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    Published on: November 13, 2003

    We continue to get email about Wal-Mart's immigration-related problems, as one MNB user wrote:

    As much as I despise the billion dollar goliath (W.M.); I cannot see how it would be held responsible for "illegals" that have entered the U.S. knowing they are wrong to be here in the first place, then expect our courts to back them up. This is wrong, where is the U.S. going and when does it stop this hideous stuff. When does someone come down on these defense lawyers that are taking these positions for their own politicizing and gain?

    MNB user Stefan Schachtell wrote:

    I beg to differ on your statement:

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

    Just because these were illegal immigrant, or as I would like to categorize them, undocumented workers, does not free up any company to not pay equally, pay taxes on them and generally, treat them as any other workers. You do forget that the company (Wal-Mart) was able to benefit from these low wages, etc. and therefore had an unfair advantage against other companies that did not have these low expenses.

    If I would be their lawyer, I would even try to sue them for some of the profits they made while they were employed either by contractors or by Wal-Mart themselves.

    Having been in the retail industry and comparing bids of contractors and talking to them, observing them and dealing with them, nobody in their right mind can make the argument, that Wal-Mart did not know about them (and remember, some of them were employed by Wal-Mart directly, after they took the work in-house) and therefore benefited.

    So in summary, I think you are way off on your statement and demonstrate a veiled ignorance or even an unspoken approval of the fact that just because they are un documented workers, treat them and pay them like you know what. And furthermore, don't pay taxes as one would have to by law!

    It is much easier and safer to blame these workers, unless you walked in their shoes, than hold these companies responsible for their action.

    MNB user Mark E. O'Toole disagreed:

    It is my judgment that we have to get back to integrity standards that are supported by the law. The law is what counts here and not someone's personal feelings because they are breaking the law. I also find it disgraceful that people who break the law, want to blame someone else for their problems.

    While I do not agree with all of Wal-Mart business practices, I have worked with then for over 20 years and I honestly believe that they would pay less money to someone who is Mexican or any person of color or nationality. The attorney who has filed this case should be embarrassed.

    Furthermore, since you are not in this country legally and you had to break the law to get here in the first place, whether on your own or with someone assistance, then you have no rights. In addition, to get here, you most likely had to lie, falsify documents, maybe steal to get into the USA.

    Every step of the way has been lined with breaking the law. Breaking the law is breaking the law and you have no rights. It is that simple and there does not need to be a trial or hearing, just a one way ticket back to your own country.

    There is right and there is wrong. This is wrong and anyone supporting such a lawsuit should evaluate their standards of integrity. They clearly need development.

    Actually, you use a phrase here that makes us rethink our position: Breaking the law is breaking the law and you have no rights. In fact, everyone in this country has rights…and when you break the law, that's when your rights become more important, not less so.

    Or have we misread the Constitution?

    MNB user Jeffrey Pipes Guice chimed in:

    I just don't understand why we continue to pussy-foot around with what is obviously a crime. For God's sake -we term the term "illegal" for a reason because it's ILLEGAL and it's AGAINST THE LAW!!!!

    1. What about the Americans jobs that were lost due to this contractor breaking the law? Put the cleaning contractor IN JAIL!!!!!!! and fine him for the ENTIRE amount of the contract, plus 15% -after all, the money was indeed earned in an ILLEGAL manner.

    2. Deport the ILLEGAL immigrants, and charge the contractor with any/all relative expenses!!!!!
    3. Slap Wal-Mart with a BIG FINE of $1,000,000 for hiring a contractor who was BREAKING THE LAW RIGHT UNDER THERE NOSE!!!!!!!! -as if Wal-Mart store managers didn't know?!?!?! A fine this size (not that Wal-Mart will even notice it) will hopefully send an important message to Corporate America encouraging them to not do business with contractors who don't OBEY US LAWS!!!!

    Now, am I to be viewed as being politically incorrect, un-American, anti illegal, or just tired of Corporate America screwing me as a citizen and my government screwing me as a taxpayer?

    Another MNB user wrote:

    What I don’t understanding is if the workers are illegal, how do they or anyone else have the balls to complain about the wages! They are here illegally earning an income to support Mexico. I am not a prejudice person – so my beliefs are not racially driven. However, with the unemployment at the highest in how many years, i.e., dramatic downsizing in the telco, food, hotel, aviation industries to mention just a few, there are plenty of AMERICAN CITIZENS who need work and would be willing do whatever to earn an income to keep food on the table of their AMERICAN families!

    Bottom line: get to the real source – illegal aliens. Send them back to their own country until they can LEGALLY reside in this country.

