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    Published on: February 11, 2003

    The Oscar nominations were announced this morning, with major categories as follows:

      “Gangs Of New York”
      “The Hours”
      “The Lord Of The Rings: The Two Towers”
      “The Pianist”

      Adrien Brody, “The Pianist”
      Nicolas Cage, “Adaptation”
      Michael Caine, “The Quiet American”
      Daniel Day-Lewis, “Gangs of New York”
      Jack Nicholson, “About Schmidt”

      Salma Hayek, “Frida”
      Nicole Kidman, “The Hours”
      Diane Lane, “Unfaithful”
      Julianne Moore, “Far From Heaven”
      Renée Zellweger, “Chicago”

      Chris Cooper, “Adaptation”
      Ed Harris, “The Hours”
      Paul Newman, “The Road To Perdition”
      John C. Reilly, “Chicago”
      Christopher Walken, “Catch Me If You Can”

      Kathy Bates, “About Schmidt”
      Julianne Moore, “The Hours”
      Queen Latifah, “Chicago”
      Meryl Streep, “Adaptation”
      Catherine Zeta-Jones, “Chicago”

      Rob Marshall, “Chicago”
      Martin Scorcese, “Gangs Of New York”
      Roger Daldry, “The Hours”
      Roman Polanski, “The Pianist”
      Pedro Almodóvar, “Talk To Her”

      “About A Boy”
      “The Hours”
      “The Pianist”

      “Far From Heaven”
      “Gangs Of New York”
      “My Big Fat Greek Wedding”
      “Talk To Her”
      “Y Tu Mamá También”

    The Oscars get handed out on Sunday, March 23.
    KC's View:
    We have some movies to see…

    Published on: February 11, 2003

    In yesterday’s MNB, we reported on gender marketing and the varying efforts of Home Depot and Lowe’s, and quite frankly were fairly negative on the whole DIY experience.

    MNB user Dan Raftery, of Prime Consulting Group, wrote to set us straight:

    “Although the Home Depot near you has rubbed you the wrong way and although I could tell you about many of HD's mis-steps, let me simply relate a few observations from my trip to the Gurnee IL Home Depot yesterday (Sunday).

    “My shopping list included a sabre saw and a few hardware items. The number of options for the saw were a bit staggering. As I browsed, an irate customer brought the section clerk over to complain about a sale sign on a saw. He took the wrong one to the checkout and it was $20 more than he thought it should be, based on the sign. The guy was clearly a doofus, the sign was fine but the clerk gave him the lower price. Customer service lesson #1: Doofus customers are always right too, maybe more so.

    “After they sauntered off, I was still pondering the choices, and another clerk asked if he could help. He stayed with me, answering my questions, until I had a selection in my cart. Customer service lesson #2: Consultative selling closes the sale.

    “Next to one of the items on my list I discovered adjustable folding saw horses. I never knew such beautiful things existed. Two went in my cart (+$40 to my bill). Pure impulse, and it wasn't a salty or savory snack or a beverage.

    “On the way to my car, a pleasant young man wished me that old "Have a good day." I didn't know he was an employee until he started shagging carts. He didn't have to talk to me. He was dressed like everyone else and could have gone about this crappy part of his job (25 degrees) incognito. Customer service lesson #3: Be nice, even if you're miserable.

    “Major retailer big box lesson: Its not the size of the store, its how you train the employees. Since the first European hypermarkets appeared in the US, research has shown that shoppers approach big stores in smaller, more manageable segments. Heck, they do that in Europe too. That's the whole idea behind the "store within a store" concept. Many sections need available, friendly experts to help shoppers spend more than just their time in the aisle.”

    Points taken. And we think those lessons are fairly applicable to almost every forma of retailing.

    Also on the subject of Home Depot, MNB user Bob Vereen wrote:

    “I am a retired trade magazine editor, still doing some free lance writing in my old field, hardware/home centers, so have been researching Home Depot's current situation--checking with independent retailers who compete with Depot as well as vendors supplying them.

    “Most retailers now feel Depot is less competition than under the founders' leadership--service is poorer, prices are higher, housekeeping no better and often worse.

    “Vendors tell me that on low-cost items, Depot is now more than doubling cost, which means that even two-step distribution (retailers buying from wholesalers) can be competitive. I thought Depot was supposed to be an advocate of Everyday Low Pricing.

    “Almost uniformly, vendors say Lowe’s is the sharper operator today in almost every way.”

    We mentioned in passing yesterday that watching CNN over the weekend made us want to hide under the bed and wait for current events to pass,

    One MNB user made a helpful suggestion:

    “Maybe you should switch to Fox instead of CNN!”

    Actually, we’re just hoping that spring training games begin soon so we can avoid the news altogether.

