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    Published on: November 20, 2003

    We've been getting a ton of emails over the past few days, almost more than we can keep up with. So let's get right to it with an extended version of "Your Views" (the kind that would be on the DVD, but too long for theatres…)

    Anyone who has been reading the site over the past few weeks knows that Wal-Mart has been in the news constantly. We've written that not only are issues like the hiring of illegal immigrants to clean stores going to cause Wal-Mart problems, but that the media scrutiny puts the company in the cross-hairs…whether it is fair or not. This coverage, and our commentary, has prompted an enormous amount of response…

    MNB user Art Turock wrote:

    In my Strategic Report on Wal-Mart, 13 factors that could contribute to Wal-Mart's decline are delineated. Of the 13, I believe that this concerted media attention could be the greatest threat because it is virtually inescapable so long as Wal-Mart is successful. As it grows in size, they become more likely to be a media (or government) target. Everybody loves to throw stones at Goliath.

    Wal-Mart's winning formula depends on being the low cost operator and the lengths they will have to go to continue cutting costs will likely grab more media attention. Since Wal-Mart blames the problems on "irregularities" that come with being a large company, wait for 4 more years to see the increased irregularities when they add another 1,000 supercenters and another million employees.

    There may become a point where low prices will not be able to compensate for a damaged brand image.


    The "Goliath" reference is interesting. We all know how that turned out…

    Another member of the MNB community wrote:

    What successful and growing business isn't subject to increased attention?

    By its competitors; naturally.

    By its suppliers; again naturally, to see how they can earn more of its purchasing dollar.

    By the Feds; only by the stretch of the imagination since there has been very little claimed by its opposition that has been proven factual.

    In other words; innocent until proven guilty.


    Another MNB user wrote:

    If you strive to be the price leader, the volume leader, and the assortment leader, as Wal-Mart does, you can only expect to be in the lime light the majority of the time.

    These people that get offended and defensive of Wal-Mart because they claim publications and analysts are "picking" on them...the close scrutiny comes with the territory. Expect it and deal with it.


    Another MNB user questioned MNB's approach to the company:

    I'm beginning to wonder if your coverage lately on Wal-Mart is "fair and balanced." There is great discussion of all the "wrongs" that the premier retailer is allegedly guilty of, yet I see no analysis of the UFCW, the force that has lined up a multifaceted attack, a "corporate campaign," vs. WMT & is probably the instigator in most of WMT's woes.

    Admittedly, I am an antiunion individual, but that is the result of seeing my father's small entrepreneurial business go to the dogs after the union mob tried to muscle its way in upon seeing some of his success.

    As long as WMT remained in the backwoods & serviced the rural customers that no one gave a damn about, they remained off the target list. Now times are changed…

    The union assault against WMT is just a reincarnation of their attack against Food Lion back in '92, another retailer who preferred to remain nonunion. Remember the union claim that Food Lion sold rotten fish & ham and that ABC news so eagerly promoted...

    If WMT associates prefer to remain nonunion, they should not be forced to see their company torn down as a result. There must be balanced coverage on Labor's dark side.

    Thanks for listening, I'll now get off my soapbox.

    Your site is still the first I seek each morning to get my retail news.


    Well, thanks.

    We agree that Wal-Mart employees should not be forced to unionize. And we agree that unions often have both misplaced priorities and questionable tactics.

    But so do some employers.

    For the record, we've never claimed to be fair and balanced. We have our biases, and they are fairly clear when you read MNB…what we do try and do is have an open mind about most issues, and encourage passionate discourse among both those who agree and disagree with us.




    We reported a few days ago 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".

    We weren't thrilled about being grouped into yet another demographic category (especially one with the number "60" in it), and several MNB users weighed in.

    One MNB user wrote:

    On one hand, I don't like being classified into yet another demo either. However, I think it was Lenny Bruce who observed that the more you say a word, the less meaning (or offense) it conveys.

    Maybe. But "old" is a word that we could do without hearing at all.

