business news in context, analysis with attitude

In response to a piece we wrote last week about a discrimination suit filed against Safeway, the company’s Greg Teneyck sent us the following email:

“I'm sorry that you did not include Safeway's position on the item in The Legal Beat today. First, as of today, Safeway has not yet been served with this lawsuit. If the case does go to a court of law and all the facts are revealed, Safeway strongly believes that our hiring decision will be affirmed. We are committed to non-discrimination in our hiring practices and actively promote diversity throughout the company.”


For the record, MNB asked Safeway about the suit and, learning that the company’s spokesmen knew nothing about it, forwarded all the press materials we received in hope of getting a comment. However, we were told, company policy is not to comment on pending litigation.

Last week, after reporting a story about negotiations between the US and EU over GMOs, we commented that “somehow, compared with the Iraq situation and the war on terrorism, GMOs just don’t seem all that important.”

Well, there were some of you who thought that comment was a little…well, intemperate.

One MNB user wrote:

“KC, I'd like you to consider your comment from another perspective. According to some, the one of the principles that the terrorists are "fighting" against is America's brash consumerism ego of more, more, more, often initiated by greed for the almighty dollar and control. Even though some might say that GMO is to help expand food supplies for "the world" and for other altruistic purposes, to me, that doesn't ring true.

“If, by chance, the first perspective regarding greed and GMOs is true, then GMOs are as important as the war on terrorism. One of the great faults of the greed factor is it often creates singular focus and blinders to how so many issues are interlinked to one another. Thanks for considering this.”

MNB user Tom Kroupa wrote:

“You may not think that the GMO issue is not as important as the war on Iraq. But consider this: we are using the same bullying tactics with the EU on the GMO issue as we are on the war. In case we haven't noticed, they have a democracy in Europe and the people are saying NO TO GMO's. The politicians’ policy on biotech is based on the money that the biotech companies have given to the politicians to speak in their behalf. We rushed biotech products to our market so the companies could recoup their investment –all without ever looking at the future effects it might have on our long term health. So this is about big money. Remember how they promoted margarine as a healthy alternative to butter? The EU is expressing that we do not have sound science to support the widespread use of GMO's and please don't dictate to us what we can and cannot eat!”

And another MNB user wrote that GMOs were less important than the way…

“…Unless you’re the farmer!”

Good points all.

The thing is, we wrote those words on Friday, and we’re always a lot crankier on Friday mornings.

While technically we still would argue that GMOs are less important than the military and national security issues that are in the headlines, we actually agree with the notion that we as a country have no right to tell Europeans what they can and can’t eat.

Responding to our story last week about A&P testing a dollar store concept within one of its Food Basics units, one MNB user was a little cynical about its prospects:

“A&P, although once a premier retailer, has not done much right lately, so they might as well fail in the dollar store war.”

We wrote last week about the advantages of creating so-called “value networks,” and one MNB user thought we were on the right track:

“I agree with your perspective, and I believe we have just begun to see the effects of these relationships. They just make all of the sense in the”

But MNB user Richard Lowe thought we were over-reaching:

“I think it is time for retailers to stop trying to be all things to all people. This morning I saw a TV ad for Sears showing all the major appliance brands and saying they will meet the lowest price plus 10% for 30 days after your purchase. No wonder service goes out the window when all decisions get made on price alone.

“Manufacturers need to get a back bone and not sell to retailers selling competitive brands. They also need to stop the retailers from rolling over them at their whim.

“This escalating spiral has to end. So when I need something I first shop online for the best deal and then go pick it up at the nearest location. If I do not place the order with Amazon because of all the clicking hassle and I just go to Borders and buy it. What has Amazon gained? If I buy it from Amazon and have them ship it. What does Borders gain? You have been talking about retailers standing for something and now you want them to stand for nothing! Then the profits continually get rung out of the manufacturer, the wholesaler, and the retailer. Nobody remains healthy!”

Perhaps you misunderstood. More likely, we weren’t clear enough.

