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    Published on: February 10, 2003

    Lots of reaction to last week's piece about how Charles Conaway, the former chairman and CEO of Kmart who has been accused in many quarters of negligence while presiding over the company's financial ruin, asked the US Bankruptcy Court to allow a Kmart insurance company to help pay for his defense costs in a number of securities lawsuits. Conaway claims that the insurance policy is not part of Kmart's bankruptcy estate. Dow Jones reported that there are policies that could make available well over $100 million in coverage for directors and officers of the company.

    Our comment: " What a joke. Exorbitant salaries and benefits, loans that didn’t have to be paid off, and now the guy doesn't even want to pay his own legal expenses. And all the while tens of thousands of Kmart employees are being laid off from their jobs, and will have to exist on unemployment and the faint hope that they'll be able to find new work in an unforgiving economy. We can only hope that the judge laughs him out of the courtroom."

    One member of the MNB community wrote:

    "It would be interesting for the US Bankruptcy Court to determine if and when -- exactly -- did former Kmart CEO Conaway and his management team actually set up this $100 million defense insurance slush fund. Or was the insurance put in place for and by a prior board or executive team?

    "It would benefit the Court, and current Kmart stakeholders, and the Kmart insurance subsidiary to know if the legal insurance was actually set up to protect these particular individuals. Or would the knowledge that there was indeed legal protection at hand for his executive team have made Conway et al more aggressive in their management style because they believed their legal fees would be covered to the tune of $100 M in event of any legal suits or SEC investigations launched against them.

    "Yes, it's understandable that most senior management teams set up coverage for themselves for legal fees. Yet this smells shady, shady, shady to me! I'd hate to be one of the stakeholders of the Kmart insurance firm having to pay out up to $100 million in fees to these less-than-fiduciarily-responsible individuals. Given the penchant for unbridled greed, I'd even be wondering how much of the insurance monies might float back into their own pockets?"


    Excellent question.


    Another MNB user wrote:

    "It is difficult to find sympathy for the former Kmart executive who played in a high stakes game and lost. People who take high responsibility, high pay, high-risk jobs must be willing to suffer the high-stakes consequences.

    "Somehow, these powerful people have manipulated things in their own favor to eliminate consequences with golden parachutes and side agreements to cover all their losses. Those people are insulated from the real world to such an extent, that there is little evidence that thousands of layoffs have any impact on them except how that affects the company bottom line. The little people who suffer the lay-offs do not have golden parachutes or side agreements to pay their rent, buy groceries or gas. In today's tight job market, these people truly suffer. Unemployment benefits do not last forever. These people were not even tossing the dice, but they still lose as a result of the game. Corporate America's answer to the things that come out of bottom line adjustments would be "Business is business". That is no consolation to those people who do not know how life will go on."



    Not everyone feels this way, however. MNB user Marie Griffin wrote:

    "Your view on Chuck Conaway's request to have the insurers of bankrupt Kmart pay for his legal representation is hard-hearted and simplistic. Isn't it up to the legal system to decide to what extent Chuck is personally liable for the Kmart mess? Accepting a high salary does not make one guilty of anything. Until the full story on the legality of the loans is exposed in a court of law, who are you to pass judgement?

    "The Kmart Chuck walked into was already 10 years into its downfall. The untenable strategy of fighting to be "number 2" after Wal-Mart led to the bankruptcy that was long predicted and, in fact, inevitable. So, too, were all those layoffs. What does that have to do with the totally separate discussion as to whether an insurance company should deliver upon its promises to a person who functioned in a corporate role, not as a private citizen?

    "Chuck should be backed with counsel that is up to the task at hand--and that means bucks. Let the jury pass judgement based on the facts."


    Hard-hearted? Us? (Actually, our kids accuse us of that all the time…)

    So many questions…let's see if we can answer most of them.

    Who are we to pass judgement? Well, to begin with, that's sort of what we do for a living. We're neither judge nor jury…except, maybe, in the court of common sense.

    Conaway may in fact be guilty of nothing according to the law. Who knows? And sure, Kmart had troubles before he got there.