    More on our discussion of the merits of loyalty marketing. MNB user Ken Robb, who used to be with Dick’s Supermarkets and was on the leading edge of such programs, wrote:

    “It appears to me that those who are irritated by supermarket card programs are shopping in supermarkets that have cards but do not have card programs...those retailers with cards that offer little or nothing to the customer. Perhaps they have not experienced shopping with a retailer on the cutting edge of CRM.

    “We may or may not have been on the cutting edge...but there were no coupons, no purchase requirements, and no limits on our advertised prices...ever. Our best customers, those who spent at or above the average weekly transaction, received paperless coupon offers that were unique to their household, targeted against their purchase history, and were automatically deducted from their receipt at the checkout. They also received higher check cashing limits, personal charge privileges, and free home delivery when they needed it...and every so often, we would surprise them with a sincere thank you or an unexpected customer service.

    “For sure, we had our detractors, those customers who didn't like our card program. For the most part, they were customers who spent well below the average, and more often than not, divided their spending between us and our competitors, not really spending enough at any store to be considered a "loyal customer" to anyone. In focus groups, these customers complained that they didn't get the price discounts and benefits that their friends and relatives did. That's right. But it would have been different if they would have changed their shopping behavior.

    “Our best customers liked our program. Indeed, we had (and they still have) customers who memorized their card numbers, and didn't carry their card with them. I've even had checkout operators who have memorized the first few digits of my card number. And then, I have seen many customers take out their card, and tell a new checkout operator that they had their card since the beginning of our program, asking them, "...have you seen one of card is one of the originals...see how worn it is...?" Amazing.”

    A pretty good rule of thumb when it comes to loyalty marketing programs seems to be that if there is a coupon involved, it may not actually be a loyalty marketing program, but a glorified discount program. Which is something else entirely.

    Yesterday, we reported that 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, telling its various agencies that it will evaluate campaigns not just on effectiveness, but on likeability.

    One MNB user responded:

    “We think McDonald's has taken their eye off the ball. What has made them profitable and famous in the past is an average quality of food, but delivered in a fun atmosphere for kids. I don't know too many adults who go to McDonald's because they like it. They go because their kids like it. And from about age 2-12 you can bet your kids are going to ask to go there. The only positive for adults was that they could let their kids run (to the play area) and they could sit and have a cup of coffee and talk.

    “Having worked in the past in fast food (Wendy's), each restaurant that was successful created their own unique niche. Burger King was char-broiled, McDonald's was for kids and if you had grown up you went to Wendy's.

    “Now with the proliferation of fast food and fast casual opportunities, it's even more important for McDonald's to do what they do best. And that is provide kid sized meals with prizes, a playground, and something that an adult can stomach while they are there.

    “Even though I'm in the ad biz, I don't think changing their advertising is what will bring them back to their old glory.. (Even if they can get back with all the competition out there today).”

    Another MNB user wrote:

    “McDonalds just re-built their store in Broadripple (Indianapolis, IN). It has a player Baby Grand piano and a fireplace, plus offers additional menu items like croissant sandwiches, etc. The piano is occasionally provided a real person to play or a patron may play at will.”

    Maybe, in certain cases, Mickey D’s is getting the message…but they still have to improve the overall food offering.

    Yesterday, we reported that the US Department of Labor reports that the nation's unemployment rate tumbled to a four-month low of 5.7 percent, and that the number of workers on US payrolls rose 143,000, following a 156,000 decline in December.

    Our comment was that while there are still the wild cards of possible war and potential terrorist attacks, we're starting to see more positive economic stories lately. Which prompted the following email from a loyal member of the MNB community:

    “A Content Guy I know said just 2 months ago, "No matter what the spin, the economy ain't pretty." Nothing meaningful has changed in 2 months.”

    Okay, maybe we were having a brief flash of qualified optimism. Sorry about that.
    KC's View:

    Published on: February 11, 2003

    • Kellogg Company announced that it named David Mackay, president of Kellogg USA, to be in charge of the day-to-day operations of its U.S. Snacks business unit.

      Mackay will remain president of the Kellogg USA division, but will spend the next few months focused on the Snacks business, and will groom a successor. He replaces Paul Lustig, who is leaving the company.

    KC's View:

    Published on: February 11, 2003

    • 7-Eleven Inc. announced that total sales for January were $832.1 million, up 16.5% from a year earlier. Total merchandise sales for January were $571.3 million, up 7%. Same-store merchandise sales for January increased 6.6%, compared with a 4.3% increase in January 2002.
    KC's View:

    Published on: February 11, 2003

    Ron Ziegler, the former president and CEO of the National Association of Chain Drug Stores (NACDS) from 1987 to 1998, died yesterday near San Diego, California, of a heart attack. He was 63.

