retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: May 16, 2003

    It's Friday, so a good day to address two of our favorite subjects…

      Retail Baseball
      There was a fascinating piece in The New York Times yesterday about the unique scenario being faced by the Kansas City Royals, which are owned by former Wal-Mart CEO David Glass.

      NYT reporter Murray Chass writes:

      "The Royals have not been in a playoff game since 1985, the year of their lone World Series championship. No one expected them to be in the playoffs this year, but for the first seven weeks of the season they have been the most
      surprising team in the major leagues. They have been in first place in the American League Central every day of the season. After last night's 7-0 loss at Minnesota, they had a game-and-a-half lead over the Twins with a 23-15 record. Their surprising success has created a quandary for the team's owner, David Glass.

      "Last winter Glass directed (team general manager Allard) Baird to cut $10 million from the $47.6 million payroll the Royals had in 2002, even though the Royals were projected to receive $19 million in revenue-sharing funds at the end of this season under baseball's new basic agreement. With their payroll
      reduction, the Royals have raised questions about the owners' stated desire to improve competitive balance through revenue sharing."

      The NYT says that while GM Baird downplays the financial restrictions placed upon him by Glass, the owner himself doesn't respond to interview requests. The players, on the other hand, already are up in arms about the possibility that their efforts could be undercut by an ownership mandate to cut costs.

      This is interesting on all sorts of levels. We, quite frankly, have always believed that at least some of the baseball owners were full of it when they said that they wanted revenue sharing so they could be competitive. Revenue sharing was never supposed to drop to teams' bottom lines…it was supposed to be used to hire better players and build better teams.

      Glass reportedly was a hard-liner in the recent contract negotiations with the players, perhaps mistaking the Players Association for the United Food and Commercial Workers (UFCW). We know that Wal-Mart doesn't like to pay much for any product, which may explain why Glass doesn't want to have to pay much for players…but he doesn't dominate the baseball business the way Wal-Mart dominates retailing, so he hasn't got nearly the juice to make his opinions stick.

      Interestingly, Glass isn't the only owner who has retail roots. Drayton McLane, also of Wal-Mart, and Peter Magowan, formerly of Safeway, are the owers of the Houston Astros and the San Francisco Giants, respectively. And both of those owners, while being vocal about the financial restraints under which they operate and their irritation with baseball's economic structure, continue to invest money in their teams. They seem to know that ultimately the best way to make money in baseball is to win.

      Glass doesn't seem to know that. Maybe because he's never had a winning team. This season, however, fortune seems to be smiling on him…and he needs to respect the streak, as the well-known philosopher Crash Davis once said.

      Matrix Redundant
      "The Matrix Redloaded" is the long-awaited sequel to the hugely successful and innovative science fiction movie of some four years ago. Sad to say, the new movie - which opened yesterday - is pretty much a disappointment. It is filled by mythical mumbo-jumbo, stunts, and special effects that echo but never improve on those in the first film, and has none of the surprises that infused the original. It also is all "middle" -- that is, the bridge film between the first and the final film of the trilogy, "The Matrix Revolutions," which is scheduled to come out later this year. So it really doesn't have a beginning and an end.

      In fact, sometimes it seemed like it would never end.

      "Matrix Reloaded" probably will make a lot of money, but it is creatively mediocre.

      Then again, maybe we're just on the wrong side of 16 to appreciate it. (Our teenaged boys loved it. So go figure.)

    Have a good weekend.
    KC's View:

    Published on: May 16, 2003

    While these emails came in before the California attorney decided to withdraw his "Oreo lawsuit" against Kraft, they still make legitimate points worth being aired.

    One MNB user wrote:

    "Like fat, trans fats are a fact in our modern age. I gave up Oreos when an open bag spilled a cookie into my ice chest on a camping trip - the disgusting result was all it took for me. It was my choice.

    "In the late 80's, when fat was spotlighted, manufacturers developed and marketed products for those desiring lower fat in their diets, it was not litigated: the market determined the need and success of those products. The same should happen with trans fats and with future items found to less than helpful in the human diet…

    "My vote: First, kill all the lawyers."

    Another MNB user wrote:

    "Simply, when are we, as a society, going to take responsibility for our own actions?

    "Litigation is frivolous, here. Parents should be controlling and monitoring what their kids eat.

    "What's next? Should we take steak houses to court because our porterhouse may contribute to heart failure.

    "Better yet lets lock Ben and Jerry up for their contribution to the demise of our population. Oh! Wait! What about those Kreepy Krispy Kreme folks...

    Come on...Moderation..."

    Another MNB user wrote:

    What would (the attorney's) opinion be of a restaurant that refused to serve a customer who was obese? Would he then sue the restaurant for the violation of that customer's civil rights?

    Yet another member of the MNB community wrote:

    "Just like no tobacco company forces you to smoke that first cigarette, no one forces anyone to eat an Oreo. And I wonder if people who are impartial (maybe a doctor?) would say that as long as children have a healthy level of exercise, having a certain level of trans fat is ok? And if the target really is to protect children where is parental responsibility in all of this? You can put a warning label in a 15-font on the label and it might not matter as parents know that today cookies, cakes etc are high in sugar, fat and calories. At crunch time, when the kid in the cart is saying "I want that" I question whether parents will say no."