    But it seems to us that the evidence is pretty clear that he and his cohorts profited mightily even as the corporation was going down the tubes, and that their compensation was linked not to company performance, but to the sweetheart deals that they managed to land for themselves. And we happen to think that there is a connection between the sweet deal that a CEO has and the raw deal that affects a laid-off checkout person who happens to be a single mother with three kids. Maybe not a legal connection, but certainly an ethical one, a moral one.

    Let him have his counsel. Let him make his excuses. Let him defend his behavior. And sure, let him have the best defense possible.

    It's still a joke. Not a funny one, but a joke.


    MNB user Ron Dunbar didn’t seem to think we were all that bad…

    "I love your response on this one!!... Could not of said it better myself... Joke is right..."




    In one of the responses cited in the "non-winners" story we had on Friday, one of our users defined the "future store" as "a conventional supermarket design with independent owners managing their own categories directing entire focus on customer wants and needs. One independent in the heart of the store will carry a traditional grocery mix that evolves on a one to one need with customers. The perimeter will be much like a mall food court with shopkeepers that cater to the market niches. Shops like Sausage maker, Local Fish Market, and all ethnic groups related to the area will be represented."

    One MNB user responded:

    "There is a store like this on my block, in Portland OR. It's called City Market. It's only about the size of an average convenience store but one corner is produce, one is fish, one is meats, and one is an Italian deli/bakery/pasta and each one is run by an independent local company.

    "There's a small section in the middle of basic groceries and I'm not sure who is in charge of that. And then a single (well, two of them) cash register. The prices are much higher than at the chain groceries but the quality, and knowledge of the counter staff, can't be beat."





    And more on loyalty marketing. MNB user Don Sutton wrote:

    "When the dust and the pro/con verbiage have settled, loyalty marketing programs can be summed up in one simple sentence: operations that do a good job with the program reap benefits, those that don't - don't.

    "There will always be customers that like it and customers that don't. Those who do present a golden opportunity for the operation sharp enough to give them what they want and they, in turn, will reward the operation. Keep it simple. You can listen to the winners gloat or the whiners make excuses.

    "Your choice."


    The interesting thing about loyalty marketing from our point of view is that consumers always have a choice whether to invest in a store and program with their dollars. Retailers, e think, don't really have a choice -- it is more a matter of which kind of program to develop, not "if" a program should be developed. The really hard part is when retailers with a program communicate to shoppers who don’t want to use one that they are not somehow being relegated to second-class citizenship.

    But let's let another MNB user speak for the consumer population that doesn't embrace the loyalty card concept:

    "A question was raised, 'What is the fear?' regarding loyalty card resistance. Speaking for myself and several of my friends, it is not fear at all, but IRRITATION. I consider my hard-earned cash to be my "loyalty" to my local market. I hate coupons with a passion, I hate cards I have to carry around and keep track of and dig out of my overstuffed wallet (with just such detritus, not money!) to prove that I deserve that lower price. I am my local stores' BEST customer because I pay "full price" for everything and I spend 95% of my grocery dollars there.

    "In this age of digital information, there is NO EXCUSE for paper coupons as a way of "getting an understanding of regional buying habits." And if the data from the so-called loyalty cards is supposed to be anonymous at the macro level, then it is meaningless to track my personal purchases over the course of the month or year. Besides, all that data would do (as keyed to me personally) would show what I was buying at that particular store, not what I buy in a global sense (I might not like vegetables... or I might be getting my produce down the street because I like their department better).

    "That "hole" in my buying habits might be useful to the store, but I don't get the impression that stores are doing that level of analysis of data! In terms of analysis and collection of data, with scanners and digital inventory control, there is no reason that "cart transactions" couldn't be tracked as opposed to "buyers". This would entail NO effort/irritation on the part of the customer, no irritating "double standard" in pricing on the shelf (man, that fries me!) and would yield the same amount of effective data.

    "Bottom line - I am not responsible for the store's understanding, or lack thereof, of its clientele.

    "Whew, now I feel better..."



    And we have further discussion about whether airlines' frequent flier programs are a good example of loyalty marketing, in the form of a follow-up to an exchange we had on Friday:

    "I was not using the airlines' financial troubles as evidence that their frequent flyer programs don't work or are otherwise bad examples of successful programs (though the two aren't mutually exclusive). What I was really trying to get at - and I would hope we all agree on this point - is that "a loyalty marketing program that's of any value (is supposed to be - should be) part of a company's overall marketing / business strategy that leads to, or at least maintains, profitability (for the company)." If you're using loyalty marketing, isn't that the point?

