us if we were kidding. (We think these members of the MNB community just needed to be reassured that we hadn't completely lost our mind…)

We haven't. And we were kidding.

Unless, of course, Wal-Mart actually does decide to supply Kmart…in which case we're a cross between the Amazing Kreskin and Harry Houdini.

Actually, one member of the MNB community, Richard Harding, seemed to think that Wal-Mart supplying Kmart wasn't such a bad idea:

"If Wal-Mart was in the wholesale business; why wouldn't they? They obviously would not build their wholesale business around K Mart as a client, so K Mart's uncertain future would not affect a major company like Wal-Mart Mart. If Wal-Mart Mart was able to obtain a contract with Kmart to be its supplier, then Wal-Mart Mart could possibly control what it
supplies Kmart and could can gain further leverage in the market they are competing for. On top of that, a deal of that nature would be a major deal and would hit main stream news which would give Wal-Mart Mart free positive PR especially because it could be an easy spin for competitive nature even though in essence they are controlling the competition.

"The only down side for Wal-Mart Mart is knowingly supplying its competitor and Wal-Mart Mart has first hand knowledge that it is possible that Kmart could possibly bounce back and be just fine in the years to come, but then Wal-Mart Mart would have their supply agreement and they would be just fine with that.

"The other possible downside is similar to that, the free PR could promote Kmart in a sense as being a part of Wal-Mart Mart and the uneducated or uninformed buyer might then say the two stores are the same, so why not shop at K Mart. In my opinion, if this situation were to happen then only those people who are more conveniently located to Kmart would shop there; if they are currently a Wal-Mart Mart customer. To answer your question with a question: what are three reasons why Wal-Mart Mart would not want to supply Kmart?"

See folks? It isn’t just us…

We wrote yesterday about how Kmart is bringing out a new print supplement to its print ads called Urban Direct, hoping to attract a new demographic. Our observation was that this makes sense if the in-store offering matches the supplement's editorial.

One MNB user responded:

"Haven't we all been disappointed by a retailer who's print image (catalog, FSI) didn't match the store experience.

"I believe that one of the reasons for Target's success is they know how to match these experiences."

We posted a fascinating email the other day from an MNB user who overheard an elderly couple in the supermarket saying that it was cheaper for them to eat at a local family-style restaurant than to buy food at the supermarket and cook it at home.

Another member of the MNB community responded:

"Until now, I never really thought about my parents doing the same thing after my father retired (we live in different states). For $6 to $8 each, they get soup, salad, entree, vegetables, dessert and beverage. The portions are so big that they take home enough of the entrees for lunch the next day. In addition, they split one dessert at the restaurant and take the second to go. Fortunately for grocers, not all parts of the country have these kind of family style restaurants that are prevalent in areas like the Chicago suburbs where my parents live.

"With an aging population, this may just be the beginning of a trend. People are finding time to enjoy retirement and hobbies instead of shopping for groceries, preparing meals, cleaning pots and pans as well as dishes and all the energy involved in doing that. The restaurant also absorbs the shrink for perishables that to go bad more often in a house with fewer mouths to feed. My mother has even commented about how is it hard to adjust to cooking smaller portions after having fed three active sons and a father who worked construction. When my mother does shop, she prefers the prices at Aldi and the quality/value at the local independent grocer. She also agrees with their decisions to remain closed on Sunday."

Got a lot of reaction to yesterday's story about the Hooters restaurant chain going into the airline business. One of the creative steps the company is taking is to separate job functions that traditionally have been combined; for example, trained flight attendants will handle boarding and safety issues, while stereotypical "Hooters girls" will handle most of the hostess and food functions.

This comment from an MNB user was typical:

"Try explaining the Hooters girls flight uniforms- tight orange shorts and even tighter white T shirt- to your 7 year old son or daughter next time you fly Hooter Air. Even better, try explaining why you chose to fly Hooter Air to your wife.

"I can see it now, 'Honey, I swear this was the cheapest flight. And, I didn't know that our flight from Chicago to New York had a stop in L.A.' This is certainly one way to get everyone to pay attention during pre-flight instruction."

And MNB user Earl W. Engleman added:

"While I would expect to see the Hooters girls on a Southwest airlines flight, I'm sure this one will bring out the opposition group you had to the
Miller's Super Bowl commercial…"

Clearly, if Hooters gets the same reaction that Miller did, it will have hit a home run.

Continuing reaction to the dual subjects on the need for better school lunches and the trend toward teenaged vegetarianism.

MNB user Mark Shukwit wrote:

"Teenagers and children are very much like the rest of us. When we exercise and live an active lifestyle, our eating habits naturally move toward quality choices. Rather than having these councils fighting each other for position, maybe we should focus our efforts at getting these kids away from the TVs and concession stands!

"As far as school lunches are concerned: as long as Ketchup is considered a portion of vegetables, my children will be packing their lunch!"

MNB user Don Sutton added:

"Bottom line, guys - homo sapiens evolved as an omnivore. One educated glance at our teeth alone makes that point.

"Making a complete break from either meat or veggies means that the organism will suffer without adding a lot of vitamins and other supplements. It's a whole lot easier to add a few meat portions than to carry around a bag of pills, etc. And in a retail environment that is driven by an increased emphasis on speed and convenience, I wouldn't bet on a long term commitment to vegetarianism on the part of a significant share of the population. When the beef, pork and poultry people figure that out, a modicum of science-based advertising should cool down the knee jerk fear reaction and inform the public what's really happening and how much money and hassle is involved in a meatless diet."

And another MNB user wrote:

"Nothing ever made me hungry for red meat more than pregnancy! Some of the girls who think that vegetarianism is "cool" now may abruptly abandon that (hopefully in several more years) when there's a baby on board demanding a steak. Protein, iron, yum!"

Or, looked at another way, if your teenaged girl starts to crave meat, it's time to pull out the home pregnancy test.
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