    Another member of the MNB community wrote:

    Regarding the Zoomers article and Target's new clothing lines ...it’s a little concerning that those of us in that age group would need clothing specifically designed for our age...seems that someone might be thinking a bit too much. To create a special line of clothing "characterized by a fairly active lifestyle, and above average household income, and a desire for a multi-functional wardrobe" doesn't seem any different"....and then call it cheap and chic....I just don't know...guess it remains to be seen if cheap doesn't equate to poor quality....that would be my concern.

    We're not buying the concept, either. As far as we're concerned, it's gonna stay jeans, sneakers, sweaters and leather jacket during the winter, and shorts, sneakers and Hawaiian shirts in the summer. Just like it's always been.




    Great letter from an MNB user about the Southern California labor situation…

    As a Southern California Shopper, I gotta tell you that there is much more to this strike and the weariness of the strikers. The customers are getting a bit tired of it as well. The stores are in deplorable shape, many out of stocks and the employees are just as surly as a night shift MacDonald's burger flipper. Example:

    Went to Ralph's at 5:30 on a Tuesday. Bakery already closed, lights out and no one home. All service cases empty. Deli had crusted over chicken burning under the heat lamp, about three salads in a twenty-foot case, with a nice crust growing on them and only a non-English speaking janitor behind the case. You could lay down in the detergent section shelves. Got mad, left.

    Went to the Albertson's down the street. In better shape, stock wise, but asked three employees where to find a pretty common item, no one knew or told me they would find out. Stares that were as blank as a surfer on a smoke binge. Got mad, asked for manager. Only one around was deli manager, profuse apologies and request to "bear with us" as the strike continued.

    No choice, had to go to independent. Meat case stunk like a Tijuana market. No specials in stock, excuses of "didn't prepare for added rush" of people not wanting to cross lines. This is like a month after strike started and they weren't prepared.

    News reports now state that Ralph's is only receiving half the turkeys they were expecting. This means that not only will there be a shortage, the prices will be affected by those that have them. Right? Expect a more expensive bird this holiday.

    Kevin, people have a short loyalty to their stores. If this strike affects the holidays for SoCal shoppers, they will not only not forget it; they will throw a parade for the new WM Supercenters when they come. In the end, I believe that shoppers only care about getting their food in a clean, informative environment. The union stores were nothing special before the strike. The employees at the local Wal-Mart were just as friendly and informed as the higher paid union workers at the supers.

    What shoppers really want, especially this time of year, is to get their food, get in and out without trouble and pay what is fair. This strike is making a lot of shoppers pretty mad. It probably wasn't Wal-Mart strategy, but how timely for them, huh? These stores have a lot of 'splaining to do, you know! They are not winning and they are looking bad to their former shoppers. And...it keeps dragging on. The only people in the shopping centers that are smiling are the union officials and people notice this. People out here don't appreciate that. (I hear talk all the time that unions are out-of-date...)

    I think that people will shop at the Wal-Mart Supercenters because:
    The lower wage employees are not their problem. (Sad, but true.)
    The prices are enticing, even though in SoCal the money is more disposable (we want bargains, too, especially if they are advertised!)
    The holidays are coming and people are freaking out at the lack of merchandise in the stores.
    I think the damage is done here and these stores are not winning anything with the strike. They are running off their help, their customers and paving the way for every grocer's worst nightmare (WM) to come to town, not just as a leader...but as a savior. They could not have set this up better, if they had planned it!




    We got the following email regarding a new loyalty marketing program being developed by Giant Eagle:

    It's interesting to see that Giant Eagle is researching promotions aimed at specific targets of consumers when they are in the midst of turning their stores over to the modern day version of Winn Dixie. What was once an aggressive national//regional/private label high service chain is now going to a bid/buy basis and Internet buying . Everything in proteins is going Private Label and the Center Store is jammed with the same. As for points of differentiation..................forget it. Doesn't everyone know the consumer is stupid. Watch this chain closely for another failed effort to match Wal-Mart and forget what got them to the top of the heap.