    "If we are looking for programs of "excellence", I would hope we could come up
    with an example, or examples, of loyalty marketing programs that have a proven track record of success that reaches beyond the realm of being successful unto themselves. Where are the examples of companies with "excellence" in loyalty marketing that have a proven track record that shows a contribution to the company's overall success, profitability, good will, customer retention, etc...?

    "It just seems to me that a better example could be given of excellence in loyalty marketing, other than the airline industry, that doesn't have this strange dichotomy between "success" and overall, bottom-line "value" to the company involved."



    Another perspective on loyalty marketing from a member of the MNB community:

    "I still don't get it. Invasion of privacy or not, Loyalty Cards are supposed to offer me, the consumer, some value. It appears that most of the big chains offering the cards have just applied the information provided by the cards to their advantage, not mine, which I might point out, is extremely annoying. I don't see any real value there! I feel like it's some kind of sham when the checkout person says, "You saved XXX dollars today by using your ______ Card." It is indeed less spent than if I hadn't used it, but it's more expensive than Wal-Mart, Meijer, and my favorite little 3-store chain. It says to me that the prices of the stores offering Loyalty Cards are too high to begin with.

    "The observation has been made in MNB that Wal-Mart, in particular, gets people in the door by offering low prices to begin with. No Cards. Meijer basically does the same, and I'm sure other small national chains do too. So does my favorite little 3 store Chicago chain, Caputo's. Caputo's is actually my preference, but they're not close, so for single items that I really need, I'm forced to go to Jewel (Albertson's). What always amazes me when I shop at Caputo's, is that I can walk out with a whole banana box full of groceries for $35. I have to compare this with my neighborhood Jewel, which is close to where I live and so gets my necessity and impulse purchases, and where I'll go for 3 or 4 items, and end up spending $35, even with my Preferred Savings Card. I know Jewel is taking advantage of centralized buying and distribution, but where's the value going?

    Granted, Caputo's is luring me because it's still like a neighborhood market, with wonderful produce and a huge selection of ethnic goods, but I find extreme value there AND I find great selections, too. They get me there without the card . . . they've lured me by not only the shopping experience, but because I know they're pulling me there by value before I even get in the door.

    "I have to add, I'm insulted that the formula usually presented by MNB heralding Wal-Mart as the future of shopping, always insisting that it's obviously price that's dominating the retail landscape, is really missing the point and grossly underestimating me, the consumer, and my stubborn insistence to shop where I want. Sure, I want value, but I won't shop Wal-Mart just because of what they are. They almost seem un-American or un-democratic to me because they've gotten so big and taken over so much of the market that I fear that there just plain won't be any choice left . . . they'll take over everything.

    "Competition seems to me to be the preferred choice. Where's the choice when everything is Wal-Mart? The truth is, I want EVERYTHING! Give me the value, give me great food, give me a good shopping experience, make it fun, make it interesting, make it a part of life that's enjoyable, on and on and on."


    We certainly didn't mean to insult you. Listen, we're pro-competition. We're pro-diversity. We're pro-fin and pro-great food. We would prefer to think that the retail landscape can be full of great and differentiated shopping experiences that offer the consumer real alternatives.

    But we think the evidence is fairly clear that most retailers in the food business are trying to figure out how to out-Wal-Mart Wal-Mart. We don’t think it is Wal-Mart or even consumers who make it a Wal-Mart universe. In a lot of ways, it is Wal-Mart's competition that does so.


    Another MNB user with a different perspective on Wal-Mart wrote:

    "Maybe the best Loyalty program is one that has no coupons, no card, nothing but "Low Prices, Always".

    "Seems that Wal-Mart is the one organization that is attracting the most customer loyalty as shown by the increasing numbers of customers shopping there.....Always!

    "You can't argue with success!"





    We continue to get email in response to a 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 Steve Grossman wrote:

    "The major problem with the majority of retailers is that they are focused on talking cost out of everything not seeing how to generate the most sales. Reverse auctions are the prime example. If there is just enough money to cover costs, where are the funds for R&D or product development?

