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    Published on: June 3, 2003

    We wrote yesterday about our support for Country of Origin Labeling (COOL) legislation, and the need for a foolproof traceability system that would maintain consumer confidence in the meat supply.

    One Canadian member of the MNB community responded:

    Without a system you are setting yourself up for a huge fall.

    Press hard on this one - or buy your beef from us or Argentina for a long time.

    We already sell you oil and gas as well as water. Have a banking system and a health system that put what you have to shame.

    How would you feel about being annexed to us?


    Oh, we can only imagine the emails this one is going to prompt…



    On the subject of how big meals and little exercise contribute to youth obesity, one MNB user wrote:

    I'd like to chime in on the issue of "supersizing" causing kids to eat more than they need, though this isn't necessarily about kids. I have a friend who works for a major soda manufacturer. He was telling me that a way they generate incremental gallons is to work with the retailer to serve larger size drinks (by not offering smaller sizes), with the retailer therefore having a higher cash register ring and higher profits. And, just like loading and slotting and other ills of this industry once you start you can't go back unless you come up with another creative way to make up the drop in volume. So I don't expect anything to change.




    We had a story yesterday about how baby formula manufacturers are using additives in their products and holding out the promise that they will help babies be smarter and better.

    MNB user Sherry Coughlin responded:

    I believe that the baby formulas based on soy products may have greatly harmed our children. The soy interferes with the natural process of building testosterone in young males during the first year of life. The result may be several generations of males who are lacking testosterone.

    Females are also affected because women need testosterone to balance their estrogen levels.

    So when they want to add more things, I don't believe it will be beneficial to infants. It's purely a marketing ploy to sell more formula. How sad and horrible.




    On the subject of McDonald's introduction of a new McVeggie sandwich, MNB user Wanda Allie wrote:

    McDonald's is making a smart move with its introduction of the non-meat sandwich and healthier food. To those that disagree, have you checked your cholesterol level or looked at the scale lately?

    …But they still don't completely get it. Cooking the vege-burger on the same grill as the regular burgers is just dumb. There are millions and millions of us vegetarians (read: potential customers) that will not order the McVeggie since we don't eat animal ingredients. They obviously did not learn the lesson from the multi-million dollar French Fry lawsuit.

    And on another note: Have you ever seen an obese vegetarian? Odds are no!
    Vegetarians do not need the wacky Atkins diet to stay healthy and slim!


    MNB user Gerardo I. Lopez had some additional thoughts about McDonald's:

    What McDonald’s really needs is a return to basics. No doubt their menu options have not kept up with the times, but it is their apparent abandonment of the fundamentals that made them great that is really baffling.

    Just yesterday my family (self + wife and 2 boys in prime Mickey D age range) had lunch at one of their restaurants in Farmington Hills, MI. This is an outlet that has won recognition in their system (judging by the awards hanging on the wall). Like so many of our visits in the last few years, this was a sad, sad experience. At 12:25 pm, the kitchen area was well staffed with young people that where very eager to please (“can I help the next person in line?” resonates in my ears still); but little else was positive. The floor was dirty in the kitchen and filthy in the dining room. A mistake was made with our order, which we caught in time when they attempted to charge us $5 too much.

    Interestingly, while we ordered and waited for our food, no less than six other customers came up to the counter to complain they had received the wrong items in their bags. Once we had our food, we discovered the chicken nuggets were good, but no sauce was offered. The fries were cold, however. The burgers were lukewarm. Salt? Sorry, none of that. Plenty of pepper, though. The table tops were either littered or ‘sticky’ to the touch.

    Memo to new Senior Team: “Guys, I am not expecting gourmet when I go to McDonald’s, but I do expect hot fries and a clean place to eat. And a correct order. Good luck with the veggie burger (and new line of salads), but please clean the joint once or twice, will ya?” In the meanwhile, where’s that Wendy’s I remember around here …….. ?


    MNB user Glenn Cantor chimed in:

    The irony with all of the recent reporting about childhood obesity is that our industry thrives on the very products that are the problem. We offer our customers large, full aisles of high fat, high sugar foods on which we make huge margins. For example, even though natural and healthy foods occupy large parts of our stores, all supermarkets dedicate much of their real estate to cookies, salty snacks, soft drinks, candy, cold cereal, ice cream, fruit snacks, etc. (Most of these products are delivered DSD, which makes them even more appealing to an efficiency fixated industry.) Another irony is that all of these items are "expandable consumables;" they are normally consumed immediately after purchase, which puts the customer back in the market quickly. They are the kind of products we need to sell to maintain our profits and be able to pay for the perishables.

