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    Published on: November 10, 2003

    In Week 10 of National Football League action…

    Seattle 20
    Washington 27

    Atlanta 27
    NY Giants 7

    Tampa Bay 24
    Carolina 27

    Arizona 15
    Pittsburgh 28

    Houston 27
    Cincinnati 34

    Miami 7
    Tennessee 31

    Cleveland 20
    Kansas City 41

    Indianapolis 23
    Jacksonville 28

    Chicago 10
    Detroit 12

    Minnesota 28
    San Diego 42

    Buffalo 6
    Dallas 10

    NY Jets 27
    Oakland 24

    Baltimore 22
    St. Louis 33
    KC's View:

    Published on: November 10, 2003

    Regarding the possibility that the government could require fast food restaurants to post ingredient information for all their menu items, one MNB user wrote:

    I fail to understand why the government thinks it's the restaurant/hospitality industry's responsibility to educate the public on nutrition - should that not be done through the country's educational system - which is the government's responsibility! Think of it, if a comprehensive class that covered nutrition, exercise and wellness were taught in schools, how much healthier would the country be... both physically and financially!

    On the subject of Country of Origin Labeling (COOL) requirements, MNB user Delfina Anderson wrote:

    This not so unreasonable. Although I have not followed this issue in the food industry, in the apparel industry we are required to label garments and accessories with the country of origin and the fiber composition (this is a real science). We encounter issues when multiple countries are involved with materials being made in one country and assembled in another country. The labeling requirement is the manufacturers responsibility not the retailer who is buying a finished product. It makes sense to me that if we know the origin of what we put on our bodies we should have access to the origin of what we consume.

    MNB user Al Kober had some additional thoughts:

    Kevin, you are confusing the issue. It was not intended to be a food safety issue. COOL is still nothing more than a marketing issue. The original bill was never intended to be a food safety issue. It has always been that the "American Consumer" would pay more for it so it had value. There is no market value for this labeling or some one would be doing it now. If it is traceability that we need then let Congress draft up a traceability bill and let go of this bad, ugly, expensive, poorly conceived, worthless, piece of legislation. Make it voluntary first to see who is right, before adding additional unnecessary costs to the already financially strapped consumer.

    In our piece about the FDA responding to concerns about the safety of cloned animal products by deciding to study the issue some more, we wrote:
    "...So what are we supposed to believe? That the FDA didn't know what is was doing the first time around, but bowed to pressure? Or that it was right the first time, and now is being pressured to change its mind..."

    MNB user Alan Binder responded:

    I think the answer is: "Neither of the above." Seems like the FDA is condescending to "the masses" by saying, "Oh, you're right...we'll keep studying this issue," already knowing that the result from further research will be the same.

    If, however, they find something amiss, then maybe this isn't the witch hunt it appears on the surface.

    Another MNB user wrote:

    Is it truly a stretch to believe the FDA can be swayed by lobby? These are the kings of measurable risks. When they do something fast, you better be suspicious. When a major clinical trial exposed the incredible dangers for women taking combination hormones, the FDA (which had approved their usage) remained silent, even as experts urged women to get off the medication. Within two months, in what was the quickest approval ever by the Agency, a "modified" medication with the same ingredients was approved by "fast-track". Pharmaceutical money and lobby were not idle and the FDA proved (once again) that it can be bought. This is the last governmental watchdog I would trust to make a decision that protects anyone. In the case of cloned animals for consumption, their quick turnaround is no surprise. That they are not held accountable for such flaky scientific scrutiny is no surprise either.

    Another MNB user raised an interesting question about the consumption of cloned animals and their offspring:

    I wasn't aware that there was a shortage of food-source animals to begin with. There are millions of cows, pigs, turkeys, and chickens in the US. They have no problems breeding and there is no wide spread disease wiping them out. So, why would we need to consume products from clones?

    On the subject of Wal-Mart's immigration problems, which we have suggested are shared by other chains not yet targeted by the feds, one MNB user wrote:

    This is the kind of kick in the pants that could do the US corporate world good.

    Good thing that Wal-Mart is the fall guy here because it can afford the expenses and the weather the controversy. Fact is, this is a practice needing exposure, not just at Wal-Mart but at many US Corporations. Do you believe that Wal-Mart consciously knew or encouraged its contractors to hire illegals? There are some Wal-Mart haters out there that do, but I don't think so. Wal-Mart leadership is not stupid. This was simply under the radar. It was not noticed due to the million other pressing concerns of running a mega business.

    How did they miss this? Well, I have a theory that this exposes a blind spot stemming from one of Wal-Mart's greatest strengths. Perhaps more than any other corporation in the world, Wal-Mart shares responsibilities with suppliers to effectively run their business. Extremely effective strategy when it comes to maintaining in-stock conditions, lowest prices, timely promotions, etc. This mind set, where responsibilities are delegated to suppliers, may extend to other contractors supporting store operations and might explain how this could have been overlooked. That theory aside, let's be honest. How many other corporations have been checking immigration papers on people doing their night time cleaning?