    And you folks think we're cynical…




    In a piece earlier this week that addressed a Boston Globe piece about zone pricing, we suggested that it was a shame that supermarkets were being classified by the prices they offer, not the ways in which they differentiate themselves.

    MNB user Steve Paris responded:

    While in general I think your comments on the commoditization of mainstream supermarkets are right on target, what I took away from this article was that the majority of shoppers interviewed would not switch stores for lower prices! Maybe this is a quirk of the Northeast grocery market, but clearly some retailers are providing meaningful benefits to consumers beyond price - even if competitive pricing is still part of their strategic mix. And as a transplanted New Englander living in the Midwest, I can honestly tell you that I would pay a bit extra to shop at a grocery store that felt like "home."

    MNB user John Anderson wrote:

    While I agree with you that there is much more to the offerings of these businesses than just the pricing of their goods, as pricing variances within a single market become significant, it does not take long for that to bubble up as a consumer issue. After all, at the end of the day (or shopping trip), the majority of us are focused on simply getting the best value for our grocery budget -- this is not just a matter of common sense -- unfortunately, for many it's a matter of survival.

    MNB user Dan Raftery wrote:

    Zone pricing has been around probably since the first operator opened a second store "across the river" or "on the other side of town." From time to time some astute journalist figures this out and takes a run at an "expose." For some reason this seems like news; maybe it is if you don't actively participate in our society. Hopefully the retailers in this journalist's sights can weather the storm with logic. Or silence might work too. Must not be much to write about out there.

    MNB user Mark Boyer added:

    I concur that the focus too often these days is only on price, and not value delivered. The retailers delivering to the value equation of their shoppers will thrive.

    As for the Globe piece, consumers define a value for the things they buy. If the consumer values an item at $1.99, why should a retailer sell it for $1.79? There are plenty of items in the store where the consumer places far less of a value on the item than the retailer would like to make. Margin dollars have to be made somewhere.





    Regarding Wal-Mart, earlier this week we noted that "there is an argument to be made that the only social responsibility that a retailer like Wal-Mart has is to provide low prices to consumers and returns to investors.

    MNB user Brad Morris responded:

    One of the coursework areas required by most B-schools is business ethics. In ethics one learns that there are more stakeholders involved in corporation than the just the shareholders and customers; there are also the employees and the communities in which we live and work.

    There is no argument that Wal-Mart has been a great success story, a great corporation and should be studied by all students interested in the world in which we live, business and otherwise. The question today is whether or not Wal-Mart will continue to be considered great for more than just its size.

    Wal-Mart has more power today than most governments.

    As the comic book says, “With Great Power Comes Great Responsibility.”



    We also had a piece in the last week about the price differential between Wal-Mart and Kroger, which prompted one MNB user to write:

    I found this interesting, as last night my wife and I had a conversation exactly about Kroger vs. Wal-Mart on price. My point to her, which I believe is very true, is that on everyday pricing, Kroger doesn't come close to WM.

    The key is to look in the weekly circular (yes some people still do this) to find the items that Kroger has on special and buy household staples (tp, detergent, deodorant, toothpaste, etc.) at that time. Or alternatively, just walk down the isles and look for the specials - you can rest assured that you are beating the WM price when Kroger items are on special. The grocery side of things may be different - we do not yet have a supercenter close to us - but I would guess that I may find the same thing.





    We had a story recently about how Wal-Mart is being accused of selling gasoline below price…which prompted a number of emails.

    MNB user Pat McCarthy wrote:

    The issue is whether Wal-Mart is selling gasoline below cost. The fuel stations in Oklahoma are Murphy Oil stations operating on the premises of Wal-Mart Supercenters and Neighborhood Markets. Murphy Oil is a producer/refiner/ distributor and can determine their own "cost". I believe that Murphy is privately held. The situation is creating allot of attention for Wal-Mart.