    And MNB user Alan Binder noted…

    Here in California, there has been talk of issuing driver's licenses to illegal immigrants, so I'm sure this substantial segment of our population is encouraged to speak out. Seems like what we're looking towards is either another round of amnesties, or possibly a simple annexation of Mexico.

    Maybe we could use a 51st state...
    KC's View:

    Published on: November 13, 2003

    The ongoing discussion of whether obesity should be categorized as a disease - with all the legal and social implications such a move would carry - continues to generate interest.

    One MNB user wrote:

    I was intrigued by all the responses you received regarding your views on obesity, manufacturers, disease classification and personal responsibility.

    "If people think that obesity is really a disease and it should be treated
    that way, just wait until we get the newest rate increases in health
    I've never known an insurer to cover an eating disorder. We'll all pay for it anyway as obese people use the medical industry more and more.

    "People do not have to helplessly die of obesity as they would die of a real
    disease such as cancer."
    Isn't Bulimia a "real" disease? How about Anorexia? These diseases revolve around bad food choices or lack thereof and distortions of self image. Both of these factors seem to be very involved with obesity. People die from Anorexia, from Bulimia AND Obesity - often helplessly. They are just as "real" as cancer. Ask anyone who's had a relative or friend die from an eating disorder.

    Let's face it, there are people out there who need help, personal responsibility or no. And there are those who just need a shove in the right direction.

    Here's a thought - we've created a pretty miserable environment for a lot of people when it comes to food (from "ideal" body images to super sized meals to "convenience" foods loaded with fat, sugar and preservatives), why can't we take some responsibility for that while helping those who've gotten caught in the middle of it?

    MNB user Katherine Johnston disagreed:

    This is definitely a topic that is heated! My view is that obesity is a symptom, not a disease. People get fat for many reasons. For some, there is a legitimate medical reason. Glandular problems, metabolic problems, etc., are the diseases, and obesity is a symptom of that. “Emotional” eaters and other overeaters may be depressed or have an addiction. Those are mental health diseases or conditions. Most of us (myself included, now slimmed down thanks to getting off my behind and giving up sugar and fast food) are not sick. We know that Quarter Pounders with Cheese aren’t healthy, and we don’t care enough to change. Maybe that’s a mental condition or laziness. Obesity is not a disease by itself. We just need to realize that we are creating bad health and it will catch up with us, not medicate it or throw money at it.

    Another MNB user wrote:

    I can't control my spending. Why don't we make that a disease and the government or and insurance company can pay off my credit card.

    You might be able to run for office on that platform…

    MNB user Susan Kemp wrote:

    If obesity is classified as a disease, will it also qualify for disability] coverage? (Hmmm, seems to me that the "Simpsons" aired an episode about this.) If so, we will pay increasing health insurance costs and increased Social Security contributions at a time when the pool of employees paying into SS is shrinking and the pool of people collecting benefits is increasing.

    With all these deductions from our salary, who will be able to afford food?

    Yet another MNB user wrote:

    It seems a little insensitive for those of us who have not struggled with obesity to determine that those who are obese have become that way solely as a result of their own choices, particularly if we aren't experts on the medical and hereditary causes of obesity.

    I am not an expert, but having studied a little physiology, I do know that the number of fat cells in a person's body is fixed by age 2 and that each fat cell sends a message to the brain when it becomes depleted. That means that those who have more fat cells (through no fault of their own, unless you want to blame babies) are constantly hungry if they eat the same amount as the average person. It's not just a matter of self-discipline; they are actually having hunger pangs! How long can any of us--fat or thin--can stand feeling hungry?

    For those who don't actually have more fat cells but just eat compulsively, why shouldn't that be considered a disease? Many insurance plans cover psychological treatment, and eating disorders would certainly fall under that classification. And as for the insurance rates going up, my guess is that it would be cheaper to give overweight people some preventative treatment early on than to let them treat themselves with fad diets and then shell out the money later for the diabetes treatment and triple bypass surgeries! I don't believe food manufacturers are responsible for anything more than accurate labeling, but there's no reason health plans shouldn't help obese people become healthier.

    And finally, this MNB user offered a unique perspective:

    I am both a recovering alcoholic and a smoker, yet my BMI is a 24.5. Simply meaning I have a disease, a weakness and a desire to stay fit.( yeah, I
    know, can't fix stupid!) The point of my message is simply this: Obesity, alcoholism and smoking are all health concerns that carry additional health cost, yet the only one that the insurance companies single out are the smokers. I am not complaining about my surcharge for smoking yet I find it curious that it is the ONLY behavior that is surcharged.