    "Retailers today will take what they perceive to be the most profitable program based on guarantees from the manufacturer and pass on the better program would has better potential of generating more sales and dollars, taking the safe way out. Buyers or category managers really have little time to manage their business, because the retailers look at the cost rather than investment. The thought is go with on vendor program verses many or multiple sources because of time and effort to manage multiple vendors in a category. One of the hardest things to do today is get a single item from a new manufacturer placed. It is just too time consuming and costly, so says the buyer and management."





    On the subject of our story last week about Dr. James Hill of the University of Colorado, a well known obesity researcher who said that many Americans could avoid weight-related health problems by simply cutting back on 100 calories a day, MNB user David Whitsel wrote:

    "Dr. Hill is right on. Changing habits is the key to dieting success. If you try to do it all at once, than you are bound to fail. To change a bad habit into a good habit you need to repeat that behavior at least 7 times until it becomes a new habit. When you try to do it all at once, you overload the system and are bound to fail. I am living proof, I have lost over 250 lbs. in 2 1/2 years by changing habits, one at a time. Slow and steady is key.

    "Diets fail because the insist on deprivation. You have to eat what you enjoy, just in moderation.

    "It can be done, just takes a little discipline and patience."


    Congratulations to you, David. That's terrific…and you’re an inspiration to a lot of us…
    KC's View:

    Published on: February 10, 2003


    • Mark Sellers, president of Winn-Dixie's Central Florida Division, has been named by the company to assume new responsibilities as president of the South Florida Division, effective immediately. Sellers will retain his Central Florida oversight responsibilities, as well.



    • Alan Williams, COO for Coles Meyer's food and liquor division in Australia, will retire later this year, the company announced.

    KC's View:

    Published on: February 10, 2003


    • Wal-Mart de Mexico, the 597-unit division of Wal-Mart Stores, reported that January same-store sales were up 3.1 percent compared to the same month a year ago, as total sales were up 10 .1 percent to the equivalent of $850 million (US).

    KC's View:

    Published on: February 10, 2003


    • Loblaw, Canada's number one grocery operation, announced that over the next two months it will begin testing a "dollar store" discount format at some of its discount units.

      Affected will be No Frills stores in Ontario and Maxi stores in Quebec.



    • Carrefour SA, the world's second largest retailer, announced today that it will acquire three Italian hypermarkets from Hyparlo, its franchise partner there. Carrefour, which already has 34 hypermarkets in Italy, is expanding its operations there, building five new hypermarkets to be opened there next year.



    • Marathon Ashland Petroleum has agreed to sell 193 of its c-stores in
      Florida, South Carolina, North Carolina and Georgia to Sunoco for $140 million plus store inventory.

    KC's View:

    Published on: February 10, 2003

    In an effort to combat eroding sales and market share across the globe, not to mention an image for poor quality food and service, McDonald's is making an effort to improve its marketing efforts.

    USAToday reports that last week the company held a summit with 14 agencies from 10 countries, telling them that advertising in the future will be gauged not just on awareness but also on likability.
    KC's View:
    Likability? How about effectiveness? (We're not sure that in the ad game these two words are synonyms.)

    Besides that, we'd urge the Mickey D folks to focus more on the food before they change the message.

    Published on: February 10, 2003

    Reuters reports that a new study from Forrester Research reveals that despite the fact that Home Depot and Lowe's Cos. seem to appeal to different gender groups -- Home Depot to a primarily male consumer, and Lowe's to women -- in fact, 45 percent of each company's customers are female.

    Christopher Kelley, a Forrester analyst, told Reuters, that the companies' appeal seems to be to home improvement enthusiasts, not specific gender groups. The study was not commissioned by either of the two retailers.

    This conclusion flies in the face of what has become conventional wisdom, which is that Lowe's brighter lighting and wider aisles hold greater appeal to women, who studies show are more and more interested in home improvement projects. While Home Depot management has said that it may have underestimated the importance of the female consumer in the past, its goal is to target both men and women, not one group at the expense of the other.
    KC's View:
    : We have no dog in this hunt; we can't stand the Home Depot near us, we're no more thrilled with the Lowe's stores we've been in, and we would not in any way, shape or form be considered a home improvement person. (Our idea of home improvement is buying better beer or wine. Or sending the kids away for a long weekend.)

    That said, we believe that there is room in the home improvement big-box genre for departments that can appeal to people like us…men and women who just need the basics, and especially can use help and advice like you used to be able to get at the local hardware store.

    That's the real tragedy of the hardware store business, and one that more retailers in other venues should learn from. Hardware stores closed by the dozen in the face of big box competition, and have not really been replaced by anything except enormous stores with allegedly low prices. It leaves an enormous chasm between what many of these stores offer and what people like us need. It is a chasm that someone or something could try to fill with the possibility of great success.

    There is a parallel to what seems to be happening in the food business, and supermarkets ought to learn from it, creating a new model of store that transcends the simple issue of price.

    This isn't about gender marketing, though that's a part of it. It really is about educational/instructional marketing -- about demystifying a subject for people so they, in fact, become more proficient (and profitable) consumers.

    Published on: February 10, 2003

    From FMI…
    The Food Marketing Institute (FMI) will be a co-sponsor of The 5th Annual Food Safety Summit, the nation's largest and most important event on food safety, quality assurance, and food security, scheduled for March 18-20, 2003 at the Washington, DC Convention Center. The other sponsors are The National Food Processors Association, The National Restaurant Association, and Food Safety Magazine.

    "We view the Food Safety Summit as an event which shares our commitment to food safety throughout the food chain and are thrilled to be part of this leading industry forum," said Jill Hollingsworth, vice president of Food Safety Programming for FMI. "By sponsoring the Food Safety Summit we give our members, food retailers, wholesalers and distributors the opportunity to network with industry leaders, participate in a high quality conference program and see the newest products and solutions that are available to increase safety."

    Invited keynote speakers for this year's event include Ann Veneman, Secretary of Agriculture, and Food and Drug Administration Commissioner Dr. Mark McClellan. Topics that will be part of the conference include Food Security and Bioterrorism, Food Allergens, E-coli, Listeria, and Norwalk viruses, plus a host of new technologies for combating food safety issues.

    Nearly 200 companies will show products in microbiology, laboratory instrumentation, sanitation, quality control, temperature measurement, identity testing, contract laboratory service, auditing, verification, cleaning chemicals, x-ray and magnetic inspection, swabs, containers, or media, training, color and texture evaluation instruments, GC, and many other quality or safety products.

    For more information on The Food Safety Summit, visit http://www.foodsafetysummit.com
    KC's View:

    Published on: February 10, 2003

    Dow Jones reports that a bankruptcy judge will consider whether Kmart can pay two investors in its reorganization plan a $10 million "commitment fee" and up to $5 million in related attorneys fees.

    The two investors have pledged that they will invest up to $353 million in Kmart in exchange for stock in the company.

    Kmart filed for bankruptcy in January 2001, and it hopes to emerge from bankruptcy protection by the end of April.
    KC's View:
    We should have paid more attention in accounting class. Actually, we probably should have taken an accounting class. Who knew we'd spend so much of our time trying to understand the intricacies of bankruptcy protection?

    Published on: February 10, 2003

    USAToday reports that while about three out of ten Americans are obese today, within the next five years that will increase to almost four in ten.

    Obesity is defined as being 30 pounds or more over a "healthy weight," and increases the likelihood that a person will develop diabetes, heart disease, cancer, and other health problems.
    KC's View:

    Published on: February 10, 2003

    The Washington Post reports that the US Federal Reserve will stop processing checks at 13 of its 45 locations. The reason? Americans are writing fewer checks, preferring to use credit cards and debit cards to make their transactions.

    While 60 percent of non-cash transactions are by check, in 1979 it was as high as 85 percent. US consumers wrote 40 billion checks last year, down from 50 billion checks in 1995.

    The Federal Reserve also announced that in a cost-cutting move, it will close five of its locations and eliminate about 400 jobs in total.
    KC's View:

    Published on: February 10, 2003

    The Great Atlantic & Pacific Tea Co. announced that it is selling nine supermarkets in northern New England to Ahold's Stop & Shop and Big Y Foods. The company said it expects to make roughly $80 million on the deal, which is part of its efforts to cut costs and improve its bottom line.