    Another MNB user observed:

    I’ve been told that Wal-Mart contracts with a third party for gasoline operations. There are three companies across the U.S. that handle its gasoline business. Sam’s Club, on the other hand, controls its gasoline operations.

    And MNB user Stuart Lowry wrote:

    Now this is a subject near and dear to my heart, as I work in the world of convenience stores. To state that they have never sold gasoline below cost, is in my humble opinion, a bold faced lie. In our region, they operate a fueling station at a Sam's Club Outlet, and the cars are always lined up to buy from them. Needless to say, they set the price for gas for miles around.

    But again, and I encourage us all to do this, let us not focus upon what Wal-Mart's doing to hurt us, but instead on how we can exploit their weaknesses. For us and our chain of stores, that plan has been to build a brand identity separate and complete from the brand of fuel we post on our price sign; a brand largely dependent upon the human equation: great customer service and being responsive to how our customers define "convenience". For you folks, maybe its something else, although I'd tend to believe customer service would factor in at some point, because that's Wal-Mart's chief weakness, always has been and I think always will be.

    To beat the giant, you have to become the anti-Giant if you will. Being nimble and quick in listening to what our customers want, and providing that to them in an exceptional manner, is the best way to be the anti-Giant. Maybe it's just me, but I sense a backlash in this country against what is perceived to be "Big Business". As smaller and, for the most part, independent operators, we stand to gain from this trend. People deal with people, and they will always deal with people who treat them exceptionally well. They don't get this level of service from "Big Business", but they do from us. I know I'm preaching to the choir, but I feel strongly that this "sermon" is always important.



    We've continue to get a lot of reaction to the debate about self-checkout and its impact on how stores interact with consumers. One MNB user wrote:

    Move the employees to the aisles or counters or set up nutrition centers or day care centers…socialization with checkers or through greeters is over stated and customers needs at the point of purchase are misunderstood. If you can go to a store and find a good demo person and listen to the exchange of product knowledge to those that want to and/or have the time to learn about a product or category, etc.. you can see what meaningful socialization in a supermarket is all about.

    Even though "socialization" is the word we've been using, maybe it's the wrong one. Maybe we should really just refer to the potential for meaningful interaction…but either way, we agree with this member of the MNB community.

    Not everyone agrees that this is necessary, as one MNB user wrote:

    I abhor chit chat, keep the line moving please!

    Of course, sometimes it depends on the store, as one MNB user related:

    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 yet another MNB user wrote:

    I work for a large retailer in the Midwest and only a few of our stores contain the self checkouts. While it may be cost savings in the long run they are not cheap to install and I feel the whole purpose of them is to honestly just offer the consumer another form of service for those who have small quantities and are in a hurry. Grocery retailers are constantly looking for new and improved ways to take care of customers. What we all have to realize is that competitive prices, good selection and great customer service are what keep your customers coming back!

    Another MNB user chimed in:

    It is cut and dry, provide self-checkout for the convenience and have pleasant personnel available should I need assistance. I’m not anti-social, I am busy. So if I can skip a conversation in the store and that gives me more time to spend talking to family and friends, then it is a win-win.

    i>MNB user Cathy Donahue wrote:

    Kevin, I am not a big fan of self-checkout. I have never yet found it to be a time-saver at either Home Depot or my local library, largely due to problems with the technology itself. Whenever I've tried to use it at the library, the machine refuses one or more of my books, which then need to be checked out at the desk. So, I have waited in/on line to use the self-checkout and then I have to get in another line to wait for someone at the desk to help me. I fail to see the benefit for me -- at least until the technology improves.




    And finally, thanks to all the MNB users who wrote in about our two-year anniversary. We appreciate all the kind words more than you know, and look forward to being around for a long, long time.

    Of the dozens of emails that we received, one stands out…because it is clear that the person who wrote it, MNB user Susan Kemp, has really, really, really been paying attention:

    I know the traditional gift for a first year anniversary is paper. Isn't the traditional gift for two years Krispy Kreme doughnuts?