    One thing Wal-Mart does very well is clean up its messes. This practice will not be tolerated now that they are aware of it. The real question is how many other corporations and contract maintenance companies will stop hiring illegals as a result of Wal-Mart's black eye.

    Another MNB user wrote:

    The only problem is that the government really doesn't want to do anything about the problem. If we eliminated all the illegal aliens, who would do the dirty work in the US? There would be no one to pick our fruit or clean our buildings, because most Americans find this work below them.
    KC's View:

    Published on: November 10, 2003

    • Longs Drug Stores Corp. reported that total sales climbed 4.2 percent in the four weeks ended Oct. 30, to $338.9 million from $325.2 million a year ago. October same-store sales increased 1.4 percent.

      Same-store pharmacy sales up 4.1 percent for the period, while front-end sales fell 0.9 percent.

    KC's View:

    Published on: November 10, 2003

    • Crain's Chicago Business reports that Kraft Foods will test a program that will give women who buy certain of its products coupons for three free 30-minute workouts at Curves International, a fitness club chain with nearly 150 sites in the Chicago area. The goal, according to the report, is "to change consumers' perception that its processed foods contribute to America's obesity epidemic."

    • The Wall Street Journal reports this morning that McDonald's Corp.' may be getting out of some of the ancillary fast food brands that management feels may be distracting it from rebuilding its hamburger business.

    KC's View:

    Published on: November 10, 2003

    i>The New York Times reported over the weekend on the troubles that seem to be plaguing Winn-Dixie - its stock price has dropped 49 percent this year, management is refusing to discuss quarterly earnings, and Wal-Mart continues to open supercenters and Neighborhood Markets in regions where it operates.

    The chain is responding to these challenges by opening a new value-oriented format, Grocery Bargain Depot, and by spending $210 million in the coming year to open new stores or upgrade existing ones.
    KC's View:
    It could be worse. Winn-Dixie could have a labor contract expiring soon…

    Published on: November 10, 2003

    Interesting piece in the Boston Globe that explores Wal-Mart's decision to stop selling certain men's magazines (Maxim, Stuff, and FHM) that it considered too risqué, put up "blinders" to shield the covers of women's magazines (Cosmopolitan, Glamour, Redbook, and Marie Claire) it felt were too provocative, as well as "to sell only edited versions of music CDs with parental advisories."

    "These were judgments based on customer demand and based on what customers wanted to see on our shelves or didn't want to see on our shelves," said Wal-Mart spokeswoman Karen Burk.


    • The Globe notes that none of the men's magazines were particularly strong sellers, raising the possibility that the decision not to sell them was more posturing than any sort of significant move.

    • And, the paper reports that "Wal-Mart also still carries lots of magazines with scantily clad women on the cover, including Blender, a music magazine published by Maxim that this month features the singer Pink on the cover wearing a skimpy top and flashing a metal plate on her hand that says "Kiss My A**."

    • While Wal-Mart says it made the decision in response to consumer reactions, nobody can quite figure out who protested. Conservative Christian groups say they never asked for the men's magazines to be removed.

    • However, some of these same conservative groups say they’re not happy with the blinder arrangement, because they block the headlines but "tend to accentuate the cleavage on the picture of the model in the middle of the cover." Bill Johnson, head of the Michigan-based American Decency Association, told the paper, "I'm not really impressed with what Wal-Mart's done."

    • And, while Wal-Mart says it was responding to local community interests, the fact is that it made the changes across the board, eliminating the magazines from all of its units - no matter where they are and who its local customers happen to be.

    Stop & Shop, which competes with Wal-Mart in New England, told the Globe that it carries all the magazines and doesn't shield covers. "It's not up to Stop & Shop to screen or make choices for consumers," said Faith Weiner, a Stop & Shop spokeswoman. "Our goal is to be a place where consumers can get whatever they want."
    KC's View:
    We've said it before and we'll say it again. We have absolutely no problem with chains deciding that there are items they don't want to sell.

    But editing any sort of content is just plain wrong. And the only person who is wronger than a retailer who makes editorial changes is the publisher who permits it.

    Then again, we sort of have a stake in this content issue…

    Published on: November 10, 2003

    John Cleese of "Monty Python" fame will host a special on the Food Network next year entitled "John Cleese On Wine for the Confused."

    The goal is to debunk "the myths and fussiness that make wine intimidating to the average person," according to a statement by the network.
    KC's View:
    We can't wait.

    Published on: November 10, 2003

    Royal Ahold CEO Anders Moberg said Friday that while the company will divest as many businesses as necessary to regain its financial footing and reduce its crushing debt load, it plans to retain ownership of its US Foodservice division.