    If A&P Canada comes on the market, both Sobeys Inc., the country's number two grocery chain, and Metro Inc., the number three grocer, say they would be interested in making a bid for the 239-store company. A bid would likely cost them the equivalent of more than $600 million (US).
    KC's View:
    We hope that A&P is successful at getting its house in order…though we also think that clearly more is called for than simply divesting stores and divisions and cutting costs.

    In a Wal-Mart universe, the real challenge continues to be creating a differentiated retailing environment that can appeal to consumers in new and different ways.

    Not easy. But necessary for survival.

    Published on: February 10, 2003

    The US Department of Labor reports that the nation's unemployment rate tumbled to a four-month low of 5.7 percent.

    The Labor Department also reported that outside the farm sector, the number of workers on US payrolls rose 143,000, following a 156,000 decline in December.

    Both the increase in workers on US payrolls was double the improvement forecast by many economists, who also had not predicted the drop in the unemployment rate.
    KC's View:
    Go figure. While there are still the wild cards of possible war and potential terrorist attacks, we're starting to see more positive economic stories lately.

    By the way, speaking of possible war and potential terrorist attacks, did anyone else have the sensation after watching CNN and the other news channels over the weekend that an appropriate response to all this would be to crawl under the bed and hide?

    Published on: February 10, 2003

    USAToday reports this morning about the continued battering that Wal-Mart's reputation seems to be taking at the hands of organized labor, which argues that the company "discriminates against women, underpays workers and uses illegal tactics to kill unionization efforts." The paper writes, "Never before has the retail empire, founded in 1962, come under such blistering attack," with the company currently facing more than 40 lawsuits on a variety of labor-related issues.

    Wal-Mart has 1.3 million employees worldwide, making it the planet's largest single private employer, and it plans to almost double that count over the next five years. It argues that company employees don’t want or need unionization because they are paid competitively and treated well.

    As the paper points out, this is about more than Wal-Mart. It is about organized labor remaining relevant in a political and cultural sense, an argument that is hard to make when a company the size of Wal-Mart has not been organized.
    KC's View:
    It must be difficult for retailers that are organized to know how to root on this one. On the one hand, they don’t want organized labor to become any more powerful, but they understand that if Wal-Mart is unionized, it instantly has to make internal changes that would make it easier to compete with.

    Tough call.

    Tell you one thing. We were shocked to learn from the USAToday article that just 75 percent of employees are eligible for health care coverage, with the rest being in "waiting periods" of six months for full time employees and two years for part-timers, and that the company picks up just two-thirds of the cost.

    For the world's biggest company, that just seems inadequate.

    However, to be fair, the article seems to quote just as many employees who love working for Wal-Mart and think the benefits are just fine as it does disgruntled former employees. Ultimately, this all comes down to a power struggle…and it is hard to know what the result will be.

    Published on: February 10, 2003

    The Chicago Sun-Times reports that in Italy, the growth of supermarkets -- up 74 percent in number since 1996 -- have led to the mass closings of mom and pop food shops that traditionally offered Italians fresh produce, meats, cheeses, and baked goods.

    In part, this dramatic shift can be traced to the rise of the supermarket industry there, but there also has been a demographic change toward dual income households where there is less time to wander down to the local shop on a daily basis.

    Price also has become a major factor, and consumers say that supermarkets have better prices.
    KC's View:
    Sometimes, progress just makes us want to cry.

    We figure that someday we're finally going to get the opportunity to go to Tuscany, to spend some time amid the rolling hills and vineyards, to learn Italian cooking and more about wine…and there's gonna be a damned Wal-Mart Supercenter on the corner.

    Published on: February 10, 2003

    "The 2000 Census revealed the tremendous growth in the U.S. Hispanic population over the previous 10 years; and looking into the future, we can easily see that Hispanics will grow by 80% over the next 25 years (while the White, Non-Hispanic population will grow only 5%)," it is reported in the new edition of Facts, Figures and The Future. "What the census does NOT indicate are the very real implications, opportunities and challenges for food marketers."

    In addition to defining and clarifying some of the issues facing retailers looking to capitalize on this demographic shift, Facts, Figures and The Future offers analysis by FMI's Michael Sansolo, who notes that "one of the best possible reasons for optimism in the food industry these days should be the growth of the Hispanic market," he writes.

    "But winning over Hispanic customers requires some focused effort."
    Sansolo adds, "If you are developing or offering products or services for ethnic
    consumers, know your shopper first and know them well. Observe how
    they buy, what products and in what quantities. How do they cook, and
    how many people are they cooking for? Digging deeper into the
    cultural habits and likes of this very important ethnic group will be
    more difficult and challenging than retailers and brands have
    experienced before -- but the rewards will be worth the effort at the
    checkout."

    In addition, Facts, Figures and The Future offers a look at private label growth in the US food retailing industry, including a look at how it is being used in alternative channels; an Internet grocery update; a piece about the Kinesthetics of Supermarket Lighting," and how the increasing irrelevance of fast food chains opens a door of opportunity for supermarket retailers.

    Facts, Figures and The Future is a co-venture of Phil Lempert, the Food Marketing Institute, and ACNielsen.

    For a subscription to Facts, Figures and The Future, either click on the "FFF" logo on the right hand side of this home page, or go to:

    www.factsfiguresfuture.com
    KC's View:

    Published on: February 10, 2003

    MNB continues our newest feature: "The BIG IDEA Beat" Contest, in which the thought-leaders who make up the MNB community have the opportunity to share their perspectives on critical issues facing the industry and win a signed copy of Agentry Agenda: Selling Food in a Frictionless Marketplace, by Glen Terbeek.

    Each week, we offer both a Premise and a Challenge to MNB users. The Premise will seek to state either a fact of life for the food industry as it currently exists, or a trend that seems to be developing as retailers and manufacturers seek a better way of conducting business.

    Your Challenge will be to respond by identifying the best ideas and examples that typify where the industry ought to be heading.

    Entries should be emailed to kc@morningnewsbeat.com.

    "The BIG IDEA Beat" contest will be featured each Monday, and repeated Tuesday and Wednesday…answers must be submitted by 11:59 p.m. on Wednesday. Winners will be picked and featured on MNB by Friday. Some weeks there may be single winner…other weeks, there could be multiple winners. Selection of the winners will be solely at the discretion of Glen Terbeek and MNB Content Guy Kevin Coupe.

    Premise:

    Wal-Mart’s supply chain has been envied by the supermarket industry as being both efficient and effective; many in the industry say it's the key to their success. It was the motive for the ten-year ECR movement, in which the industry tried to emulate it. It includes a significant technology investment including Retail Link that shares complete sales and inventory visibility at store level with their suppliers. It operates on the policy of "net, net" costing to the store.

    And now, as reported on MNB, it is rumored that Wal-Mart may offer wholesaling services to independent supermarket operators, leveraging this supply chain.

    Challenge:

    Tell us if you think independent supermarket retailers should use Wal-Mart’s wholesaling services? What are the pros and cons of doing so? What would be the impact on the shopper, the manufacturer and the retailer of such a decision? Consider this question from the shoppers’ and manufacturers’ view as well as the retailers'. And finally, if Wal-Mart decides to go into the business of supplying independent grocers, what should the current wholesaler class do in response?
    KC's View:

    Published on: February 10, 2003

    Nash Finch Co. announced last Friday that what it termed "material adverse consequences" - such as breaches of loan covenants, liquidity issues and the delisting of the company's securities from the NASDAQ - could take place if the US Securities and Exchange Commission (SEC) Office of the Chief Accountant (OCA) rules that it improperly accounted for "count-recount" charges assessed to its vendors.

    Delisting will occur if Nash Finch doesn't report its third quarter earnings by March 19. They were supposed to have been reported last October.

    The company's auditors, Deloitte & Touche LLP, resigned Jan. 28, and has not yet been replaced. The auditor had only worked for Nash Finch for six months, and quit over the company's unwillingness to provide what it termed "sufficient evidence" that its accounting practices were appropriate.
    KC's View:
    "Material adverse consequences." That's MBA-speak for "your worst nightmare."

    Be nice, wouldn't it, if these guys actually spoke English. It's like, if you don’t speak plain English, how can you run a business in a realistic, credible way?

    In fact, maybe that's a truism. Companies that use phrases like "material adverse consequences" are almost always doomed to experience them.

    A new mantra for the Content Guy…

    (The list is getting longer. We'll have to make up a T-shirt…)