    If not, it should be. (Atkins Diet be damned!)
    KC's View:

    Published on: November 20, 2003


    • Longs Drug Stores Corp. reported third quarter earnings of $5.2 million, compared with $3 million during the same period a year earlier. Total sales rose to $1.09 billion from $1.06 a year ago. Pharmacy sales rose to 47.8% of total drug-store sales from 45.4% a year earlier.

      There has been rampant speculation over the past few days that Longs is about to be acquired by either another drug chain or a supermarket company.

    KC's View:

    Published on: November 20, 2003


    • Reports out of Australia say that Aldi, the German-owned discount retailer Aldi is planning to open stores in the eastern state of Queensland next year, while continuing to expand its presence in both Victoria and New South Wales. Aldi entered Australia in early 2001, and expects to have 50 units there by the end of the year.



    • Australia's Foodland Associated Ltd. announced this morning that it will acquire five Newmart supermarkets in Western Australia from Coles Myer Ltd. Terms of the deal were not disclosed.

    KC's View:

    Published on: November 20, 2003

    Global notes and commentary from PlanetRetail.net…
    Whole Foods Market has posted its results for fiscal 2003, a year in which sales breached the USD3 billion mark for the first time in WFM’s history. Sales were up by 17% to USD3.1 billion, boosted by weighted average year-on-year sales area growth of 11% and impressive comparable store sales growth of 8.6%. Net income for the year increased by 23% to USD103.7 million. Capital expenditures for the year were USD173 million of which USD89 million was for new store development.

    Chairman, President and Chief Executive Officer John Mackey stated: “Last year we spoke of three challenges that we saw for Whole Foods Market in fiscal year 2003. These challenges included continuing to improve our operations, increasing our store development pipeline, and successfully integrating the Harry's stores into our company. In a year that was full of unusual events ranging from the outbreak of war, continued weakness in the economy, extreme weather across various parts of the country, and a blackout in the Northeast, we are pleased to have met these challenges and achieved such strong results for our shareholders.”

    In Q4, WFM opened two new stores in Santa Monica, CA, and Las Vegas, NV, and relocated two smaller stores in Ann Arbor, MI, to a new 4,740 square metre store, ending the year with 145 stores (144 in the US and one in Canada) and total sales area of around 418,215 square metres. The Company has recently signed leases for eight new stores, one each in Redwood City, CA; Red Bank, NJ; West Hartford, CT; Denver, CO; Brooklyn, NY; Oakland, CA, and two in Chicago, IL. The Company currently has 35 stores in development averaging 4,182 square metres in size.

    In a year that has seen many US grocery retailers beset by woes including intensifying competition from Wal-Mart Supercenters, flat or negative comparable store sales and debilitating strikes, WFM’s performance in fiscal 2003 stands out as a truly impressive achievement. Although comparable store sales growth dropped back down to the 2000 rate of 8.6% in 2003, this compares extremely favourably with the most recent quarterly figures from the likes of Albertsons (-0.9%) and Kroger (-0.4%).

    In some ways, WFM is fortunate that the specialist product areas in which it operates are being buoyed by extremely favourable market conditions that are prompting US food shoppers to be much more thoughtful about their consumption patterns (it is also to be noted that these product areas have been largely left untouched by Wal-Mart). Issues such as allergies, obesity, worries over GM foods and an increased awareness of the causal linkages between diet and health are playing into WFM’s hands. Demand for ranges such as organic and natural foods, products designed to cater for specific dietary requirements, low-fat and functional foods and lo-carb products (thanks to the Atkins diet) has been booming in recent years and WFM has been the best-placed player to capitalise on these trends.