    Ziegler more famously was the former press secretary to President Richard Nixon who once called the Watergate break-in a “third-rate burglary.”
    KC's View:

    Published on: February 11, 2003

    • Jewel-Osco announced that its sales of toys has increased by 50 percent over a year ago since it installed Toys R Us branded departments in five stores. A further roll-out is planned, though details have not been released.

    • The Associated Press reports that two front-end stalwarts, Ladies' Home Journal and Woman's Day, are getting design makeovers that the publishers hope will make them appealing to younger readers.

    KC's View:

    Published on: February 11, 2003

    Dow Jones reports that Kmart Corp.'s internal investigation of management and mismanagement practices during the company’s descent into bankruptcy protection now is focusing on its board of directors.

    The goal now, through a series of interviews with members of the board, is to determine what the board knew and when it knew about the management practices that drove it into financial ruin.

    Ironically, one of the people being investigated company chairman James B. Adamson, who replaced Charles Conaway as CEO last March and just relinquished the position. Adamson is sue a $3.6 million lump-sum cash severance payment when the retailer emerges from bankruptcy, scheduled for this April.

    Kmart filed for federal bankruptcy protection in January 2002 .
    KC's View:
    Depending on how this goes, the company picnic this summer ought to be a real treat.

    Tell you one thing. It seems from this perspective that the one thing they don’t have in stock at Kmart are signs that say, “the buck stops here.”

    Published on: February 11, 2003

    Starbucks Corp. said will test market Godiva chocolates and biscuits over the next three or four months in 50 of its coffee shops in New York, Seattle and Chicago.

    The test is part of an ongoing series of attempts by Starbucks to expand beyond its traditional and exceptionally successful coffee shop business. It has sold breakfast items and pre-made sandwiches in some of its shops, to varying levels of success.
    KC's View:
    This actually seems like a pretty good idea…the Starbucks-Godiva match seems like a natural. One assumes that they’ll probably come up with a Godiva-branded coffee before you know it.

    It also is further proof that everybody competes with everybody these days…

    Published on: February 11, 2003

    A new survey on the subject of ice cream consumption conducted by Harris Interactive reveals that 70 percent of Americans say that they have at least one ice cream “indiscretion.” Such as:

    • 26 percent of those polled said they will eat ice cream instead of a meal.
    • 10 percent say they will eat ice cream for breakfast.
    • 19 percent say they eat ice cream in bed.
    • 16 percent say they sneak extra servings of ice cream when nobody is looking.
    • 22 percent say they’ll share ice cream with a loved one by serving it in a single bowl with two spoons.
    • 57 percent of American males between the ages of 45 and 54 like to eat ice cream right from the carton.

    The poll, which was conducted in connection with the introduction of a new line of ice cream products, also revealed that three percent of respondents like to eat ice cream in the bathtub, and a small minority likes to share its ice cream with their pets.
    KC's View:
    We’re just glad that there was no statistic for people who like to eat ice cream with their pets while both are in the bathtub.

    That would’ve been more than we could handle.

    Published on: February 11, 2003

    The Atlanta Journal-Constitution reports that Coca-Cola’s Minute Maid division is test marketing “BeginIt,” a new dairy-based fruit drink with nutritional benefits, vitamins, and no fat.

    The product is reported to be similar to “Snapple-a-Day,” a new product from the Snapple Co.

    The difference between the two products, however, is that BeginIt is being positioned as a “fruit to go” drink, while the new Snapple n=beverage is supposedly a meal replacement for dieters.
    KC's View:
    It almost doesn’t matter how these products are positioned. Store shelves and coolers are about to get even more crowded than they are already…

    Published on: February 11, 2003

    The New York Times reports that has decided that the cost of television advertising isn’t worth the return, and instead will rely on low prices, free shipping and positive word of mouth to drive sales.

    Last year, Amazon spent $50 million on television advertising, but monitored its impact to see if it could directly correlate sales with ads. It couldn’t, so it has disbanded its five-person advertising department.

    "Over the last couple of years, we have come to understand how low prices drive volume," Jeff Bezos, Amazon’s CEO, told the NYT. "We think we get a better return giving the money to customers instead of television networks."

    The company will continue to advertise on other websites, as well as in Sunday newspaper circulars, an expense largely covered through manufacturers’ cooperative programs.
    KC's View:
    The cost of free shipping will be more than $100 million this year, according to estimates, which means that not spending $50 million on television ads covers about half that expense. The rest, one assumes would have to come from increased volume.

    Remarkably, this company that is emblematic of high-tech B2C commerce is counting on the lowest tech technique of all to drive its future volume and profitability.

    Works for us.

