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    Published on: September 17, 2003

    We got a number of emails yesterday regarding the proposed pictorial by Playboy about "The Women of Wal-Mart," which follows up on such revealing studies as "The Women of Starbucks" and "The Women of Enron."

    One MNB user wrote:

    I've been to Wal-Mart. I've seen the associates. The issue with them possibly posing nude may not be a big seller. Also, about your comment about MNB having a sense of humor about these things, I think I can speak for everyone when I say we don't want to see you in there either!!

    Hey, nobody has made us an offer. But if it mans promoting MNB, we're willing to do almost anything. Almost.

    This MNB concern seemed to be a theme. MNB user Glenn Cantor wrote:

    Hopefully, we won't be seeing "The Women of MNB" in Playboy.

    Also, based on my parochial experience in my local Wal-Mart's, I shudder at the thought of most of these women naked- "Hello, welcome to Wal-Mart…honey." It doesn't work.

    One Wal-Mart employee wrote:

    I seriously doubt, based on 10 years service, that in the whole Wal-Mart world there are enough "bodies" to enable Playboy to have a story that is representative of their normal publishing endeavor.

    It's a big company. One thing we're sure of is that Playboy will find enough attractive Wal-Mart employees to justify a feature…

    MNB user Matt Weeks had some thoughts on the subject of Wal-Mart banning magazines from its shelves, which apparently is what got Playboy started on this…

    In the early 1980’s our then-Attorney General Edwin Meese put together something called the Meese Report, about sexuality and how a range of publications in the “violent pornography” (apparently Playboy then qualified) sector could be traced to violent behavior against women. Not to trivialize what’s going on here, there are a lot of thoughtful and reasonable women, and presumably men, that hold this feeling. They believe that there is a cause and-effect relationship between the two. Again--- this is gasoline on the floor for you. Your gentle readers probably come from a wide swath of conservative backgrounds. As for myself--- I obtained a copy of the Meese Report and have it in a safe place right next to my copy of “The Women of 7 11” which was the first such exploit by Playboy on the heels of a corporation banning their publication, and occurred the same year as the report. In the “what goes around comes around” department, I find it a bit telling that Edwin Meese himself eventually resigned around a rather messy and forgettable portion of the Reagan Administration. So much for the integrity and purity of the source. I must be careful, he is now a “distinguished fellow” right here at the Hoover Institute, and I have good friends associated with that noble organization. Talk about gasoline on the floor…

    As for the essence of the coverage on Wal-Mart, I find it interesting that both Wal-Mart and Playboy are, as Simon & Garfunkel sang (and will again sing this Fall) “just trying to keep the customer satisfied.” Only time will tell, and if too many customers refrain from coming into Wal-Mart, and if their data shows that baskets brimming full of groceries, Playboy and other goods are now empty, and those customers less frequently shopping, well then I believe Wal-Mart will re-think their decision (Or not. Has Southland put Playboy back on the shelves? Why?). As I’ve pointed out before, however, the majority of grocery and other retailers, including even the “great and powerful” Wal-Mart do not yet appear to be acting upon the wealth of customer shopping data that they collect right at their registers, if not from the non-existing frequency and loyalty programs. So I chalk this up to reaction (as opposed to “leadership”) based on news, spin and lack of imagination. Ahh but I digress…

    The best line - meaning the one we wish we'd written - came from MNB user Ron Rash:

    Thank God it's not the "Greeters of Wal-Mart"…


    We also got a number of emails about our criticism of Dr. Phil McGraw's NBC special on fat (and the book that is climbing the bestseller lists).

    I saw parts of the special and couldn't help thinking that he might have more credibility if he looked in shape.

    The extraordinary thing about perception is that McGraw is in shape - he lifts weights, plays tennis, and watches his diet. He's just a big guy. Does this make him unhealthy? No.

    Another MNB user wrote:

    I enjoyed your comments about Dr. Phil. I too find him wearying...mainly because so much of what he says is just plain common sense.

