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    Published on: November 18, 2003

    It is hard to believe, but MorningNewsBeat is two years old tomorrow. That means some 500 editions of the service, adding up to something like two million words trying to communicate "news in context, analysis with attitude."

    Whew! (Hope it's been as good for you as it has been for me…)

    I just wanted to take a moment and thank you for your support and enthusiasm over the past two years; the growth that we've seen at MNB has far outstripped what I expected when I launched this littler enterprise, and without your support, that wouldn’t have happened.

    Your enthusiasm is something else entirely. One of the things that makes MNB unique, I think, is the level of response that we get from members of the community and the passion with which you all address the critical issues and trends of the day. It has helped MNB evolve from something that was mine into something that is ours.

    This would not have been possible without you. It also would not have been possible without the support of the various sponsors who help to underwrite MNB on an ongoing basis - companies like MyWebGrocer.com, Empower IT, StoreParts, Distinctive communications, Notiva, Wood Products international, Lawson Software, and EDS. They add to the intellectual diversity of the site, not to mention its commercial viability…and make it possible for you to receive MorningNewsBeat free each morning. If you haven’t checked out their sites, you should. And tell 'em the Content Guy sent you…

    It's amazing when you consider the range of subjects we've all discussed over the past two years. Obesity. Wal-Mart. Biotechnology. Self checkout. Mad cow disease. E-commerce. Food safety. Food security. Health care costs. Management-labor relations. Bankruptcies. Mergers and acquisitions. Layoffs. And possibilities…always challenges and possibilities.

    We've traveled together from coast-to-coast, and outside the US, looking for easily detected trends and the subtle clues for what might be important to all our businesses tomorrow. And we've chatted about wines and movies, books and television shows, and had an extended debate about the best sports movie ever made (I still think it's "Bull Durham," but don't get me started…).

    So thank you for making MorningNewsBeat possible. Two years have gone by, but I feel like we're just getting started together.

    Tomorrow, Year Three begins. We hope that not only will you join us, but that you'll continue to tell your friends and co-workers, clients and customers about MorningNewsBeat. Because it just doesn’t work without you.
    KC's View:

    Published on: November 18, 2003

    In Monday Night Football action, the San Francisco 49ers defeated the Pittsburgh Steelers 30-14.
    KC's View:

    Published on: November 18, 2003

    In a story yesterday about the growth in popularity of touch-screen kiosks, including self-checkout systems, MNB noted that we share the concerns of people who say that a kind of de-socialization is taking place. By actively participating in this trend and encouraging it, retailers run the risk of creating shopping environments that are so sterile and mechanized that they fade into mediocrity.

    One MNB user responded:

    It was very efficient to go through the self-service lane at a BJ's over them weekend.

    De-socialization? Not really...just didn't want to wait in line and didn't mind doing my own scanning. Same thing when going through the airport and obtaining the boarding pass.

    As long as the merchant provides knowledgeable persons to offer help when needed (which Home Depot seems to do), I'll cast my vote for the expediency in these situations.


    Another MNB user wrote:

    The worry about people's ability to socialize is nothing more then a bunch of "I'm smarter then you are" hogwash. The same label was attached to home schooling, which we clearly see now is not true. I love my banks teller
    machines and I know I get better service because of them. Keep it user friendly, and offer excellent customer service when I ask for it and my business is yours.


    Yet another MNB user chimed in:

    We see the self checkouts as an added feature to the 1 to 10 check lines. Most shoppers are not interested in the self check out if they have a large purchase of items. If you watch the self checkouts you see mostly small orders going thru them. Besides you have to bag your own items and you readily fine out it takes more time with large orders. Now it could be that the C stores may lose more business because customers feel they can get a better price at the Super Market on incidentals and at the same time not cost them that time checking out. It seems to us that the issue is time. We are surely interested in spending as little time as possible at the Market. We like self checkout for our small orders, but prefer the service when our purchase is large.

    And another member of the MNB community offers:

    Based on my most recent visit to a local chain ... a non-speaking kiosk would be a major improvement ... management should take a few moments to listen to their checkout employees ... for some nothing is sacred ....

    And more comment from another MNB user:

    Would someone please tell me just how much social interaction I can have with a clerk who grunts at me at best? I prefer the self checkout because I'm faster and more accurate than the clerks at my local Winn-Dixie, and I know what I've picked up. The other night, they were short-handed, so they closed the self-checkouts (hey, I don't make this up) -- as I went through the checkout, the clerk never said a word to me except to ask me what nearly every produce item I had was -- while I will grant her that not everybody buys some of the things I buy, I'm a little taken aback that she had no idea what the items were in her own store. The pomegranate was the most exotic item I had -- the shallots and leeks threw her for a total loop -- and then she had to ask me how to spell them, as she didn't know that, either. The only things she had no trouble with were carrots (bar-coded on the bag) and yellow onions.