    Amazon is hardly the only company to have sworn off advertising in its desire to be more effective in reaching customers. Dorothy Lane Market, having created an effective loyalty marketing program, decided to do exactly that years ago -- and found that by using targeted niche communication vehicles it could be far more efficient in connecting with its best customers.

    Published on: February 11, 2003

    • Published reports in the UK say that Marks & Spencer has approached Wal-Mart about acquiring some Safeway Plc stores if the Arkansas-based retailer is successful in its bid to acquire Britain’s fourth largest food retailer. There have been estimates that Wal-Mart would have to sell close to 200 stores to be approved by the UK’s competition authorities.

    • The UK’s Consumers’ Association has announced that it is in favor of the bid made by William Morrison Supermarkets for Safeway, reasoning that a Morrison acquisition of the company would be better for consumers by creating a strong counterpoint to powerhouses Tesco, Sainsbury and Wal-Mart’s Asda Group.

    • The Transport and General Workers’ Union (TGWU) announced that it is supporting the Sainsbury bid for Safeway, judging that this acquisition is more likely to retain jobs for its membership.

    • Waitrose, a subsidiary of the John Lewis Partnership, said that it has asked the government’s competition authorities to review every bid for Safeway, regardless of what company makes it. Waitrose said that regardless of which company acquires Safeway, the potential impact on consumers is enormous and needs to be watched by government regulators.

    • Retailer Philip Green formally submitted his bid to acquire supermarket chain Safeway Plc this morning, becoming the fifth entity to do so. Only Kohlberg Kravis Roberts, the US buyout firm, has indicated interest but not submitted a bid.

    KC's View:
    We know that there will always be an England, but this game is going to play out for so long that by the time it gets resolved, there may actually not be.

    Published on: February 11, 2003

    In a decision that could presage results of the antitrust suit filed by Wal-Mart and other retailers against Visa and MasterCard, a California judge has ruled that the two credit card companies have to pay back $500 million in fees and surcharges collected by card-issuing banks from people who used their cards outside the US.

    At issue was the disclosure -- or lack of disclosure -- of rates used for currency conversion.

    While this case was not an antitrust case, The New York Times reports that at least one plaintiff attorney believes that "a lot of the factual predicates are the same.” Another attorney suggested “there is a continuing practice by Visa and MasterCard of failing to disclose the real costs of transactions they impose on consumers and merchants.”
    KC's View:

    Published on: February 11, 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

    “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.


    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.


    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 11, 2003

    The New York Times reports this morning on the conflict that exists between much of Europe and the US over the issue of genetically modified foods.

    “Tinkering with the genetic makeup of crops to make them faster-growing and more resilient, something done routinely in the United States with seldom a pang of consumer concern, is seen (in Europe) as heretical, or at the very least unhealthy,” the NYT reports.

    Robert B. Zoellick, the United States trade representative, calls Europe's stance on genetically modified food "Luddite" and "immoral.” The NYT notes that when he said “that Europeans' fears about GM foods had persuaded some famine-ridden countries in Africa to reject genetically altered grains,” it appeared to some Europeans as if he was blaming them for starvation in Africa.

    David Byrne, the European Union's health and consumer protection commissioner, called Zoellick’s comments “unhelpful,” “unfair” and “wrong."

    For the moment, the Bush administration has decided not to pursue this issue through legal channels because it needs to keep Europe on its side during any potential conflict with Iraq.
    KC's View:
    We have no problem conceptually with eating foods that include GMOs, but referring to European feelings in the matter as "Luddite" and "immoral” strikes us as the worst kind of American arrogance.

    You wonder why the US gets a bad reputation in the world sometimes, and then you read comments like that and suddenly it all seems clear. After all, how would we feel if, say, France decided to lecture us on our opinions about the foods we put into our bodies?

    Published on: February 11, 2003

    The Bush administration, while saying that there was no evidence that a chemical or biological attack on the US was imminent, offered guidelines yesterday as to how citizens should prepare for such an eventuality.

    The government urged the preparation of a "disaster supply kit" that includes a three-day supply of water, one gallon per person per day; food; a battery-powered radio; a change of clothes; an extra set of car keys; and cash.

    It also recommended that people keep a supply of duct tape and plastic sheeting in their homes to seal off windows if a chemical or biological attack occurs.

    The recommendations were issued by the Department of Homeland Security, and are similar to those made last year by the Red Cross.
    KC's View:
    We’re not being crass here, but do think that this is an opportunity for retailers to establish their roles as community centers in case of a national or regional emergency. It isn’t just stocking these kinds of items or providing pre-packaged kits…it is being a place where people can come if events warrant.

    It is interesting to us that the question of “having a plan” came up numerous times last weekend in conversations with friends and neighbors. We know people who have bought property near the Canadian border, and are holding it just in case they need a safe haven.

    We haven’t even bought extra water yet. But we may rectify that today.