    Seems like a lot of families now days don't emphasize common sense in raising their kids. I give him credit for using the media to help people realize they can make a difference in their own lives and actually visualize what their lives can be if they take responsibility for their health. Oprah has been on this same kick for years. Your comment about retailers picking up on this is a good one. How better to build customers for life than to become involved in their lives.

    And another MNB user wrote:

    The best weight loss program around is Weight Watchers (I don't work for them). I am living proof. I had high BP (it has come down 30 points) and was told to lose weight or have to go on medication. In October, I started the program and in July, I met my goal. The only thing you must do when you reach your goal is weigh in once a month and cannot go over 2#. I haven't gained. In fact, I lost a bit more but still within the range for my height and build. I am not obsessive about eating. I continue to eat healthy and realize it has to be a lifestyle change. You can still have your wine Kevin but in moderation. That is what weight loss is all about. Lifestyle change and eating in moderation. I don't crave candy (M&Ms and Snickers) or cookies (chocolate chip) and don't really miss not eating them. I know that I can have them but choose something else. During all that time I kept a written diary.

    When you write down what you eat and your thoughts about the day, you are more aware of what you are putting in your mouth. I don't keep a written diary now but it is in my head as to what I ate and where I stand for the day on the points. If I gain weight, I will go back to keeping a written diary.

    We would only differ on one point here. Weight Watchers was good for this person…but different programs work for different people. It is the "one size fits all" approach to weight loss that makes us really nuts.

    Continued dialogue about the shipment of cheaper Canadian medications to the US from Canadian MNB user Gerri Polis:

    I'm chuckling out loud at the quote, "the drugs are not always the same as those sold in the US, do not have the same safety measures and approval processes applied to them, and are potentially dangerous." Well, duh! If the safety measures and approval processes were the same that would mean the FDA had jurisdiction in Canada. There's just this minor glitch in that happening - it's called sovereignty. Many people would like to think that Canada is just a puppet nation that needs to be coddled by the US, but believe it or not we have capable scientists in this country who make up their own minds.

    Is there no limit to the amount of fear mongering that lobbyists go to? What they don't tell you is that in some cases Health Canada's safety measures and approval processes are even more stringent than those of the FDA. Canada has fewer lobbyists pressuring for the approval of drugs and therefore takes the time to fully assess the claims of the pharmaceutical manufacturer trying to get the approvals. The potential danger that the Canadian pharmaceuticals pose is the threat to the bottom line for their American counterparts who will actually have to compete.
    KC's View:

    Published on: September 17, 2003

    • Sainsbury in the UK has appointed Toby Anderson, the company's former "scope and strategy" manager, to be its new head of online operations. He replaces Robin Lassiter, who now becomes the company's central retail operations director.

    KC's View:

    Published on: September 17, 2003

    • Kroger Co. reported that profit for the fiscal second-quarter ended Aug 16 fell to $190.4 million, from $264.0 million a year ago. The company blamed higher operating costs, tougher competition, and the recent power blackout.

      Sales for the quarter increased to $12.4 billion from $11.9 billion a year ago.

    KC's View:

    Published on: September 17, 2003

  • Wegmans Food Markets reportedly is ready to do battle with both Vanilla Coke and Pepsi Vanilla, and is bringing out its own private label vanilla cola product - W Pop Vanilla, which is currently available in 20-ounce, single-serve bottles retailing for $ 1.09.

  • Smart & Final Inc. reported it has completed previously announced divestitures of its foodservice direct delivery business units and its Florida stores, and now will reposition the company's focus on its core western U.S. store operations.

    Gordon Food Service purchased the Florida foodservice direct delivery and stores businesses, and Sysco Corporation purchased the northern California foodservice direct delivery operations. In addition, Smart & Final's northern California meat processing and distribution business was sold to Pacific Fresh Sea Food Company. In total, the sales raised about $59 million for the company.

  • The Molson family has indicated that it is open to a bid for the brewery in which it has a controlling stake and that bears its name, according to a story in this morning's issue of Toronto's ,i>Globe & Mail. It's believed to be the first time the family, which owns two-thirds of the company, has been willing to consider a sale.