    On the other hand, the clerks at the Publix, I enjoy the checkout process because the checkout clerks and the baggers start up friendly conversations -- small talk, but definitely socialization.

    Bottom line? If you can't be bothered to train your personnel well enough to make small talk (and learn what's being sold in the store!!!) -- then just give me a self checkout and leave me alone. I'll socialize with my friends and family, thanks.


    And more opinion…

    It is not hard to believe that some people prefer using a non-person contact machine for items. When one considers the "warm bodies" often manning food order places, a mechanized, electronic alternative is preferred. Other places have employees conversing with other employees or involved in personal phone conversations while serving customers. Give me a machine that will take my money and give me my selection and let me move on.

    Okay, we get the point.

    But our position isn’t anti-self checkout. We think it makes a lot of sense, but we also think that retailers that view it purely as a cost savings device are making a long-term mistake because they are eliminating the only place where most customers actually talk to a human being. Move to self checkout, sure, but move some of those people into the aisles.

    Now, many will say that none of these employees do the business any good. Our response to that is that any business that feels that way about its employees has done a lousy job of hiring, and needs to reassess its priorities.
    KC's View:

    Published on: November 18, 2003


    • Toys R Us, saying its financial performance is being pressed by discounters such as Wal-Mart, posted a third quarter net loss of $38 million, compared with a year-ago loss of $28 million. Sales were up 2 percent to $2.32 billion, with all of the gain coming in currency translations.

      These numbers forced some tough choices at Toys R Us, as it announced that it will close more than 180 children's clothing and educational-toy stores, including 146 Kids "R" Us and 36 Imaginarium units. About 3,800 jobs will be eliminated.

    KC's View:

    Published on: November 18, 2003


    • The US Food and Drug Administration (FDA) has issued an advisory linking green onions such as scallions to a hepatitis A outbreaks in both Pennsylvania and Tennessee. In the Pennsylvania case, more than 500 people have gotten sick and three people have died.



    • Pepsi Vanilla reportedly has managed to pass Vanilla Coke in terms of market share, reaching a 1.2 percent penetration to Vanilla Coke's one percent.

      Vanilla Coke launched with a 2.1 percent market share last year, but has seen softening in the market since then.



    • The Pittsburgh Tribune-Review reports that Giant Eagle is testing a new customer loyalty program at two of its units, looking to use shopper data to target promotions at specific customers.



    • UK retailer Tesco reportedly has informed its suppliers that it will require that all shipments use Radio Frequency Identification (RFID) tags in 2006.

      Wal-Mart has made a similar demand of its suppliers, but has set 2005 as the effective date.

    KC's View:

    Published on: November 18, 2003

    USA Today reports this morning that American eating habits are starting to find their way into other parts of the world, even those that traditionally subsisted on the Mediterranean Diet heavy on fish, olive oil, pasta and vegetables.

    The result: more people are fatter in more places.

    • A recent study in Italy, for example, revealed that a quarter of all Italian children are either overweight or obese. Thirty-six percent of children ages 6 through 10 are overweight. Italian children, in fact, are now the fattest in Europe.


    • In Britain, 21 percent of men and almost 24 percent of women are now considered obese - three times the number in 1983.


    • Thirty percent of Spanish children, 18 percent of children in Denmark, 18 percent of children in France, 18 percent of children in Sweden, and 13 percent of children in Finland are considered overweight.


    • Thirteen percent of Spanish adults, 11 percent of adults in Finland, 10 percent of adults on Denmark, and nine percent of the adults in Sweden, France, and Italy are considered overweight.

    KC's View:
    The interesting thing about these sets of numbers is the fact that the percentage of children who are overweight is higher than the percentage of adults…which suggests that maybe parents aren't paying attention to what their kids are eating.

    Parents who have lost control of their kids? Hard to imagine…

    Seems like just another set of reasons for Europeans to be ticked off at America. But if they're not smart enough to realize that the Mediterranean Diet is better and tastier than a Big Mac, we're not sure they should be blaming the US.

    Published on: November 18, 2003

    The Associated Press reports that as a result of the current high protein diet fad, as well as the effect of droughts and the closing of the Canadian beef supply because of the mad cow disease scare, breed bulls are going for $40,000 and live cattle prices were recently trading over $1 a pound - double what they were just a few years ago.
    KC's View:
    As a consumer, we've certainly seen that. A piece of flank steak used to be a fairly inexpensive meal for the family, but no longer. The question is how much the market will bear…we've actually started cutting back on our beef purchases because of the price increases, or choosing hamburger when we might have chosen steak in the past.