    MNB user Kathy Kohout wrote:

    "All I have to say is, what in the hell are people doing? What's next, law suits against City Water Departments because someone drowned in their bathtub and water is a dangerous substance? Whatever happened to personal responsibilities? Must we all be victims of someone else, unable to control our own destiny? YOU are the one that bypasses the healthy broccoli and heads for the Oreos. YOU are the one that would rather take the easy route and buy the Oreos instead of taking the time to bake some reduced fat oatmeal cookies for your family. YOU are the one that puts them into your kid's lunchbox every day. YOU are the one not watching your kids once they get home and are left alone to eat an entire bag of Oreos. YOU are the one stopping at the closest drive through loading up on Big Macs and Happy Meals instead of cooking something nutritious. The companies are only responding to YOUR demand. I would bet the Oreo people make a hell of a lot more money than the broccoli farmers because YOU voted with your dollars for Oreos over broccoli.

    "I love Oreos. I buy about a bag a year and gobble the whole bag up in three days. I also love McDonalds. I eat there about once or twice a year. Oreos and McDonalds are fabulous American institutions when enjoyed in moderation. I remember a few years ago when all fat was bad. What did the food manufacturers do? Replaced fat with sugar. Now sugar is bad and they're replacing sugar with fat. I also remember when growing up that something in bacon was bad. It's now 30 years later and people are still slapping bacon on everything and living to tell about it. In fact, the Atkins diet puts bacon with all its fat, protein and chemicals right up there with broccoli. The truth is, I don't want to live to be 100 if it means going 100 years without Oreos, McDonalds, and bacon. If I die at 65, so be it. But I want to go with a bacon cheeseburger in one hand, a beer in the other and drooling Oreos."

    We were with you until that last image…which is a little more than we can handle at this hour of the morning.

    MNB user Mark Beuerman wrote:

    "I am getting tired of hearing all of the reports of lawyers and politicians getting self-righteous by offering their services to protect our children from the evils of junk food. Has anyone but the Associated Press picked up on the research released from the University of North Carolina stating that caloric intake of teenagers has increased only 1% in the past two decades, while physical activity in teenagers has decreased 13%, thus leading to the 10% rise in teenage obesity? Perhaps the lawyers should be trying to sue the Presidents Council on Physical Fitness, or is it the age-old story of suing the one with the money?"

    Another MNB user wrote:

    "Why doesn't he sue Sony, Panasonic & Toshiba? They introduced remote controls that I'm sure contribute as much to this problem. Come to think of it, let's get GM, Toyota & Mazda, since they could have invented pedal cars instead of petrol ones. After all, if they didn't have cars, they couldn't get drive through…

    However, not everyone was quite as absolutist. MNB user Norma Gilliam chimed in:

    "In as much as I truly believe that people must be responsible for what they put in their mouths and for the personal decisions they make, I heard
    something on talk-radio the other day that make me ponder. They were speaking about the obesity problem in America and a doctor mentioned that so many products are made with "corn syrup." He said it is cheaper than sugar, but he also said it has an "addictive" quality to it. It supposedly triggers something in the brain that makes you crave more of it. If this is true, and can be proven....those lawyers may just have a case. Like you said, I guess it is just a matter of time before this thing busts loose!"

    One thing we're sure of. This trend will continue to gain momentum.

    However, in reading these and other emails, we do have a thought. We all like to blame the lawyers, and like ton suggest that people need to take personal responsibility for their actions.

    But aren’t lawyers mostly being hired by people who want them to sue? And so, following the "personal responsibility" logic, shouldn't we blame not the lawyers, but the people who hire them?

    Just a thought.
    KC's View:

    Published on: May 16, 2003

    Reuters reports that the Walt Disney Co. is considering selling off all or part of its chain of Disney Stores. The company also reportedly is considering yet another round of store closures as it looks to make the chain perform up to expectations.
    KC's View:
    Disney practically invented the whole format, but it is no surprise that the cycle is coming to an end.

    It's been a tough couple of years for Disney, with bad news affecting almost every business it has been in. The company is almost sure to come back, though it is hard to know what it will look like and who will be running it.

    Published on: May 16, 2003

    • Mike Bourgoine has been promoted by Associated Grocers of New England to be the company's COO, a new position. He previously was senior vice president, merchandising.

      Steve Murphy, AG's vice president of finance and administration, has been named the company's senior vice president of finance and administration, succeeding the retiring Dick Ennis.

    KC's View:

    Published on: May 16, 2003

    • Ahold announced this morning that its most recent quarterly sales were off 11 percent, down to the equivalent of $19.9 billion (US), though the figures do not include joint ventures in Europe and South America. The figures are the first to be released by the company since it announced that it had overstated revenues by $500 million (US) back in February, a number that subsequently was revised to $880 million. Annual results for 2002 have not yet been filed, and may not be until this November, owing to ongoing audits.