    It won't be cheap, however. Just the Molson family's stake is believed to be worth as much as $290 million (US).

KC's View:

Published on: September 17, 2003

The Financial Times reports this morning that the identity of the company or companies that will be allowed to bid for Safeway Plc in the UK could be announced by next week.

Among the prospective bidders for the nation's fourth ranked supermarket chain: Tesco, Wal-Mart, Sainsbury, and William Morrison Supermarkets. Conventional wisdom has had Morrison as the only likely survivor of a probe by the UK Competition Commission and final determination by government officials, though Wal-Mart has been making a variety of moves to try and sway opinion.

According to FT, the UK Department of Trade and Industry is keen to make an announcement before the opening of a Labour Party conference on September 28th.
KC's View:

Published on: September 17, 2003

Almost 70 percent of Seattle voters who cast ballots yesterday rejected the concept of a 10-cent tax of espresso and latte drinks that would have been used to fund pre-school and day care programs.

The tax proposal had riled up a wide range of people in what many people view as the capital of coffee drinkers, and had fostered protests and even a faux "Boston Tea Party" recast as a "Seattle Coffee Party."
KC's View:
The voters have spoken. Let's hope there's not going to be a recall…

Published on: September 17, 2003

The Detroit Free Press reports this morning that a federal judge has refused requests to dismiss indictments against two former Kmart executives that charged them with securities fraud, making false statements, and security.

The executives' trial is scheduled to begin October 14.

Enio Montini Jr. and Joseph Hofmeister face a maximum of 10 years in prison and a $1-million fine for the securities fraud charge. The maximum penalty for the other charges is 5 years and $250,000.
KC's View:
We hate to take pleasure in the miseries of others, but stories that have the words "Kmart" and "trial" in them warm our heart…because we're looking forward to the people who mismanaged that company getting what is coming to them.

But these are little fish. Let's wait for the Chuck Conaway trial, when the former CEO will have to justify enormous remuneration and little in the way of productivity. That'll be fun to watch.

Published on: September 17, 2003

The Associated Press reports that a man who has been selling office chairs and candles to Wal-Mart for some eight years is now suing the company for $1 billion, charging that representatives of the retailer conspired with his ex-partner to steal his business.

The plaintiff, Jeffrey Saull, says that a division manager and buyer at Wal-Mart worked with his former partner to cut his company off as a vendor, as well as trying to get his suppliers to stop shipping him raw materials.

Saull even says he laid out his complaint to Wal-Mart CEO Lee Scott back in March, but got no satisfaction.

Wal-Mart has 15 days to reply to the suit, but denied to the media that it had taken any inappropriate actions.
KC's View:
The hardest thing about this suit is the fact that it is being brought by one guy, and is targeting the Bentonville Behemoth.

This is going to turn out to be one of two things: somebody trying to take advantage of Wal-Mart's enormous deep pockets, or someone filled with righteous indignation about Wal-Mart's arrogance.

Published on: September 17, 2003

Costco Wholesale Corp. has announced that it will open a new, 147,000 sq. ft. membership club store in downtown Vancouver, British Columbia, next year.

Located in a $200-million mixed-use development that also features four residential towers with 900 housing units, the store will sell groceries, appliances, furniture, and clothing. Estimates are, according to the Toronto Globe & Mail, that the Costco will have close proximity to 12,000 businesses and some 200,000 residents.

There is no dearth of competition in Vancouver, with companies like Canada Safeway, Supervalu, and upscale market Urban Fare dotting the landscape, among many others.
KC's View:
It is hard to imagine Costco situated in an urban environment, but if Wal-Mart can open in New York City, Costco certainly can target Vancouver.

Published on: September 17, 2003

The October 2003 issue of Prevention offers some timely advice about the nature of carbohydrates, noting that the wrong carbs are as bad for consumers' health as the wrong fats.

Simply put - and that may be exactly how consumers needs these issues framed in the current environment - Prevention notes that refined carbs (the kind that come from white bread and rolls, candy, and sugared cereals) can lead to raised blood sugar levels and increased blood fats called triglycerides, "which puts you on the fast track for heart attack, stroke, and diabetes." Whole grain carbs, on the other hand, are less likely to lead to these metabolic problems - though this is problematic, since 95 percent of grains consumed by Americans are of the refined variety.

And there's another benefit of switching to whole grain carbs - research shows that they seem to help protect against the outbreak of cancer.
KC's View:

Published on: September 17, 2003

It is extraordinary how much news pops up in a single day related to the issue of health, nutrition, and obesity. Some samples, just from our perusal of numerous newspapers…

  • The Pittsburgh Post-Gazette reports on the impact that the Atkins Diet and other proponents of the low-carb lifestyle are having on local businesses.

    Restaurants are creating low-carb menus and low-carb buffets, pasta dishes are making way for steak and bacon cheeseburgers, and even Heinz has announced that it plans to be ready with low-carb product options by the second quarter of next year.

  • Reuters reports that Burger King is getting into the act by introducing low-fat baguette-style chicken sandwiches, following up on low-fat efforts made by McDonald's and Wendy's.

  • The Associated Press reports that the Center for Science in the Public Interest (CSPI) has come out with a list of the least healthy snacks for children, and they include Coca-Cola and Pepsi sodas, Hostess snack cakes, Kit Kat Big Kat candy bars, Chips Ahoy! and Oreo cookies and Starburst Fruit Chews.

    Among the healthy foods listed by CSPI: unsweetened applesauce, Nestle Nesquik fat-free chocolate milk, other lowfat and fat-free milk, bottled water, 100 percent orange juice, traditional Chex Mix, Nature Valley crunchy granola bars and raisins.

    CSPI made the revelations as part of its campaign to replace sodas, candy bars and sugary juices with fruit and granola bars in school vending machines.

KC's View:
It's enough to make one consider one of two options…

One, never eating again.

Two, ordering a triple banana split as comfort food.

Published on: September 17, 2003

USA Today reports this morning that food retailers such as Wal-Mart, Harris teeter and Food Lion all are getting ready for the expected landfall of Hurricane Isabel tomorrow somewhere on North Carolina's coastline.

Harris Teeter executives told the paper that the company is moving dry ice, refrigerated trailers, canned goods and milk to the storm area. "We have extra orders of all of those going to key stores to keep them stocked for preparation and aftermath," said spokeswoman Tara Stewart.

Food Lion says that it is sending water, batteries, bread and canned goods to the area by the pallet, as well as planning to move refrigerated trucks there to help get stores reopened and restocked quickly.

Wal-Mart says that it is focusing on getting non-perishable food to the region.
KC's View:

Published on: September 17, 2003

Albertsons, Inc. announced that beginning today, it will begin offering its online ordering and home delivery service to 13 zip codes within the Boise, Idaho, market. The service also allows customers to order online and pick up product at their local supermarket.

According to the company, now serves eight major metropolitan areas in the Western states.

" will provide shoppers with flexibility to complement their busy lifestyle," said Larry Johnston, Albertsons' chairman and CEO. "With a 90-minute delivery window or the alternative of picking up pre-ordered groceries at the store of their choice, our dot-com service is a continuation of our promise to make our customers' lives easier."

Albertsons uses a store-pick model, using trained "e-shoppers" to select merchandise. The company charges $9.95 for door-to-door delivery or $4.95 for pick-up service.

"Albertsons was the first national brick-and-mortar chain to offer the online grocery service to its customers and, as a hometown grocery chain we are proud to be the first to bring this service to the Boise area community," said Bob Colgrove, Albertsons' Intermountain Division President. "We have been pleased with our Internet shopping results in Seattle, San Diego, Southern California, Portland, Las Vegas and the San Francisco Bay Area, and we believe we will achieve great success in our own backyard of Boise."
KC's View:
Yet more good news from the e-conomy front…at least to those of us who believe in this segment of the industry.

Published on: September 17, 2003

In the Netherlands, Ahold announced this morning that CEO Anders Moberg has agreed to take a pay cut, waiving his guaranteed severance payments and bonuses over the next two years - guarantees that had severely annoyed investors in the company, especially when Moberg threatened at a recent shareholders' meeting to quit if he wasn't immediately given the CEO job on those terms.

Previously Moberg was supposed to get a base salary the equivalent of about $1.5 million (US), a guaranteed bonus in the same amount over the first two years, and extra bonuses, stock options and shares that could lift the total above $10 million (US) - plus an exit package that was 2./5 times his salary and double his bonuses. All of this made Moberg was of the most highly compensated executives in the Netherlands. For now, Moberg reportedly has decided to settle for the base salary.

His exit package had also previously provided for 2.5 times his annual salary and double the average bonus received over the preceding two years.

In a prepared statement, Moberg said, "I have been concerned by the recent public debate in the Netherlands caused by the terms of my remuneration package (and) I understand that my current severance benefits and my guaranteed bonus are considered unacceptable in the Dutch environment, so I have taken the decision to modify both."

In additional news, Ahold supervisory board chairman Henny de Ruiter announced that he will resign from his position at the shareholders’ meeting next month.

In other Ahold news, there was a report late last week that Albert Heijn, Ahold's flagship chain in the Netherlands, had seen a drop in customers since the shareholder meeting last Thursday at which the company's new CEO's pay package of $10 million over two years was announced. One local newspaper put the drop at 15 percent, though the company said it didn't "recognize" those figures.

Well, the company now says that Albert Heijn did see a sales drop last week, but while it would not put an exact figure on the decrease, the company implied it was less than five percent. A spokesman also suggested that CEO Moberg's compensation package was less the cause than the usual September slowdown.
KC's View:
It just seems so extraordinary that outrage over a pay package could cause so much angst in the Netherlands. It also seems to be illustrative of Ahold's general position at the moment that it seems to be underestimating the sense of betrayal and disappointment that exists toward it in some quarters.

While we suppose you have to give the company credit for recognizing the increasing severity of the situation and dealing with it, there is a sense of continued missteps here that makes one wonder if the company has the moxie to pull itself out of the morass in which it finds itself. After all, it was just yesterday that de Reuiter was saying that rumors about his stepping down were pure speculation.

Published on: September 17, 2003

Supervalu and C&S Wholesale Grocers announced this morning that they have completed their asset exchange.

Supervalu has acquired former Fleming Midwest operations from C&S, including customer supply agreements, inventory, trade names of Sentry Foods and Festival Foods, and closed, owned real estate in La Crosse and Waukesha, Wisc. Supervalu is now providing services to these additional customers from its existing facilities in the Midwest.

C&S acquired Supervalu's New England operations, including customer supply agreements, inventory, three owned distribution centers located in Portland, Maine; Andover, Mass.; and Cranston, R.I., and a closed, leased facility in Suffield, Conn.

According to the announcement, C&S is servicing all of the customers of these facilities.
KC's View:
Maybe for the moment. But the word we hear is that there are an awful lot of independent retailers in New England who are concerned and dissatisfied with the asset swap, and who are reconsidering their options. Part of the problem seems to be that C&S has a strong reputation as a distributor, but not as a service/support organization - and independent retailers believe that they need those kinds of services in the current competitive environment.

Another factor - we've heard from a number of independents in New England that they read about the asset swap in MNB and elsewhere before ever hearing a word from Supervalu…and they're not pleased about it. (We were up at the Connecticut Food Association convention giving a speech last weekend, and there were independents in attendance who said they still hadn't heard anything officially from Supervalu.)

The conventional wisdom seems to be that the big winner in New England is going to be Bozzuto's, which is perceived as being strong in the service area. Indeed, the biggest problem that many believe Bozzuto's will have is the ability to take on all the new business that may come its way.