    I have been helped tremendously by the medical community in relationship to my alcoholism. I could not deal with my daily struggle without them so I can identify with the obesity issue. How about a simple solution, Let's add physical fitness and lifestyle to the guidelines of the various insurance programs. You yourself have been working to shed pounds and not only do you feel better, but I am willing to bet your health risk have been reduced. Therefore, you should be awarded by reduced insurance cost. They have reduced car insurance for safe drivers!

    By the way, I do enjoy your wine reviews. I read them with a bit of envy once in a while, but it is nice to be reminded that there are people who can enjoy a nice Cabernet( my personnel choice) without having to drink 6 bottles.


    Is it too naïve to frame this discussion as a matter of compassion, as opposed to what might be fiscally prudent in the short run?
    KC's View:

    Published on: November 13, 2003

    • George Weston Ltd.'s reported that its third quarter profit was up to the equivalent of $163 million (US), a 12 percent increase over the same period a year ago. Quarterly sales were the equivalent of $6.7 billion, up three percent over the same period last year.

      According to the Canadian Press, improved results at the company's Loblaw chain offset a drop in sales at the Weston Foods group.

    • Whole Foods Markets Inc. reported fourth quarter earnings of $23.8 million, compared to a profit of $22.0 million during the same period a year earlier.

    • Coles Myer of Australia posted a first quarter sales increase of 11.9 percent to the equivalent of $5.1 billion (US). Same-store sales growth was 2.3 percent for the entire company, and 1.7 percent for its food stores.

    • PriceSmart, the membership warehouse chain with stores in Latin America, the Caribbean and Asia, reported that October net sales decreased 8.2 percent to $47.3 million from $51.5 million a year earlier. For the four weeks ended October 26, 2003, comparable warehouse sales decreased 10.3 percent compared to the same four-week period last year.

    KC's View:

    Published on: November 13, 2003

    • The Rocky Mountain News reports that Wild Oats has opened a new prototype store in the Denver area, giving HBC and fitness products a "store within a store" treatment.

      The result looks more like a traditional supermarket than a typical Wild Oats, with food items displayed prominently in wider aisles," the paper notes…and is expected to generate stronger sales than the company's more mainstream units.

    • Dairy Farm's Cold Storage unit reportedly is negotiating to acquire 51 percent ownership of Singapore's Shop N Save chain, currently owned by local group QAF. The other 49 percent of Shop N Save is controlled by Delhaize of Belgium.

      No work on whether Dairy Farm also is interested in Delhaize's piece of the company.

    KC's View:

    Published on: November 13, 2003

    The Wall Street Journal reports this morning that, as predicted elsewhere (including in MNB), Wal-Mart will launch a low-price online music business, possibly as early as next week.

    The WSJ notes that's music store will have about 200,000 song titles available for downloading, probably costing less than the 99 cents charged by competitors such as Apple Computer Inc.'s iTunes Music Store.

    Wal-Mart already controls 14 percent of global music sales through its enormous CD business.
    KC's View:

    Published on: November 13, 2003

    Barilla, which makes the best-selling pasta in the US, has announced that it will convene a conference of food and nutrition experts in Rome next February with one goal - debunk the anti-carbohydrate trend popularized by the Atkins Diet.

    Atkins' advice on nutrition "defies common sense," Sergio Pereira, vice president of marketing at Barilla America, told USA Today. "It goes against a huge body of knowledge if you look at health, longevity and disease rates."

    The conference will be co-sponsored by Oldways Preservation Trust, a food-issues think tank, which advocates a Mediterranean-style diet rich in pasta and other whole grains, along with produce and olive oil.
    KC's View:
    The problem that these folks are going to have is that even as they lobby for people to consumer a Mediterranean-style diet, there are going to be all these other people who have lost weight once they cut carbs out of their diets.

    And that's going to be tough to argue against.

    Published on: November 13, 2003

    Signaling clearly that the obesity obsession isn’t just an American trend, the
    UK Food Standards Agency (FSA) has published a paper suggesting a series of regulatory changes that it believes could reduce the level of childhood obesity, including:

    • The banning of all food advertising aimed at pre-school children.

    • Set strict regulations on how much advertising is allowed of "less healthy" foods.

    • Ban the use of children's television personalities and cartoon characters in food advertising.

    • Establish a tax on all food advertising to children, with the funds to be used in nutrition education.

    A trade association called the Food Advertising Unit (FAU) is not sympathetic to the FSA suggestions, however. In a press release, it said that a "wide range of research and evidence" suggests that parents should be dealing with obesity issues, not regulatory agencies…and that "overweight and obesity are caused by an imbalance between food consumption and energy expenditure."

    It called the FSA's suggestions "quick fixes to satisfy certain interest groups," and that advertising is not considered to be a significant influence on food choices, at least not more of an influence than siblings and peers.
    KC's View:
    We're amazed by this last statement…that advertising isn’t a significant influence on kids' eating behavior.

    They must be doing lousy advertising over there, or the FAU is doing a little CYA.

    Published on: November 13, 2003

    The British government's Trade Secretary, Patricia Hewitt, has announced that she is lessening somewhat the restrictions placed on Tesco, Wal-Mart's Asda Group, and Sainsbury regarding the allowable acquisition of some of the units currently owned by Safeway Plc.

    Of course, the whole question is dependent on William Morrison Supermarkets being able to complete its acquisition of the bulk of Safeway.
    After a long period of deliberation, the government decided several months ago to allow only Morrison to bid for Safeway, and said that it would disallow bids by Tesco, Asda and Sainsbury because they would be anti-competitive.

    The only exception originally made by the government was 53 stores that it said would have to be divested by Morrison in the event of a successful acquisition. But now, according to UK press reports, the top three UK chains will be able to buy more stores from Morrison if that chain decides it wants to sell them - as long as the Office of Fair Trade (OFT) deems such acquisitions to be within the bounds of fair competition.
    KC's View:
    These days, it appears, the sun never sets on the British bureaucracy. Back a couple of months ago, this all seemed like the legitimate use of governmental discretion to make sure that a level playing field was maintained and that big retailers didn’t gain an unseemly amount of power.

    But now it's just getting tiresome. We wish somebody would acquire somebody and get it over with.

    Published on: November 13, 2003

    Global notes and commentary from…
    2003 has seen German-based hard discount chain Lidl move into the Czech Republic and Sweden and prepare for imminent openings in Norway and Hungary while laying the groundwork for entry into the Baltic States and Denmark. Furthermore, even in its existing markets, Lidl has not been sitting idle. The retailer has recently announced that it is planning to open between 15 and 20 new stores annually over the next few years in Austria. To support this expansion, the German discount retailer is considering building a second distribution depot in the country, to the south of Vienna.

    Well established in Europe, Lidl has always been rumoured to have ambitions beyond the Continent and has stated that it is considering entering new markets such as the United States, Canada and Asia. Rumours regarding Canada have recently escalated, suggesting that Lidl is planning to launch into the market in 2004, first opening in Ontario and eventually expanding to a 200-plus store network. As per usual, the secretive chain has declined to comment on the reports.

    While preparing to open stores in Norway, Lidl is also planning to buy a dairy production plant in Drammen in the southeast of the country, as the retailer has been frustrated in its attempts to find suppliers for its own label milk ranges. Similar problems have occurred in Sweden, where Lidl's dairy products are currently imported from Germany.

    Lidl's international expansion plan has been pursued at full throttle this year and has shaken up several retail markets prompting domestic operators to rethink their pricing strategies. In particular, in Scandinavia, Lid's market entry earlier this year changed the dynamics of local retailing. Domestic operators ICA, Kesko and Coop Norden have responded by refocusing their stores to a more price-orientated basis and introducing economy own label ranges to match Lidl's cut-throat prices.

    In Canada, Lidl's entry would also be something of a novelty as no hard discount food retailer of any real scale is currently present in the country. Low-price retailing is in the hands of larger-sized formats, such as Loblaws and Wal-Mart. With Lidl's small sized formats located in residential neighbourhoods offering food products at rock bottom prices, the retailer could fill a niche in the market. The move would come at a time when Canada's grocery sector is heating up in terms of competition.
    KC's View:

    Published on: November 13, 2003

    Amid lawsuits, charges and counter-charges and seemingly greater hostility between the sides, negotiations between representatives of the United Food and Commercial Workers (UFCW) and Southern California's three major grocery chains have been shut down.

    Federal mediator Peter J. Hurtgen, who got the two sides back together on Monday for the first time in the month since the strike/lockout of more than 70,000 employees began, told the Los Angeles Times that the brief talks had been useful, but did not offer any hints for then they might resume.

    It was on October 11 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.
    KC's View:
    Y'know, if these two sides keep it up, they might be able to keep this labor action going until most of the 40 supercenters that Wal-Mart plans to open in California actually are up and running.

    We still believe that the way to make this thing work for both sides is to create some sort of groundbreaking profit sharing deal for the unions that would, in essence, tell them that while employees might have to take on a small co-pay for their doctor's appointments and prescriptions, the advantage would be that at the end of the year, if both sides create more profitable companies, these same employees could be looking at nice checks.

    This gives everybody a stake in being smarter, better, faster, and more engaged.