    Additionally, try taking a child to McDonalds and getting them to order a salad instead of a burger and fries. It is no wonder that most of the healthy alternatives offers by fast-food stores are short-lived. They are just not as profitable as the standard fare.

    Therein lies the conundrum to the childhood obesity crisis in the United States. Much of the profitability of the supermarket and fast-food industries is reliant on the very products that are at the root of the issue. If we are able to successfully get children to eat healthy foods, the health of our industry might be compromised.

    One answer to this "catch-22-like" issue is to promote healthy activities and exercise. Our businesses should look to sponsor local sports leagues and local outdoor activities like 5-K/10-K runs, swimming events, community picnics, etc. We should seek to offer our customers wellness testing and vaccinations for children, in conjunction with local health-care agencies; bring childhood health-care into our stores. If we can tie our community presence into healthy activities, we might be better able to balance justification for selling "unhealthy" foods.


    On the general subject of childhood obesity, MNB user Jeff Tydings wrote:

    How long do you think it will be before some greedy, money hungry lawyers file a class action suit against Play Station, Sega and Nintendo blaming them for the obesity problem in our country, using this study as “evidence”? I say no later than July 4th. Although I say this tongue in cheek, we have recently seen a lawsuit against McDonalds dealing with this same issue. It is pretty sad watching this society’s trend toward blaming others for their own poor lifestyle choices, and even more sad that there are lawyers out there supporting this trend. Where does the nonsense stop?




    The dispute between the US and EU about genetically modified food continues, and one MNB user offered some context:

    What we have in the GMO issue in Europe is a convergence of constituencies. The "Green" movement sees this as an issue that resonates with the populace due to the Government mishandling of the various food scares of recent times in Europe, and gives them the opportunity to demonstrate relevance (i.e.. raise money). The EU sees this as a way to protect European farmers from competing with oil seed crops from the US, without having to say it outright. The trade protectionism is what the US Government has been fighting not only in this administration, but in the prior administrations as well.

    Although feeding the hungry people in Africa is a worthy objective, the real prize is opening up the European market to not only the GMO grains and raw vegetable oils, but also to the many US made products that contain these ingredients that are in a state of limbo at the present time.





    On the subject of the government deciding to allow irradiated beef to be used in school lunch programs, MNB user MacKenzie Malcolm wrote:

    I think people should be more worried about what irradiation is supposed to correct in meat products, rather than the radiation itself. I'm just guessing, but giving meat producers the option to irradiate away anything gross or harmful in meat is simply giving them license to be less concerned with the cleanliness of the original product. You only have to read "Fast Food Nation" to know that ground beef from a major processing plant is practically a biohazard.

    That's what parents of school kids (and everyone) should be worried about. A little radiation won't hurt ya!





    We've had a number of stories recently about Starbucks' ubiquity, which prompted the following email from an MNB user:

    I can appreciate the concern people have for Starbucks becoming the coffee behemoth that they are, and I'm sympathetic to the "little guys" to a point, but it's been proven over and over to me that in addition to being ubiquitous, Starbucks simply produces a better product. I like independent coffee houses, but quite often I'm disappointed with the quality of the coffee. Even though some may claim that Starbucks coffee tastes "charred", it's actually made from beans that have been roasted properly and are fresh.

    People who don't like this type of coffee probably also prefer American cheese to a nice, smelly Roquefort. In addition, Starbucks uses modern brewing equipment and the coffee is always hot. You can't always say that about the independents, either. You have to give the company credit for introducing quality coffee to American consumers. That not everyone appreciates it really says more about them than it does about Starbucks.


    While we like visiting local coffeehouses when we're traveling, you learn to appreciate Starbucks when you are in some godforsaken place, craving a latte, and suddenly you see that familiar logo.




    On the need for imagination and innovation, one MNB user wrote:

    As a grocer store worker I do go and check out the competition. You have to SEE what they have.

    But as a consumer, the atmosphere, variety and the feel, it does tend to make you want to browse and that makes you want to TRY new items, which is a sale for the store.

    Being different, offering new products, having more than a sterile shopping experience, will increase sales.


    Absolutely.




    On the subject of Penn Traffic's financial travails, one MNB user wrote:

    Penn Traffic filed Chapter 11 before, in 1999. They emerged a mere three months later -- very fast by industry standards. The company said that with its newest bankruptcy, it will attempt to reorganize and emerge as quickly as possible. Might the push for speed be unwise considering that this was the same thought in 1999 and eventually, Penn Traffic found itself back in bankruptcy?