    Published on: November 18, 2003

    Researchers from Utah State University, Southern Oregon University, and the University of Colorado have concluded that while global warming is clearly reflected in the fact that temperatures have steadily increased over the past half-century, there is an upside to the trend.

    Wine is getting better.

    The reason: in cooler climates, at least, the warmer weather can produce a more robust, flavorful and balanced wine. Which is good for the wine industries of places like Oregon, Washington, British Columbia, and England.

    However, in warmer climes - such as Southern Italy and Greece - the increased temperatures could present some challenges to how grapes are grown…and even which grapes are grown.
    KC's View:
    Lesser wine…or global warming?

    Tough choice.

    Published on: November 18, 2003

    Business Week reports that the price that Wal-Mart may be paying for its astounding growth and success over the past few years is the increased attention it is getting from the media, litigators and the federal government.

    Whether it is allegations that it allowed the hiring and underpaying of illegal immigrants to clean its stores, or used predatory pricing to put independent gas stations out of business, or practiced gender discrimination - the atmosphere in which Wal-Mart currently operates isn't as friendly as just a few years ago, and the company no longer necessarily seen as a folksy, benign reflection of American values.

    The magazine concludes that while so far all these allegations haven’t affected sales or stock price, Wal-Mart has to be careful about becoming either a legitimate target or whipping boy. "If it isn't careful, Wal-Mart could take Microsoft's place as both the target of endless government probes and a symbol of heavy-handed corporate practices," Business Week writes.
    KC's View:
    While we get our share of email from people who think we're picking on Wal-Mart, this is the point we're generally trying to make - that Wal-Mart may be reaching a critical point in its history because of all the increased attention.

    Published on: November 18, 2003

    Dollar General Corp. announced that it plans to open some 675 new stores next year, with similar goals for each of the next few years. It is opening 660 new units this year.

    The company also plans to open about 20 Dollar General Market stores next year, which is a little larger and offers an expanded selection of core products, apparel, seasonal merchandise, home entertainment items and some perishables.
    KC's View:

    Published on: November 18, 2003

    Reuters reports that Target Corp. has identified a new demographic at which it is aiming a new line of cheap chic clothing: 40- to 60-year-olds that it calls "zoomers".

    In a conference call with analysts, Target said it will launch two new clothing lines early next year aimed at a subsection of the baby boomer generation "characterized by a fairly active lifestyle, and above average household income, and a desire for a multi-functional wardrobe." This initiative runs contrary to previous efforts to focus on families with small children.

    The new women's line, called Linden Hill, is modeled after brands such as Eileen Fisher, J. Jill and Chico's. The men's brand, called Breakwater, is modeled Perry Ellis and Tommy Bahama clothing.

    The goal is to better compete with Wal-Mart, which has been upgrading its clothing offerings with Levi jeans and its own George line.
    KC's View:
    Zoomers, huh? Not sure we're happy about being classified into yet another demographic group, especially one that has the number "60" in it.

    That said, we wonder what the food offering to "zoomers" might be…

    Published on: November 18, 2003


    • Fresh Brands Inc. today announced that the company and its chief executive officer, Elwood F. Winn, have agreed to mutually end their relationship to allow Winn to pursue other opportunities.

      Winn has served as Fresh Brands CEO since December 2000 and as acting chief financial officer since September 2003. He has been with the company since September 1999.

      Fresh Brands also announced that the company and its VP of retail operations, John C. Rocker, have agreed to end their relationship. Rocker joined Fresh Brands in February 2003.

      The company said that it has initiated a national search for a new CEO as it continues looking for a new CFO. Until a new CEO is named, Walter G. Winding, III, Fresh Brands' independent chairman of the board, and Michael R. Houser, the company's vice chairman of the board, executive v.p. and chief marketing officer, will assume day-to-day duties and responsibilities.

      It was just last week that Fresh Brands revised its third-quarter earnings, lowering them from $1.02 million to $684,000, saying it needed to raise its pretax charge on potentially uncollected franchisee receivables.



    • Albertsons Inc. announced the appointment of Duncan Mac Naughton as group vice president, grocery merchandising, taking on responsibility for leading Albertsons' efforts in key center store categories, including Grocery, Dairy and Frozen. He will also oversee Beer/Wine/Liquor as well as the company's growing fuel center operations.

      Most recently, Mac Naughton was group vice president - grocery at HEB.

    KC's View:

    Published on: November 18, 2003

    Ahold announced yesterday that it is negotiating to sell its 237-unit Disco unit in Argentina to Chilean retailer Cencosud.

