business news in context, analysis with attitude

Lots of mail to sort through on this busy Monday morning at MNB World Headquarters…

Let’s start with a response that we got to our story Friday about the possibility that the investigation into Ahold’s alleged misdeeds could extend to major packaged goods manufacturer. We’ve said all along that this has all the earmarks of a drama that will unfold slowly and painfully; on Friday, we wrote that “the onion of Ahold’s misery continues to be peeled away.”

One member of the MNB community wrote:

“’The peeling back of the onion,’ as MNB puts it, is perhaps the single
biggest opportunity for the grocery channel to get well.

“When performance metrics require fictitious profit lines to be met on profit and loss statements, people will do whatever they need to do to meet their accountabilities. Some of today's practices would be deemed less than legal if we, as individuals, practiced the same things in our personal lives.

“The billing of post audits that take extra days years after the event, the over billing that occurs in many a reclamation center, the so called logistics fees that warehouses somehow justify, the unilateral deducting for new store distribution allowances and such, just to name a few, simply are not justifiable in most cases. Imagine if you decided to pay $10 less on your electric bill for a month simply because you felt that you were out of the house for a week and that you were over billed as a result. Does anyone believe that you would not be turned off for not paying and a mark put on your credit history.

“The accountability is on all participants in the industry. Retailers and wholesalers need to move towards recognizing that any profit that is earned is only earned on a consumer sale.

“Manufacturers have to draw the line in the sand and strongly enforce their conditions of sale. Without that, their trading partners are going to push to the limit, their activities in regards to creative profits. Fear of customer re-actions have to go away.

“This may seem overly simplistic and in some ways it is, the bottom line is that as a general statement, the grocery industry has become a mesh of creative income practices. As long as the so called ways of "making" money exist and are allowed, the eye is off of the ball that Wal-Mart is so clearly focused on...the consumer.”

Another MNB user wrote:

“It is painful to see a company as noble (perhaps a strong word but several months ago it seemed to fit) as Ahold struggling. But sometimes badly needed changes require a catalyst. Perhaps a revolution in the way the food industry does business would be painful but beneficial - for the survivors anyway.”


Last Friday, we noted that The New York Times was reporting that American retailers are having to depend on sales to bring people into the stores, even as new spring merchandise appears on store shelves. People are accustomed to bargains and don’t want to buy if they don’t see themselves as getting a value. We wrote that retailers have made the mistake of allowing “value” to be defined as the cheapest item on the shelf. This is particularly true of the supermarket industry, but it affects any segment that competes with Wal-Mart.

One MNB user agreed with our evaluation:

“Your comments about value formats and strategies perfectly described the problem with most food and drug retailers supposed "Wal-Mart" strategy. Instead of trying to beat WM at its own game, competitors big and small would do better by offering the consumer convenient alternatives and products that are either reasonably priced or of recognizably better quality.

“Thanks for your level-headed views - I enjoy reading them everyday!”

We’re blushing…and thank you.

However, not everyone thought our story merited attention, as MNB user Denise Remark wrote:

“Twenty years ago I worked for May Company. Even then, lots of my customers would tell me that they seldom if ever bought anything at regular price because within a couple of weeks, there would be a sale or promotion of some sort & they could get the new item off-price. And besides, who doesn't want a value (real or perceived)? So with all due respect, this isn't really news. (Well, maybe it is to the NYT...)”

Fair enough.

Writing in about the continuing saga of obesity in America, one MNB user wrote:

“I think it's time the parents of obese children take the responsibility. Wanna bet the parents who filed suit are up to their (expletive deleted) and chinny chin chins in fat!”

Maybe. But we also think compassion and education are called for as well. In our mind, that isn’t a sign of society’s weakness, but a sign of its strength.

On the subject Of McDonald’s trying to get healthier in its meal offerings, we did get one dissenting opinion from MNB user Harry Yanushonis:

“Being a father of three boys I really think that McDonalds is barking up the wrong tree trying to put fruit and veggies in the kids happy meal. I really do not think that my kids or any kids for that matter are going to be asking these items at a McDonalds. It's time that they stop trying be something they are clearly not and started focusing on the core product "fast food". “

We had a story last week about retailers that were laying off people at the top, and suggested that it seemed like there might be a trend afoot. One MNB user responded:

“Layoffs at the top? Long overdue in many, many businesses. It isn't a big secret that big business is just as capable of creating bloated bureaucracies as big government.

“Here's a similar heretical idea. How about the folks in secondary and higher education adopting the same philosophy? The current budget crunches in state and city education are mandating huge cuts in those institutions. However, while we see them cutting out classes, teachers aids, whole programs, we don't see corresponding cuts in administration. Check out the various state universities where the administrators (not the faculty who do the most important work of education) give themselves the best salaries, the best parking places, free sports tickets, insist on spending tens of thousands of dollars on yearly flower planting and landscaping where it graces the view from their windows and more. The list of expendable administrative costs is huge.

“Let's bring in a few serious bean counters and start paring down the wasted dollars.

“Just a thought. Nobody's really holding their breath on this one, which is too bad. Maybe the institutions who teach tomorrow's leaders could do a little better role modeling as part of the process.”

An important issue…but we always get a little nervous when bean-counters get called in anywhere.

Just FYI…It so happens that in the town where we live, there’s a guy on the board of finance who could be called a bean-counter. He actually suggested in a public meeting that having a library in each of the five elementary schools in town was redundant and a waste of money…

That’s right. School libraries are a waste of money.

They have a word for guys like these. (Actually, they have several.)

“Bozo” is the most charitable.

We posted the results of a survey last week that revealed Americans gained weight during the first quarter of the year…which prompted the following email:

“What the survey doesn't say is that a great share of Americans gain weight in the first quarter of EVERY year. The shortened days trigger a certain amount of lethargy (a photoperiodic response.). At one time it was a survival thing. The less you moved around in the winter, the less food you needed in the lean, mean days of winter. The extreme end of this is a condition known as SADS (Seasonal Adjustment Disorder Syndrome) where people go into a state of clinical depression. Some folks get a severe case, some get it so little that they barely notice.

The treatment is to add lots of light to the rooms they spend the most time in.

The first quarter is also pretty much devoid of so many of the activities that keep us so busy in the third quarter.

Yup, the first quarter is darker and colder than the rest of the year and we tend to veg out. January also marks new episodes of our favorite shows. There's so many reasons were turn into couch potatoes it would take a couple of pages to list them all.

People in the weight loss business tell me this happens every year. It's like talking to an economist. The figures are absolutely accurate and totally worthless.”

Aren’t economists sort of like bean-counters except with better pedigrees?

In one of our rants last week, we wondered about a story that said federal Air Marshalls were going to start flying coach, so as to free up first class seats for paying customers. While we were sort of outraged that they were flying first class, numerous people wrote in to point out that by being in first class, they also were the last line of defense between a terrorist and the cockpit.

Which is a good point.
KC's View: