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    Published on: November 5, 2003

    An interesting letter came from one MNB user regarding the alleged wage discrepancy between Wal-Mart and union supermarkets:

    I was a manager of a union supermarket and we had a Wal-Mart in the same shopping center as us, but Wal-Mart paid a higher beginning wage than we did and its employees did NOT have to pay union dues, initiation fees or arrears, so the employees we making more money at Wal-Mart than working at the union supermarket. It took an employee about a 18 months before it was better to work at the supermarket than at Wal-Mart.

    As you know how many people wanted to wait 18 months to have the so-called higher paying job, most people went where the money was, Wal-Mart. Even then at Wal-Mart they did not have the restrictions on how many hours a person could work, compared to the union store, so a person could take home more money each week from Wal-Mart rather than working at the supermarket. We lost a lot of good people to Wal-Mart.

    So much for the higher "Union Wage" theory.





    Response to the decision by Safeway not to sell Dominick's came from one MNB user:

    I wouldn't believe one word that Safeway had to say about the sale or non-sale of Dominick's!

    It would prove interesting if Yucaipa did win their case and Safeway's efforts to not sell to them, would have been in vain.


    It would indeed…




    Regarding the decision by Gap Inc. to hire Pret A Manger CEO Andrew Rolfe to run its international operations, MNB user Sue Ryan Goodman wrote:

    Let's hope Gap doesn't let Andrew Rolfe work on site selection - so many of the Prets in NYC were open just a few months before they closed. T

    The one that was literally below my feet seemed to be open under 2 months, while they spent more time than that renovating the space...


    The inability of Pret A Manger to gain traction in NYC can only be ascribed to New Yorkers having a highly refined and particular definition of what a sandwich should be…and Pret's offering didn’t fit.

    That said, if Pret doesn't try and open units in the nation's airports, it is missing an enormous opportunity. There's gold in them thar terminals, folks…




    Regarding the move toward organic produce and prepared organic salads, MNB user Dave Jones wrote:

    Glad to see that trend - we Americans eat poorly and poison our bodies in so many ways. But I think it may be disingenuous that growers convert land that has been traditionally treated with chemicals and suddenly become organic.

    That could give organic a bad rap.





    We also got a nice response from MNB user Susan Kemp to yesterday's first installment of a three-part column from The Hartman Group:

    This is a wonderful article--thank you Kevin and Dr. Richardson.

    As a consumer who wandered into a Fresh Fields store many years ago, searching for options for a newly-declared vegetarian daughter, I have evolved into a consumer who does 95% of her shopping at Whole Foods. (90% of the cart is organic as well.) My local "organic" friends and I share little in common except our commitment to supporting organic producers, purveyors and chefs who support the same. (Of course, proximity to great stores carrying these products doesn't hurt!)

    We are young, middle-aged, elderly; single, married; children, childless; moderate income, high income; vegetarian, carnivore. Now, how do you categorize and identify my "group"?


    As America.




    And finally, on the subject of the best television series on the air today (we nominated "24"), one MNB user wrote:

    For my money, the best show on the air right now is "MI-5," broadcast on A&E Network. It's a British show (aired there as "Spooks"), and really, really excellent. Detailed, twisty plots, believable characters, and great camerawork. It's the first show in years that I actually make the effort to watch every week. Only hitch is some people's apparent problem with the accents -- I nearly fell over last week to see them subtitling a character's dialogue -- he was speaking English!

    We agree that "MI-5" is a terrific show…we haven't seen as much of it as we'd like, but along with "Peacemakers," a western over on USA Network, it made summer television bearable.
    KC's View:

    Published on: November 5, 2003


    • Foodarama Supermarkets named Richard Saker as CEO after his father, founder Joseph Saker, resigned from the post.

      Joseph Saker will continue as executive chairman under a two-year employment deal approved by the company's board. Richard, a 34-year company veteran, served as president and COO before his promotion.



    • The Grocery Manufacturer of America announced that Richard P. Martin has joined the organization as vice president, communications. Martin will manage communications, marketing and advocacy efforts in support of GMA's industry and public policy initiatives.

    KC's View:

    Published on: November 5, 2003


    • Fresh Brands Inc. reported net income for the quarter of $1.02 million, compared with $1.44 million a year earlier. Net sales rose 7.6% percent to $152.6 million from $141.9 million.



    • Wild Oats Markets Inc. reported a third quarter loss of $861,000, compared with year-earlier net income of $2.2 million. Sales were up 3.9% to $237 million from $228.1 million.



    • CVS Corp. reported that total sales for the four weeks ended Oct. 25 rose 8.4 percent to $2.02 billion from $1.86 billion a year ago. October same-store sales rose 6.3 percent on single-digit increases in pharmacy and front-end sales.

      For the 43 weeks of the year to date, CVS's same-store sales rose 5.3 percent, while total sales rose 7.4 percent to $21.2 billion from $19.7 billion in the year-ago period.



    • Rite Aid Corp. said that October total sales rose 6.5 percent to $1.26 billion from $1.18 billion a year ago. Same-store sales rose 6.9 percent. Pharmacy same-store sales rose 6.8 percent as front-end sales rose 7.3 percent.


    • Walgreen Co. reported that October sales rose 16.6 percent to $2.9 billion in October from $2.57 billion a year earlier. October same-store sales rose 12 percent.

      Pharmacy sales rose 18.8 percent in October, while comparable pharmacy sales rose 14.8 percent.



    • The UK's Marks & Spencer posted first half profits that were the equivalent of $522 million (US), up 7.4 percent from the same period a year ago. Sales for the period were up three percent to $6.3 billion (US).

    KC's View:

    Published on: November 5, 2003

    The BBC reports that scientists from Imperial College London have discovered a gene that they believe may compel people to overeat by boosting the appetite. This gene, researchers say, may be responsible for 10 percent of childhood obesity cases - and its detection may allow them to develop a screening program that will allow them to identify carriers.

    At the same time, research done at the University of Wisconsin at Madison has identified a virus that scientists believe could be a contributing factor to the skyrocketing obesity epidemic in humans. In the research, more than a third of obese people studied tested positive for a virus, called Ad-36, as opposed to just five percent of non-obese individuals.

    While this research is in its very early stages, and scientists warn that conclusions should not be reached prematurely, there is speculation that the obesity virus could be contagious.
    KC's View:
    We can see it now. Anti-fat fanatics will be pushing for a law requiring fat people to wear surgical masks out in public so they cannot pass along the obesity virus to less corpulent individuals.

    That would sound like a Monty Python routine if it didn’t seem so credible for 2003 America…

    Published on: November 5, 2003

    The Wall Street Journal reports that the Canadian Pharmacists Association is blaming isolated drug shortages in that country on "the burgeoning trade in prescription-drug sales to U.S. patients."

    In addition, the organization suggests that the shortages could become more frequent and pronounced if the trend toward reimportation of low-cost prescription medicines from Canada to the US continues.

    Canadian federal health officials say there is no evidence that the trend is causing shortages, but the WSJ reports that there is concern that this could be a risk as the trend grows.
    KC's View:

    Published on: November 5, 2003

    Business Week reports that Kmart is counting on a strategy that targets urban and Hispanic shoppers to help it through a holiday shopping season that - if it is not profitable - could suggest bigger long-term problems on the horizon for the troubled, once-bankrupt retailer.

    "Kmart's focused marketing to urban communities may be a case of too little, too late," the magazine reports. "Same-store sales declined 5.4% in its second fiscal quarter, which ended July 30, following a drop of 3.2% in the previous quarter.

    And even commercials that try to attract ethnic and urban shoppers into the stores may not be enough, if Kmart isn’t able to create a compelling in-store environment that speaks to their needs and desires. Part of that task includes making choices between low price points and branded merchandise that the company feels attracts its target shoppers - if Kmart guesses wrong, there is the possibility that it may not get another chance.
    KC's View:
    Since the day Kmart emerged from reorganization, we've been predicting that it won't be long before the company finds itself back in bankruptcy trouble…and we haven't seen anything to convince us that we're wrong.

    The Kmart strategy seems marginally adjusted, but we see no evidence of any grand new vision that will propel Kmart into a brighter future.

    Published on: November 5, 2003

    The Boston Globe reports that the popularity of low-carbohydrate diets - such as the Atkins Diet and the South Beach Diet - has made it tough to be in the bakery business these days, with the North American Millers' Association estimating that annual flour consumption dipped last year to 137 pounds per person after reaching 147 pounds, a new high, in 1997.

    And it is expected to get worse. There are some 14 million Americans who say they are on the Atkins Diet at the moment, and the number is expected to double - which has led the National Bread Leadership Council to call for a November 21 "summit" of companies to develop a strategy to fight the anti-carb movement.

    The Globe notes that despite the cut in flour consumption, actual bread sales don't seem to be off that much, down maybe one percent in some areas. But the "buzz" is about how bread represents much of what is bad for you…and bakers don't like the way things are going.
    KC's View:
    They have something to worry about. We love bread…always have.

    As part of the Atkins Diet, we stopped eating bread two months ago. Haven't had a slice since.

    And we've lost 15 pounds.

    And we can't say that we find the low-carb varieties to be all that appealing. It just seems easier to skip the whole category.

    Published on: November 5, 2003

    Shopping For Health 2003, the newest version of the annual report issued by Prevention magazine and the Food Marketing Institute (FMI), suggests that "while 87 percent of consumers believe that healthy eating is a better way to manage illness than medication…consumers' shopping habits are largely driven by convenience, cost and nutritional information, and that children have a significant influence on purchasing behavior."

    "Consumers know the healing power of food, but run into the challenges of inconvenience, cost and confusing information when they shop for healthy foods," said Martha Schumacher, marketing research manager for women's health at Rodale, Inc., which publishes Prevention.

    Among the conclusions of the study:

    • Many consumers believe that healthy meals must be fixed at home but that they do not have the time to prepare them, so they turn to prepackaged, take-out and fast-food meals. While fifty percent of consumers complain that fast-food is "not at all" healthful, 70 percent still buy prepared foods. Working women (33 percent) and younger shoppers more frequently cited time constraints as a reason for not eating more nutritious meals.


    • Healthful prepared foods are especially important to working women, younger shoppers, minorities and those with poor diets. Working women struggle to find time to cook and value healthy, ready-to-eat options. Gen X/Y shoppers place more importance on healthy prepared food options, possibly because they are less experienced with food preparation. Consumers who say their diets could be "a lot" healthier also seek healthy packaged/prepared foods.


    • Shoppers say that healthy foods are not only time consuming to prepare, but more costly than less healthy foods. Thirty percent of nutritionally struggling consumers cite the cost of healthy foods as a major reason they = do not eat better. Shoppers with children, particularly single parents (41 percent), are more likely to say the expense of healthy foods is a major barrier to a more nutritious family diet.


    • While more than 80 percent of shoppers are already making "a lot" or "some" effort to eat healthfully, they remain confused about what is healthy. Consumers say they need constant reminders and education about what is really best for them. According to the survey, 45 percent of shoppers strongly agree that during the next five years, it ís very likely that the experts will have a completely different idea about which foods are healthy and which are not.


    Copies of the report can be obtained from

    http://www.fmi.org/pub/

    Published on: November 5, 2003

    The Chicago Sun-Times reports that one of the first issues that new Dominick's CEO Randall Onstead Jr. will have to face will be contract negotiations with the United Food and Commercial Workers (UFCW) union.

    It isn’t likely to be pretty. After all, it was ugly labor negotiations a year ago that forced Safeway to put Dominick's up for sale; the union agreed to extending the existing contract at that time because of the pending sale, hoping that it could make a better deal with new owners. Of course, that agreement took place against a background that had Safeway blaming the unions for its inability to compete profitably, and the union saying that Safeway's decision to centralize Dominick's operations with its other businesses led to a chain that alienated local consumers.

    Yesterday, as reported on MNB, Safeway announced that Dominick's was off the market…which means it is back to the bargaining table for the two sides. Complicating the issue will be the fact that a rash of strikes have hit the grocery industry around the country, all of them over compensation and health care cost issues. At the same time, the Sun-Times reports, Wal-Mart is planning expansion of its Chicago operations…which will put even greater pressure on Onstead to find a way to cut costs.
    KC's View:
    Also seemingly on the minds of a lot of analysts is the fact that while Onstead was effective running Randalls in Texas (before it was sold to Safeway), that was a non-union operation.

    Want to be that a strike against Dominick's is an almost certainty before this thing is resolved?

    Published on: November 5, 2003

    Published reports say that Kroger Co. and the United Food and Commercial Workers (UFCW) union have agreed to both resume contract negotiations and extend the existing labor contract until November 12.

    The existing contract expired last night, and a strike had been expected. Kroger already had announced a reduction of operating hours in its 24-hour units to compensate for an expected lack of personnel, though it is likely that this shift will be delayed pending some sort of result from new talks.

    The argument in Indiana, as elsewhere in the country where strikes against supermarket chains are taking place, is over both compensation and a proposed reduction in health care contributions by management.
    KC's View:

    Published on: November 5, 2003

    A Guest Column by James Richardson, PhD, of The Hartman Group

    (Content Guy's Note: Amid all the discussion of labor strikes, health insurance, slotting allowances, and all sorts of other infrastructure and technology issues that captivate the food industry, sometimes too little attention is paid to the lifestyle trends that define the modern consumer. This week, MNB offers a look at the issues that drive consumers, authored by James Richardson of The Hartman Group.)

    We see today's consumer as a patchwork quilter, one who constantly updates her quilt to reflect altering lifestyle commitments. These quilts capture, in woven assemblages of patches, the passions, goals, language, purchasing strategies, products and brands that support specific niche lifestyles.

    The first four principles can be found at:
    http://www.morningnewsbeat.com/archives/2003/11/04.html#MNB2

    5. These roles vary according to the intensity of consumers' commitment to specific lifestyles. At The Hartman Group, our world model captures this concept and allows companies to plot their brands and products within lifestyle-specific landscapes of commitment, from the periphery to the core. This is a fancy way of reminding ourselves that not everyone in a lifestyle is really as "into it" as its cutting-edge leaders (the core) are. But the dabblers (the periphery) also buy stuff and shouldn't be ignored.

    6. How people consume products, brands and services within a lifestyle varies according to the relative intensity of the role they currently play within it. This variation is best captured in what we call dimensions of consumption. They could be anything from price, convenience, product durability, whatever best captures the shared, learned mindset of consumers buying things to support their role in that specific lifestyle. What's often confusing is that the same consumer may care a lot about price when buying his toothpaste but not when shopping for mountain bike parts. There's no such thing as a consumer who is universally "cheap." Know the lifestyle you want to market to well, and you can avoid pitching the wrong argument for buying your product or service.

    7. Companies in a variety of industries need to understand the dimensions of consumption that will reach various kinds of roles within the lifestyle or lifestyles that incorporate their brands, products, services. Marketing to novices is different than marketing to the core of a lifestyle community. Most companies marketing to niche lifestyle communities only know the latter's perspective. They bank on the fact that the newbies aspire to the same values and goals as the core. They're wrong. Marketing efforts banking on core knowledge alone will surely alienate a potential mainstream market. The more idealistic a company or brand is, the more difficult it is to let go.

    8. Lifestyles are as much about emotion, shared expectations/desires and learned behaviors as they are about rational, strategic, goal-oriented thinking. Passion and logic aren't mutually exclusive. This is mainstream marketing's oldest error. After all, what else does the phrase "winning your love" mean other than some one logically, strategically pursuing their desire? Logical thoughts and the deeds they inspire live embedded in arbitrary passions…and these are the soul of all niche lifestyles. The key is to understand how consumers assemble purchasing strategies to pursue their lifestyle desires, whether logical or illogical. Learning these purchase strategies will make your communications resonate well with just the right consumers for your products.

    MNB will have more from Dr. Richardson tomorrow…

    To receive a copy of HartBeat from The Hartman Group, which includes constant coverage of consumer trends issues, go to:

    http://66.114.136.114/hartmanGroup/index.htm

    Published on: November 5, 2003

    Wal-Mart Stores said yesterday that it has received a letter from the US Attorney's Office, informing it that the company is the target of a federal probe into the hiring of illegal immigrants. A grand jury reportedly will begin hearing evidence in the case in mid-December.

    If Wal-Mart is indicted and found guilty, it could face both civil and criminal penalties.

    The company said that the "target letter" said that the company was under investigation, not specific individuals employed by Wal-Mart.

    It was late last month that officials with the US Immigration and Customs Enforcement (ICE) service swooped down on 61 Wal-Mart stores in 21 states yesterday, arresting more than 250 people said to be in the country illegally.

    In addition, federal officials reportedly searched the office of an unnamed Wal-Mart executive in Bentonville, Arkansas. There have been reports that federal authorities plan to subpoena Wal-Mart executives to testify before a federal grand jury in connection with the case, maintaining that Wal-Mart had direct knowledge of immigration violations involving its cleaning contractors at stores across the country, federal law enforcement sources said.

    Wal-Mart officials have said that the crews were all hired by outside contractors, and that the company has no culpability in the case. However, recent reports have been that as many as 10 of the arrested illegal immigrants actually were Wal-Mart employees, and part of an effort by the company to move its janitorial services in-house.
    KC's View:
    The all-consuming drive to lower costs can sometimes lead to an organization being blind to the law…we don't know if this is the case here, but it certainly shows all the signs.

    Besides, when a company becomes bigger than most countries, it can breed a certain arrogance, even if it is cloaked by a down-home modesty and charm.

    We continue to believe that this could be just the beginning of a minefield that Wal-Mart will have to navigate very carefully.