    A deal is expected to be made by the end of the year. The move by Ahold is part of Ahold's overall efforts to divest non-core businesses and reduce its debt.
    KC's View:

    Published on: November 18, 2003

    The San Diego Union-Tribune reports that as determined as unionized workers are in Southern California to prevail in the current strike/lockout involving 70,000 employees at Safeway's Vons, Kroger's Ralphs, and Albertsons, they are beginning to grow weary of the more than five-week-old action…especially since talks convened and then collapsed last week.

    In addition to the financial stresses, there also are concerns about health care costs - insurance coverage for the striking and locked out employees lasts only until the end of the year.

    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:

    Published on: November 18, 2003

    The Detroit News reports that a new group called Brand America, populated by both executives from private industry and politicians, is launching a new, nonprofit, nonpartisan campaign designed to push American products and retain American jobs.

    The goal, according to the report, is to promote American goods and services but to do so without the overly patriotic rhetoric that marked a similar campaign in the early 1990s.

    The group includes former presidential candidate H. Ross Perot; U.S. Sen. Dianne Feinstein, D-Calif.; Detroit industrialist Max Fisher; Michigan congressman John Dingell; Peter Ueberroth; former chairman of the United State Olympic Committee; and Sen. John McCain, R-Ariz.

    Also on sponsoring committee: Wal-Mart's Robert Walton.
    KC's View:
    We don't want to read too much into this, but…

    There has been some general criticism of Wal-Mart's decision over the past few years to stress efficiency and low costs, at the expense of the "buy America" approach that it preached for so many years. That strategy dates back to the Sam Walton days, if we're not mistaken, and it is certainly interesting to consider whether the chain would have followed the same path had Walton lived.

    So, what does a Walton presence on this new Brand America campaign mean?

    Published on: November 18, 2003

    MNB has learned that MyWebGrocer.com, which provides e-commerce functionality to brick-and-mortar supermarket retailers, has acquired the assets of NeXpansion - including its NetGrocer.com business and its Endless Aisle technology.

    It was on October 28 that MNB reported exclusively that NetGrocer.com had decided to liquidate its online grocery inventory, selling all the merchandise in its New Jersey warehouse as its president, Lisa Kent, negotiated with companies interested in acquiring the company. The problem at that time was a simple lack of investment capital to keep the company afloat.

    MyWebGrocer was one of several companies considering the acquisition of NeXpansion, according to sources. Before NeXpansion decided to liquidate its inventory, it had been engaged in discussions with MyWebGrocer to take over its IT functions; it also had signed a deal with Amazon.com to supply mainstream grocery products through that company’s web site, though implementation of that arrangement had been delayed until NeXpansion could no longer maintain its commercial viability.

    NetGrocer.com had been a "pure play" grocery e-tailer for a number of years, managing to survive the dot-com meltdown of several years ago and generating annual revenue of about $10 million. While MyWebGrocer now owns this business, CEO Richard Tarrant told MNB that "we will not be in the business of selling groceries. We don't have any desire to source and make margins on products."

    Instead, plans are to license out the NetGrocer business to a brick-and-mortar retailer with an existing web business, allowing that company to integrate NetGrocer's functions into its existing capabilities and provide it with incremental sales upon which to continue to build the business. A deal is scheduled to be announced imminently.

    MyWebGrocer will use NeXpansion's Endless Aisle technology as a complementary product offering to go along with its other Internet-based infrastructure services. "This allows us to continue to use the channel we've developed to enhance retailers' sales," said Tarrant, noting that several grocery chains had offered both e-tailing powered by MyWebGrocer and the Endless Aisle technology when they were owned by separate companies.

    New deals will have to be struck with the companies that previously offered the Endless Aisle technology to consumers.

    (Full disclosure: MyWebGrocer has been a longtime sponsor of MNB.)
    KC's View:
    While the Amazon deal no longer exists because of NeXpansion's change of ownership, we would expect that the new management will look to re-establish the deal. And that could create something really powerful, if the mainstream CPG products sold by NetGrocer could be integrated into the largely specialty/gourmet offerings now being sold by Amazon.

    We're happy to see NetGrocer and the Endless Aisle technology get a new lease on life; those of us in the dot-com business can't help rooting for others working hard to make this channel work. It probably was inevitable that it couldn’t keep working as a "pure play," and that it would have to find life as part of a "click-and-mortar" arrangement. But life is life…and the more companies that energize this field the better.

    Retailers not using the Endless Aisle concept are missing the boar, by the way…giving consumers access to any and all products is a great way for stores to provide the ultimate in customer service and differentiate themselves.