    Penn Traffic, like almost every other troubled supermarket operator in the industry these days, has blamed (at least in part) Wal-Mart (okay, well "super center" formats, but we get the idea) for its struggles and resulting Chapter 11 filing. Eagle Food Centers, which filed Chapter 11 recently, also played the Wal-Mart card. Are companies using Wal-Mart's success as too much of an excuse in these times? We know Wal-Mart has a negative effect on smaller folks trying to compete, but, is the effect great enough to become the "go to" excuse for bankrupt companies?





    We reported yesterday on a new poll that ranked food retailers and CPG companies as being tops in customer service, which prompted the following email:

    My only question is what is service as defined here? If it is variety, selection, clean stores, that's one thing. However, most every visit I make to the supermarket I still hear that customer service especially at the checkout is lacking. The queue keeps getting longer as stores try to get better control over costs.




    In response to yesterday's story about Hy-Vee, MNB user Ted File wrote:

    When the Dwight Vredenburg family set up this management/entrepreneurial organization structure many years ago, the industry (major chains) was dubious at best. They are unique, have strong interests in the community and I would guess, less turnover than their competition. The current management has followed in the footsteps of the founders with minor tweaking.

    Need we say more?





    We received two emails yesterday from MNB users who did not appreciate our attempt at humor.

    In a brief piece about how Eric Robert Rudolph, the fugitive charged with four bombings in Georgia and Alabama, including the explosion at Atlanta's Centennial Olympic Park during the 1996 Summer Olympics, was arrested early Saturday as he scavenged for food behind a Save-A-Lot grocery store, we joked that the arresting policeman got lucky because he "probably just stopped by to buy doughnuts…"

    One MNB user wrote:

    Why the wise-guy comment? The officer was doing his job, and doing it well. We need to congratulate these guys, not try to be funny at their expense. Not kind on your part.

    And another MNB user wrote:

    I don't think you realize how foolish you look when, for the sake of what you think is humor, you make statements such as the correlation between police officers and donuts. Between your take on Kmart's loss prevention initiative last week and your second or third attempt at police & doughnut humor, you've obviously told your readership a great deal about where you stand, and offended a great deal of loss professionals in the supermarket industry.

    Points taken.

    Our attempts at humor should in no way be construed as being anti-law enforcement or even loss prevention...though we think that there are two different issues here.

    Our comments about Kmart last week really were more about how the company continues to ignore issues such as marketing and merchandising and focuses on dollar issues - which, while important, do very little to entice consumers into the store.

    Yesterday morning's joke should not be taken too seriously...especially since we joke often about our own predilection for doughnuts. It was meant within that context - while we take more than our fair share of shots at other people and institutions, we try to always mock ourselves first…

    But we're sorry if you were offended. That certainly wasn't the intention, and it simply proves what our kids always are saying -- that we're only about half as funny as we think we are.




    Finally, we've gotten several emails over the past few days asking for the recipe for Poor Man's Beef Wellington, a dish that we mentioned a couple of times last week.

    Well, it isn't ours to print…but we're happy to give you the website address for Emeril Lagasse's wonderful recipe:

    http://www.foodnetwork.com/food/recipes/recipe/0,,FOOD_9936_22734,00.html

    Cheers! And we'll see you in the morning…
    KC's View:

    Published on: June 3, 2003


    • Winn-Dixie announced that it will use neXpansion's Endless Aisle technology to offer customers online and telephone access to more than 30,000 items not carried in the chain's brick-and-mortar units.

      The offering will be branded as Winn-Dixie's "Express Special Purchase " or "E.S.P." and be available to shoppers in this month.

    KC's View:

    Published on: June 3, 2003


    • Dollar General Corp. named David Perdue, who joined the company a month ago as its CEO, to be its chairman. The move had been expected.

    KC's View:

    Published on: June 3, 2003

    The New York Post reports that Apple Computer and Amazon.com are negotiating a deal that would make Apple's popular new online music store, iTunes, available on Amazon.com.

    Apple, which sold one million songs for 99 cents apiece during its first week of operation, would get much broader distribution for iTunes, while Amazon would be able to get into the music distribution business.

    The status of the talks is described by the Post as "advanced," though sources say that the deal could still fall apart.