    It was an accounting scandal at US Foodservice that set in motion the rapid changes that have enveloped Ahold over the past year, including forced resignations of numerous senior executives and a plummeting stock price.

    "We will keep working to get U.S. Foodservice back on track," Moberg said.

    He also said that the company will shortly complete the divestiture of its Spanish and Latin American businesses.

    The Washington Times reported over the weekend that there is some speculation that as Ahold attempts to put its house in order, one of the divisions it could sell would be Giant Food of Landover - with analysts seemingly split between the opinion that Ahold would hold onto one of its best performing businesses, and the feeling that a sale of the division could clean up its debt load.
    KC's View:
    If we had to guess, it would be that over the long-term Ahold will keep Giant and only hold onto US Foodservice long enough to jack up the price.

    Published on: November 10, 2003

    The federal government decided last week to drop its case against two former Kmart executives - Enio A. "Tony" Montini Jr. and Joseph Hofmeister - who were accused of securities fraud and making false statements to the Securities and Exchange Commission (SEC) in an effort to artificially inflate Kmart's earnings.

    "In light of the testimony and evidence to date, the government believes that it is more likely than not that the evidence will not sustain a conviction," prosecutors said in their motion seeking dismissal.

    However, the Justice Department says it is continuing to investigate the circumstances that led to Kmart's bankruptcy.
    KC's View:

    Published on: November 10, 2003

    A new study suggests that while 61 percent of US households have used self check-out lanes at least once, there are mixed reactions to the efficacy of the technology - 52 percent of those who used the lanes said they were "okay," while 16 percent of them said they were "frustrating."

    Seventy percent of those who have tried self check-out lanes plan to use them again, according to the study. Just 25 percent of those who have never tried the lanes plan to do so in the future. Demographic analysis of the study's results shows that usage of self check-out lanes is greatest among larger, higher income, younger, and more educated households.

    The results of the study was reported this morning in the November issue of Facts, Figures and the Future, the e-newsletter produced by ACNielsen, the Food Marketing Institute (FMI), and Phil Lempert.

    “For many shoppers, self-checkout is intimidating. Retailers must be proactive in demonstrating the units and pointing out the time savings for shoppers. Unfortunately, if one does experience a problem—not having a price ring up correctly, for example, or having to wait for a customer service person to correct a malfunction—odds are they will never return to the self check-out lane again. Consumers have zero tolerance for new technologies that don’t meet their needs.”

    To read the rest of the November issue and for a free subscription, go to:

    KC's View:
    These results make sense, and the self check-out folks have to be pretty happy with the notion that almost two-thirds of consumers have at least tried it…and that smarter, richer, younger people are among those who like it best.

    But they have some serious work to do in order to overcome the resistance that still exists in some quarters.

    While there is a lot of acceptance of self check-out among some (including our nine-year-old daughter, who loves the one at Home Depot), we also keep hearing stories from both retailers and consumers who find the technology to be off-putting. Our biggest problem with it remains the fact that self check-out further depersonalizes the shopping experience, eliminating any contact with a living, breathing human being at the supermarket…and many stores that are implementing it aren’t doing anything to replace that contact.

    The ACNielsen Homescan consumer panel has the advantage of being made up of people who are food-savvy, and therefore ahead of the curve in terms of behavior…and highly predictive of where the consumer is going. So these results are worth paying attention to.

    Published on: November 10, 2003

    The New York Times reported that nine illegal Mexican immigrants who worked as janitors at Wal-Mart stores in New Jersey are suing the company, saying that Wal-Mart and its cleaning contractors did not pay them overtime, contribute to workmen's compensation funds, and withhold taxes. The illegal immigrants, who are facing deportation, also charge that they were paid lower wages and given fewer benefits than workers who were not Mexican.

    The lawsuit says that Wal-Mart should be held accountable for its contractors' wage and hour violations.

    The nine Mexicans were among more than 250 people arrested last month in a federal immigration raid on 60 Wal-Mart stores in 21 states. Wal-Mart has said that it did not know that the immigrants, who were hired by outside contractors, were illegal and are not culpable for those offenses.
    KC's View:
    We don't even know where to start with this lawsuit…

    Doesn’t being illegal sort of negate any claims the immigrants are able to make?

    Published on: November 10, 2003

    The Chicago Sun Times reports that a Tulsa Wal-Mart conducted a study about radio frequency identification (RFID) tags earlier this year - a study it hoped would not be made public.

    "Shelves in a Wal-Mart in Broken Arrow, Okla., were equipped with hidden electronics to track the Max Factor Lipfinity lipstick containers stacked on them," the Sun-Times reports. "The shelves and Webcam images were viewed 750 miles away by Procter & Gamble researchers in Cincinnati who could tell when lipsticks were removed from the shelves and could even watch consumers in action."