    • Target Corporation reported that first quarter net earnings increased 1.3 percent to $349 million, compared with $345 million in 2002. Total revenues in the first quarter increased 7.6 percent to $10.322 billion from $9.594 billion in 2002, mostly because of a 9.8 percent revenue increase at Target Stores.

    KC's View:

    Published on: May 16, 2003

    The Atlanta Journal Constitution reports that Houston Rockets center Yao Ming is angry because Coca-Cola is using his picture on its soft drink cans, and has threatened to sue. Yao has an endorsement deal with Pepsi.

    However, Coke says that it has the right to use Yao's photo because it has a sponsorship deal with the Chinese men's national basketball team, on which he played during last year's Asian Games.

    A Coke spokesman said that the company has the rights to use Yao's image when it is included with the pictures of two or more other players from the team, which in this case it is.
    KC's View:

    Published on: May 16, 2003

    Albertsons, Inc. announced today that Patricia Heaton, actress, author and Emmy- winning co-star of television's "Everybody Loves Raymond," will become the its national spokesperson in a multi-year series of television, radio and print ads.

    Larry Johnston, Albertsons' Chairman & CEO, said that "Albertsons is entering the most exciting growth period in its 63-year history. Patricia Heaton provides the instantly recognizable voice, humor and personality that will enable us to bring key messages to supermarket and drugstore customers that shop our 2,300 stores across America."
    KC's View:
    Good idea and good choice. She's got a strong image as being smart, funny and as a wife and mother with her feet on the ground - precisely the kind of people Albertsons is targeting.

    Published on: May 16, 2003

    Dow Jones reports that Grupo Gigante, Mexico's third largest supermarket chain, has opened its fifth unit in Southern California.

    The Anaheim unit features authentic Mexican products that appeal to the areas large Hispanic population. The opening follows a small controversy in which local officials tried to block the store's opening by saying it wasn't appropriate for the area.
    KC's View:

    Published on: May 16, 2003

    The Denver Post reports that the National Cattlemen's Beef Association is launching a new, $1.7 million advertising campaign that stresses the health benefits of lean beef. Ironically, the campaign compares beef to chicken while at the same time using tactics that were developed by the poultry industry.

    "Americans are not aware of the great nutritional story that beef has to offer," Mark Thomas, vice president of consumer marketing for the National Cattlemen's Beef Association, told the Post. "This is all about setting the record straight. It's based on good, solid science."

    The chicken industry, however, is calling foul, saying that the campaign pushes beef in general, not just lean beef that is lower in saturated fat.
    KC's View:

    Published on: May 16, 2003

    Ahold's Albert Heijn supermarket chain in the Netherlands reported that it will cut out about 10 percent of its headquarters jobs over the next 18 months, or about 100 jobs. The company said the cuts should be able to be achieved through attrition.
    KC's View:

    Published on: May 16, 2003

    According to The State of Retailing Online 6.0, a annual study conducted by Forrester Research, online retail sales soared to $76 billion in 2002, up 48 percent over the prior year. is the online retailing division of the National Retail Federation (NRF).

    In addition to growth in revenue, the latest figures from the study show that US online retailers are continuing their march to profitability. Last year, 70 percent of retailers reported positive operating margins, compared with 56 percent in 2001. Collectively, retailers broke even in sales last year, up from a loss of 6 percent in 2001.

    Online retail sales are expected to grow 26 percent in 2003 to $96 billion, and reach 4.5 percent of total retail sales in 2003, up from 3.6 percent in 2002.
    KC's View:
    Y'know, this Internet thing might actually have a future…

    Published on: May 16, 2003

    US Treasury Secretary John Snow said yesterday that the Bush administration has asked Congress to extend a moratorium on Internet taxation that is set to expire in November.

    The request, in the form of a letter to Congress authored by Snow and Commerce Secretary Don Evans, said, in part, that ''Government must not slow the rollout or usage of Internet services by establishing administrative barriers or imposing new access taxes."

    While the moratorium is only on taxation of Internet access fees, the Congress has never passes legislation that would allow states to collect Internet sales taxes.
    KC's View:

    Published on: May 16, 2003

    The California attorney who filed a lawsuit this week arguing that Kraft Foods should not be allowed to sell Oreos to children because the filling in Oreos contains trans fat, which is dangerous and causes obesity, now says he is withdrawing the suit because all he really wanted was publicity for the trans fat issue.
    KC's View:
    The Oreo lawsuit, brief as it was, did accomplish two things.

    It did draw attention to the problem of trans fat in food, which certainly is a noteworthy cause. The US Department of Agriculture (USDA) estimates that trans fat, also known as partially hydrogenated oil, is in roughly 40 percent of the food found on grocery store shelves. While the Food and Drug Administration (FDA) wants manufacturers to provide information about trans fats on food labels, questions have been raised about the most effective way to present the data.

    It also proved that at least some attorneys are complete morons.

    We don't think that the attorney wanted publicity just for the trans fat issue. And we think that by going through his little charade this week, the attorney has managed to trivialize an important issue while also doing something we didn’t think possible -- downgrading people's opinion of attorneys.