    It was just last week that MNB reported that Amazon.com CEO Jeff Bezos told shareholders at the company's annual meeting that the company plans to follow up on its successful launch of office supply and apparel stores last year with several new categories, though he refused to identify the opportunities.

    Bezos did say, however, that digital music delivery was being considered.
    KC's View:
    Two of our favorite companies working together on a highly marketable project like this…it doesn't get any better.

    And the thing we like about both companies is that they're innovative, imaginative and refuse to be staid…not to mention they both offer products and services that we love.

    Published on: June 3, 2003

    We've been reporting in recent weeks about the nation's airlines moving in the direction of selling food during extended flights, but now it appears that they are taking this trend one step further -- by selling food in the airline clubs that until now have been virtual "no food" zones.

    USA Today reports this morning that American Airlines has begun selling gourmet sandwiches in select Admirals Club locations, as is US Airways at its Pittsburgh airport club. United Airlines also is considering such a move.

    Most airline clubs offer free coffee and light snacks, but prohibit bringing in outside food. Now, with all the airlines looking for ways to improve their bottom lines, they seem to realize that they have a captive audience with a need and desire for food, and the ability to pay for it.
    KC's View:
    As long as the food is decent and the prices not sky-high, we think this is an excellent idea. We've spent more than our fair share of hours in United's Red Carpet Club, huddled over the computer and draining coffee cup after coffee cup. A little food to soak up the caffeine seems like a good idea…

    Published on: June 3, 2003

    The Atlanta Journal Constitution reports this morning that Coca-Cola is considering the introduction of a mid-calorie version of its Coke Classic soft drink, one that would have fewer calories than the traditional version but more than Diet Coke.

    However, the paper notes, mid-calorie drinks have not thus far been successful in the US. While PepsiCo sells a Pepsi Max mid-calorie product in Canada, a US version - Pepsi XL - failed in the mid 1990s.

    Coke is not commenting on the report.

    Meanwhile, Coca-Cola has confirmed that it will launch its Hi-C Blast pouches nationally this August, targeting children ages eight-to-13.

    Hi-C Blast will be made by Minute Maid and sold in pouches identical to those used for Minute Maid Coolers.
    KC's View:
    It wouldn't surprise us if Coke tried the mid-calorie approach, since the soft drink companies are desperate to find ways to pump up soft drink sales. The key is to match the right flavor profile with the right ad campaign, and there's no reason to think it couldn't be a winner.

    Published on: June 3, 2003

    USA Today reports this morning on how fast food chains are expanding into previously untapped territory -- gourmet sandwiches that tastes good -- as a way of enticing new customers and generating new sales.

    Arby's, for example, is bringing out a Bistro sandwich line that includes offerings such as portofino turkey with smoked mozzarella cheese, and chicken salad blended with pecans, apples and grapes served on a fresh baguette. Having been successfully tested in Michigan and South Carolina, the line now is scheduled for a national roll-out next year.

    "For the first time in the history of our industry, you see lifestyles intersecting with desires," Michael Howe, CEO of the 3,000-unit Arby's, tells USA Today. "People not only want food that tastes great, but food they can feel good about after they've eaten it."

    Part of the impetus comes from the success of upscale sandwich chains such as Panera Bread and Cosi, which have been generating double-digit sales growth figures; sandwiches currently represent abut 10 percent of fast food purchases, but the number is growing. In addition, there is increased awareness of nutrition and health issues, as consumers look for alternatives to burgers and fries.

    McDonald's also is testing a "design your own deli sandwich" line, as well as Reuben sandwiches, while Starbucks is serving sandwiches on croissants as well as pastry sandwiches for breakfast in select Seattle locations. Wendy's also reportedly has a sandwich strategy, though it is not revealing it at the moment.
    KC's View:
    We think these folks are onto something here, and that supermarkets ought to be pushing sandwich options more…especially because they have real appeal to time-constrained families that have a hard time sitting down together for dinner.

    Though we have to admit that we still prefer to make our own -- like a hot meatloaf sandwich with melted mozzarella and barbecue sauce on a nice thick crusty bread. Mmmmm…..

    Published on: June 3, 2003

    The Washington Post reports this morning about a growing trend among area firms - creating activities that appeal to financially strapped schools that have an education component as well as a subtle marketing message.

    The Post uses as an example Petco, which hosts school field trips, teaches kids about animal care, shows off a wide range of species, and then sends kids off with a coupon, with which they can come back and get a free goldfish.