    That said, a great deal of the company’s success is of its own making. Its stores are among the most impressive that we have seen and put many mainstream food retailers to shame. Store design, merchandising, marketing and customer service are all second to none and give the outlets a sense of vibrancy, theatre and thriving well-being that guarantees appeal to the chain’s target audience. With other US grocers climbing aboard the natural and organic bandwagon by opening devoted instore areas to these categories, WFM is likely to come under increasing competition. Such is the authenticity, authority and excitement that pervades the Whole Foods chain, however, the company has every right to feel confident that more profitable and high tempo growth is on the way.
    KC's View:

    Published on: November 20, 2003

    Advertising Age reports that even as the Federal Trade Commission (FTC) is investigating KFC's advertising claims that fried chicken is health food, the fast feeder has instructed its advertising agency to pull the commercials off the air.

    The commercials say that if you eat fried chicken, you will be consuming less fat and carbohydrates and can lose weight and live a healthier lifestyle.

    The FTC reportedly has issued a civil subpoena to KFC asking to justify its claims.
    KC's View:

    Published on: November 20, 2003

    Coors Brewing Company announced that it will introduce Aspen Edge beer next March as the company's effort to capture market share in the expanding low-carbohydrate beer segment.
    KC's View:

    Published on: November 20, 2003

    A new study released in the current edition of The Journal of the American Dietetic Association suggests that more than half of all children and teens tend to be eating when playing video/computer games or doing homework, that there is a predisposition among young people to eat constantly throughout the day, and that parents generally don't have a clue how much junk food their kids are eating.

    The sum total of these trends explains why between 20 and 30 percent of American children and teens are either overweight or at risk for being overweight.
    KC's View:
    This isn't good news for snack food or ice cream manufacturers, but we've found in our household that because we've been careful with our diets, the kids have de facto been cutting down on what they're eating. Because there's no ice cream and few cookies in the house, they're not eating them - and the bitching and moaning actually has pretty much subsided. (Doesn't mean they won't resent us for the rest of their lives, but we can live with that.) They're getting used to the idea that yogurt and fruit are going to be the available alternatives.

    Sure, we don't know what they're eating at school. But you control what you can control.

    Published on: November 20, 2003

    In a statement released yesterday, Tim Hammonds, president and CEO of the Food Marketing Institute (FMI) said that "the bipartisan Medicare bill currently before Congress delivers choice, convenient access and affordable prescription drugs to seniors - especially to the low-income seniors who need it most." It is essential, said Hammonds, "that the House and Senate pass this legislation immediately.

    "This legislation provides seniors the opportunity to stay with their neighborhood pharmacist, who can counsel them how to best use medications, who can help prevent adverse drug interactions and who - in the case of supermarket pharmacists - can provide dietary guidance to promote health and well-being. This legislation allows seniors greater choice and convenience wherever they purchase medications. It enables them to fill long-term 90-day prescriptions at their local community pharmacy. It saves them money by speeding the introduction of generic drugs - a needed change, especially in this time of spiraling drug and health care costs. And it stimulates much-needed increased competition in the health care field.

    "The time to act is now. The need is obvious and the benefit is long overdue. Congress must seize this opportunity before election-year politics gridlock the legislative process."

    FMI's retail and wholesale members operate and support nearly 15,000 in-store pharmacies.
    KC's View:

    Published on: November 20, 2003


    • In Indiana, the United Food and Commercial Workers (UFCW) reports that “some progress has been made” in negotiations with Kroger Co.

      Less than two weeks ago, both sides agreed to an indefinite contract extension, averting a possible strike and keeping negotiations on track.

      The agreement is keeping 4,000 grocery workers at 58 Kroger stores in central Indiana on the job, though the agreement can be rescinded by either side with 72 hours notice.



    • As of this posting, there seems to be no progress in Southern California, where Ion October 11 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.

      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.

      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 20, 2003


    • Details continue to emerge about the acquisition of NeXpansion and NetGrocer by MyWebGrocer.com, the latest tidbit being that Indiana-based GA Foods, which owns Amelia's Market, will take on the product fulfillment portion of NeXpansion's Endless Aisle service, which makes hard-to-find CPG products available to consumers, either through the Internet or using in-store kiosks.

      As reported exclusively by MNB earlier this week, MyWebGrocer.com, which provides e-commerce functionality to brick-and-mortar supermarket retailers, has acquired the assets of NeXpansion. Terms of the deal were not disclosed.