We believe firmly that retailers need to be specific about their strengths, develop and market them as clear value advantages, and not focus on price in markets where they cannot win that battle. We do think, however, that coalitions of retailers can establish greater strength than they would have alone by building on their combined strengths to create a value network that appeals to consumers.

More email continues to come in about Ahold, with one member of the MNB community who asked for anonymity writing:

“One has to wonder weather the Chantilly Office for Ahold was built, as they said, to drive synergy, as it is in most cases of consolidation as "a vanity temple", or did it become the focal point for pushing the envelope on the types of business practices that will eventually fold their tent?

“Adding hundreds of staff personnel and millions of dollars in brick and mortar hardly seems like a consolidation strategy.”

While Ahold was acquiring companies and developing synergies where they made sense, we never thought they approached consolidation the same way as other companies. Rather, the folks at Ahold seemed more respectful of local issues and marketing needs, which is why Giant is a different chain from Stop & Shop.

On the subject of McDonald’s decision to bring out a new salad line with Newman’s Own dressings, MNB user Glenn Cantor wrote:

“As a parent who ‘dines’ at McDonalds only for the kids, one can only hope
that the quality of the McDonalds premium salad will be worthwhile of the
Newman's Salad Dressing on top of it. For help, see Wendy’s.”

Another MNB user wrote:

“I am not sure that "star-power" is going to help McDonalds all that much.

“It constantly amazes me that companies must stare into the ravine before they wake up and do something about their ailing business models.

“Hopefully, Mr. Newman’s good heart and his good business sense will rub off on McDonalds as a result of this new relationship.”

Of course, not everyone was impressed by the Newman-McDonald’s connection:

“Newman's products are another one of those shams like "Healthy Choice". Read the content labels of his products and look at the sodium content. He has a long way to go for a population that should be on 500 mg's a day.”

“Sham” seems like a pretty strong word.

As for us, we’ve become addicted to Newman’s Own Family Recipe Italian dressing…and we love the notion that all the profits go to charity.

Finally, on the subject of vendor-retailer relationships, we received the following email:

“When talking about how lopsided against the vendor the grocery industry is currently, one must not forget the emergence of in-house brokers. During the mid to late 1980's retailers and wholesalers started to adopt policies of only doing business with Private Label suppliers who, under duress of losing their business, were forced to fire their independent representation and hire a particular costly in-house broker named by and, controlled by the retailer/wholesaler…for, basically not providing the functions and/or service to the vendor that the independent broker supplies. In-house brokers do not offer anything to the vendor other than the ability to sell the retailer/wholesaler.

“The retailers/wholesalers goal? Simple. To use their muscle to capture the independent broker’s commission by funneling those monies from the vendor to the in-house broker who ultimately passes the bulk of the funds through to the retailer or wholesaler. This in direct violation of The Robinson-Patman
act. Can you say "kick-back"?

“Unfortunately, no matter how loud the broker and vendor community cried foul the federal government refused and continues to refuse to enforce a law on their books as they don't see how the practice of in-house brokers "harms the consumer". Thus, the scourge of in-house brokers proliferated…

“It wasn't a stretch to figure that once retailers/wholesalers were able to break laws over Private Label in-house brokers the practice would eventually spread to Brands. Which it now being attempted by several large national retailers.

“Bottom line: Independent Brokers are the most cost effective way for a vendor to come to market, and thus adds the least cost to products and resultant retail prices. By having to submit to in-house brokers, the vendor community was forced to gear up and hire more costly salaried sales people, additional inside sales support and customer service support, without gaining one case of additional business. Since the only revenues a vendor ever receives is the bottom right corner of their invoice, the added costs of in-house brokers had to be added into the product cost. Thus, higher retail prices to the consumer.

“Yeah, I guess there is no harm to the consumer other than having paying higher prices at the registers to cover the cost of the kick back to the retailer/wholesaler. The federal government had and has it all wrong.

“However, once retailers/wholesalers were able to get away with breaking federal law, they felt empowered to institute additional policies to illegally capture vendor monies. Store slotting fees, warehouse slotting fees, reclamation centers, etc. All of which must be passed on to the consumer in the form of higher prices.”
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