    Of course, what the chain is fishing for is a lot bigger than a goldfish. It is the long-term brand equity and customer familiarity that can set it apart from the crowd.

    School is "where the kids are," Tom Harris, vice president of sales and marketing for the National Theatre for Children, whose productions bring corporate-sponsored messages into elementary and middle schools, tells the Post. "It's a captive audience and in a world of where kids are torn between the Internet, IM [instant messaging], sports, TV and radio, school is the place where marketers can find them in an uncluttered environment."

    And since children's purchasing power is estimated to be roughly $10 billion annually, not including their ability to nag…er, persuade their parents to make certain family-oriented purchases, this is an enormous opportunity for retailers, banks, carmakers, and virtually every other company that wants to position itself with tomorrow's consumers.

    Of course, there are some questions being raised about these programs, with some worried that kids and their classrooms are being exploited for commercial gain, turning the school into "an amphitheater of commercials," in the words of one critic.
    KC's View:
    Being that we live in the world of marketing and have numerous family members involved in the world of education (our kids go to school, Mrs. Content Guy is a teacher, Grandpa is a retired principal, and numerous siblings are in the education biz), we see both sides of this issue.

    What we don’t see is how communities that don’t properly fund their school systems have the right to complain about these kinds of programs. They've opened the door to corporate programs by not giving kinds what they need and by believing that schools are a cost, not an investment…all these companies are doing is walking in.

    We think companies should absolutely take advantage of this opportunity, and can do so without resorting to crass commercialism. Food stores, especially in a time when obesity and nutrition issues are on the national front burner, and perfectly positioned to help the schoolchildren understand the issues involved, and to make better choices about what they put in their bodies. Field trips, charts, posters, sampling programs…all these are great tools for educating youngsters.

    Published on: June 3, 2003

    Family Dollar Stores, the North Carolina-based discount chain, issued as report yesterday that indicated just how fast and far the company has grown -- 41 new stores opened during the four week period May 31, for a total of 4,839 units in 43 states.

    According to the company, the 41 newest store locations are in the following states: 9 in Texas; 6 in Michigan; 3 each in Louisiana and Utah; 2 each in Florida, Illinois, Kentucky, Maine, New Mexico and New York; and 1 each in Arizona, Indiana, Massachusetts, Nebraska, North Carolina, Ohio, Oklahoma and Wyoming. The store that opened in Cheyenne, Wyoming, is Family Dollar's first store in the state of Wyoming.

    Family Dollar Stores now operates stores as far northwest as North Dakota, northeast to Maine, southeast to Florida, and southwest to Arizona.
    KC's View:
    And these seems to be plenty of room in which to expand, both for this chain and its brethren in the dollar stores business.

    No wonder it is the format that reportedly worries Wal-Mart the most in terms of competitive pressure.

    Published on: June 3, 2003

    The Triangle Business Journal reports that Food Lion, the US subsidiary of the Delhaize Group, is seeking rent concessions from landlords for about 200 of its 1,185 stores, or about 16 percent of its locations.

    The company characterized the discussions as "business as usual" and an effort to cut costs at a time of heightened price competition. However, the paper noted that real estate insiders said that such negotiations can be a "precursor to potential store closings."

    While sales have been off at Delhaize America's Food Lion and Kash 'n Karry chains, profits were up 11 percent in the first quarter largely because of Food Lion's ability to identify $100 million in cost savings during the current fiscal year.
    KC's View:
    We wouldn't think that there will be any large-scale store closings by Food Lion anytime soon. These negotiations would seem to be the smart thing to do at a time when Wal-Mart is putting so much pressure on Food Lion's bottom line.

    Published on: June 3, 2003

    Martha Stewart Omnimedia released a statement this morning saying that the company's founder and CEO, Martha Stewart, is likely to be indicted by a grand jury in the "near future." The indictment is to be requested by federal investigators who have been probing for insider stock trading related to a sale of ImClone shares that happened just before a federal ruling against the company was made public.

    The specific charges to be made against Stewart have not been revealed.

    In addition, the company said that a civil complaint against the style diva is expected to be filed by the US Securities and Exchange Commission (SEC).
    KC's View:
    Start sewing up the prison curtains…those cells aren't known for being particularly domestic.

    Seriously, this isn’t good news for Kmart, which still relies on Stewart's aura for a lot of its appeal. There's no way to know whether an indictment and eventual conviction might destroy the brand; there are examples of how brands have been strong enough to survive, but it is hard to know how much her personal appeal, plus ubiquitous presence on television and radio, drives sales.