    The Sun-Times said that it learned of the trial "from a disgruntled Procter & Gamble executive," and that it was kept secret because of concerns that privacy advocates would use it to raise alarms about the implications of RFID.

    Kevin Ashton, executive director of the Auto-ID Center at the Massachusetts Institute of Technology, told the paper, "I think that the idea that someone's privacy is at stake because there are a few RFID tags in a few lipsticks in one store is silly."
    KC's View:
    We're honestly not sure if privacy advocates have something to be worried about, but we are pretty sure that stories like this one won't make things any easier.

    Nor will lines like, RFID chips could make your daily life easier, but they also could let anyone with a scanning device know what kind of underwear you have on and how much money is in your wallet."

    Or paragraphs like, Is that a home pregnancy test in your briefcase? Is that a bottle of Viagra in your backpack? You wear Fruit of the Loom boxer shorts? Do you really have $500 in your wallet?

    Those are sentences that were used in the Sun-Times analysis. And if retailers and manufacturers don't take these issues seriously - and that means being up front about tests s opposed to secretive - then it isn’t going to matter if this technology makes sense. Consumers are going to resent it.

    Published on: November 10, 2003

    Negotiators representing Southern California's top three supermarket chains and 70,000 striking members of the United Food and Commercial Workers (UFCW) union have agreed to meet this morning with a federal mediator - the first time that they have met since the strike/lockout began more than four weeks ago.

    "We will go into mediation on Monday with an open mind and some level of flexibility," John Arnold, a UFCW spokesman told Reuters.

    However, even as the two sides planned a meeting, the Sacramento Bee reported that the UFCW planned to ask residents of both San Francisco and Sacramento to boycott Safeway stores - believing that this move could increase pressure on the chain to capitulate to union demands.

    The anti-Safeway message is being delivered via radio commercials in Northern California. The UFCW also reportedly plans to do some informational picketing at selected Safeway stores.

    It was just about a month ago that union members of the UFCW walked off the job at Safeway's Vons and Pavilions units, followed quickly by a lockout of union employees at Kroger's Ralphs units and Albertsons' stores, in what was termed a "show of corporate solidarity."

    The face-off is over the union's desire to preserve or improve current wage and benefit packages, while the chains are looking for a wage freeze, cuts to health and pension benefits for current employees and a substantially lower wage and benefit package for new hires.

    As often is the case in these disputes, much of the conflict is being driven by the arrival of new Wal-Mart Supercenters, which are non-unionized and therefore boast lower cost structures, and therefore lower prices.

    In an effort to break apart the union of the three chains, and get into a position where it can negotiate separately with the three companies, a little over a week ago the UFCW decided to stop picketing Ralphs stores in Southern California, preferring to concentrate and expand its efforts on Safeway's Vons units and Albertsons. The union said that Ralphs was not taking as hard a line in negotiations as the other two companies, and that it believed that it could reach a deal with Ralphs if it were dealing with that company individually.

    To this point, it does not appear that this strategy has worked.

    The New York Times this morning reports that despite the decision to meet, both sides seem more entrenched than ever. "For the cashiers and stockers on the picket lines, the fight to fend off large-scale concessions is a struggle to avoid being thrown into one of America's lowest castes, the working poor," the NYT writes. "But for the supermarkets, the confrontation, the biggest labor dispute in the nation in recent years, is a painful investment to ensure that they can survive against Wal-Mart and other low-cost rivals."

    This is the first supermarket strike in Southern California in 25 years.
    KC's View:
    The strike may or may not settled soon, but the real question that both sides have to address is how they both are going to change in order to rehabilitate the traditional supermarket industry. A simple labor agreement is likely to be more of a band-aid…and the industry needs a helluva lot more than that.

    In a piece of the weekend, The Los Angeles Times carried an analytical piece examining the future of the supermarket industry, suggesting that the successful supermarket of the future will have to be "smaller and more focused as its corporate parent learns how to operate with a lower cost structure."

    Larry Del Santo, the retired chairman of Vons, told the paper that these stores "need to stay big but think small, think locally and entrepreneurially."

    We agree. But we don't see a lot of evidence that major mainstream supermarket chains are doing this.

    Inadvertently, The Los Angeles Times identifies one of the major problems facing the supermarket industry in an interesting piece this morning by a reporter who labored as a replacement worker at a Ralphs store in Santa Monica, Ca.

    One angry shopper told the reporter, "This is unskilled work. They ought to be happy they have jobs and insurance."

    Unskilled work. If food retailers positioned themselves and their employees as having specific skills - getting the best food into shoppers' hands, and giving them the best information about the food they eat - then maybe mainstream supermarkets would be more competitive against supercenters.