    Published on: November 13, 2003

    Forbes has an excellent profile of Wegmans Food Markets, which it concludes is thriving (with sales up $3.3 billion this year, up nine percent) even in a Wal-Mart dominated world because of a clear vision of what it is.

    "The Wegmans formula is not pile-it-high-sell-it-cheap retailing but a search for a sweet spot between price and quality," the magazine writes. "Inside the stores chefs in white hats sauté scrod under a hammered-copper stove hood. Lanterns and canopied window shutters lend to a display of artisan breads the feel of a Parisian open-air market. Wegmans' largest stores average $950,000 a week in sales, compared with a national average of $360,000. While bigger grocers, including Safeway and Albertsons, are exiting markets, Wegmans is moving into suburban Philadelphia, Baltimore and Washington."

    Also contributing to Wegmans' success: a willingness to educate the consumer about the products and services it offers, a "nearly telepathic" customer service level, and a relentless discipline about pricing and efficiency.

    Good piece, worth reading.
    KC's View:
    Here's the thing that differentiates Wegmans from so many other retailers, and the thing that keeps it healthy in the face of tough competition.

    Wegmans knows what it is. It does what it does. And it offers itself to customers, and expects that customers will come to it. But it will not change what it is in search of new customers, because that would sabotage the philosophy and strategy that got it this far.

    Published on: November 13, 2003

    The December 2003 issue of Fast Company features a cover story entitled "The Wal-Mart You Don't Know," examining the economic power exercised by the world's biggest company. It is a fascinating piece, "the story of the pressure the biggest retailer relentlessly applies to its suppliers…it's the story of what that pressure does to the companies that Wal-Mart does business with, to US manufacturing, and to the economy as a whole." It is a company, Fast Company concludes, that is "so big and so furtively powerful so as to have become an entirely different order of corporate being."

    There are some interesting stories related by the magazine, including:

    • How it kept the pressure on Vlasic pickles to sell a gallon of whole pickles for $2.97, a price so low that Vlasic and Wal-Mart were barely making a penny per jar. Even though Vlasic wasn't making any money on the deal, and the gallon jars were ruining its cut pickle business, Wal-Mart wouldn't allow the company to raise prices or shrink the jar, until it felt it had drained all the life out of the pickle business. While it wasn't related directly to the gallon pickle jars, Vlasic soon filed for bankruptcy protection.

    • How Wal-Mart will demand to see the financial records of its suppliers, and will insist that they make smaller margins and charge lower prices, with small suppliers a favorite target because they are more vulnerable to the company's demands…even if those demands eventually put it out of business.

    • How Wal-Mart has put suppliers out of business by buying so much product that the suppliers almost become exclusive, and then pull the plug on those manufacturers whenever it suits their needs.

    • How Wal-Mart puts such financial pressure on product suppliers that many are forced to move their manufacturing facilities out of the United States in order to keep their prices down, causing an extraordinary loss of American jobs.

    This isn’t to suggest that everything Wal-Mart does is malevolent.

    Fast Company concedes that by keeping prices down, Wal-Mart has contributed to the control of US inflation - such is the magnitude of its power.

    And manufacturers tell the magazine that one way to deal with Wal-Mart is to keep the innovation bar high - if the company doesn't have a benchmark by which to measure the performance of a new product, it is less able to squeeze the supplier.

    And, Fast Company notes, this isn’t the first time that American retailing has been down this road. In fact, the Great Atlantic & Pacific Tea Co. (A&P) had more stores at its peak than Wal-Mart has today, and owned 80 percent of the US supermarket business…and we all know how that turned out.
    KC's View:
    If you don't get Fast Company, go out to the newsstand and pick up this issue…it makes great reading. (The issue isn’t online yet, so you'll have to settle for a paper copy…)

    You have to wonder at what point all this scrutiny begins to get to Wal-Mart management…it all has been a fairly charmed ride to this point, but the tide seems to be shifting.

    Wal-Mart's shift from being a paragon of "buy America" certitude to being an enormous supporter of offshore manufacturing is the most jarring change, and certainly raises questions about the proper balance between good business and social responsibility…and even how social responsibility should be defined in economic terms.

    And the hits keep coming…

    An MNB user sent us a story yesterday from The Wall Street Journal that we hadn't seen…about how new US safety rules have been designed to reduce fatigue among truck drivers by limiting the consecutive hours they can work.

    "Wal-Mart Stores Inc.," the WSJ reported, "which opposed the new rules, believes the more stringent 14-hour rule will reduce its drivers' daily work time by 6% on average and cause it to add 275 new drivers and 300 new trucks to handle the same amount of cargo."

    On the other hand, maybe it would be good for their long-term health…