      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, ShopRite will license the NetGrocer name and service the online accounts from its single store - from which it has been selecting product for online shoppers since June 2002. The costs will be minimal, beyond shipping costs, but ShopRite should be able to add NetGrocer's $10 million in annual sales to its balance sheets.

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

    KC's View:
    We've noted elsewhere that, in the interest of full disclosure, MyWebGrocer is a longtime sponsor of MNB. But that doesn't mean we're going to minimize our enthusiasm for this deal.

    The fact is that we have long believed that most retailers are going to need to have some sort of e-commerce capability as a way of giving the customer what she wants, where she wants it, when she wants it, and how she wants it. It has to be viewed not as a separate business, but as part of an overall integrated marketing strategy.

    Essentially, for retailers who decide to head in this direction, this means that they can incorporate an e-commerce infrastructure with an "Endless Aisle" capability.

    And if they don't, they should be aware that other companies will…and that will put them at a competitive disadvantage.

    Published on: November 20, 2003

    The Detroit Free-Press reports this morning that former Kmart CEO Chuck Conaway has said that heightened competition, the impact of the 9/11 terrorist attacks, and a tough economy were the cause of Kmart's bankruptcy - "not poor management and free-spending executives."

    Conaway's attorney, Scott Lassar, issued the statement in response to a new civil suit leveled at Conaway and five other former Kmart executives, accusing them of essentially bleeding the company dry for perks, loans and bonuses even as it was teetering on the edge of bankruptcy. The suit says that these executives cost Kmart more than $1 billion before the January 2002 bankruptcy filling.

    The suit alleges that former CEO Chuck Conaway expanded the company's private jet fleet from three to six, hired a dozen pilots, and then used the fleet for personal family trips. Former company president Mark Schwartz is said to have charged the company for a new fence and gate as well as more than $2 million in moving expenses; in addition, Schwartz is accused of authorizing more than $100,000 in nanny payments for some company executives. And Kmart's former executive vice president and chief supply chain officer, Anthony D'Onofrio, according to the paper, "had Kmart pay for his apartment, a Jaguar, food for a year, $15,000 in dental work for his wife and gifts. He also is accused of taking a $12,000 payment from one vendor and accepting a trip to Asia for him and his girlfriend from another vendor."

    "As CEO and chairman of Kmart, Chuck Conaway poured his heart and soul into trying to turn around the giant retailer," Lassar wrote. "Although he made significant improvements, the magnitude of the effort, the tragic events of September 11th, the downturn in the economy and fierce competition in the retailing industry defeated his efforts."

    "Mr. Conaway did not engage in self-dealing," Lassar said in the statement. "Mr. Conaway looks forward to rebutting the accusations."
    KC's View:
    Yesterday, we wrote about this story, "Forget civil reparations. The better question is whether these guys will burn in hell."

    To which one MNB user responded:

    It's a good thing that you are NOT sitting on the jury (or ANY jury for that matter). I thought that our laws read that we are innocent until proven
    guilty.


    True on both counts. It is a good thing that people are innocent until proven guilty, and it is a good thing that we're not on the jury.

    Hang 'em high.

    Next case.

    Published on: November 20, 2003

    The Wall Street Journal reports this morning that the US Food and Drug Administration (FDA) is contemplating a change in policy that would force manufacturers to specify nutrition information for the entire package, not just for "serving sizes."

    The last major change in how food labels are designed and what information they carry was implemented more than a decade ago, and there are consumer concerns that, considering current worries about the nation's expanding waistline, the old information simply isn't sufficient.

    "Labels have not kept up with the supersizing of food," Peter J. Pitts, the FDA's associate commissioner for external relations, told the WSJ. "We want to make sure consumers don't need a calculator to make wise nutritional choices."

    If a change were made by FDA, it would impact virtually every edible consumer packaged good product on the market - and would it would entail significant costs within industry to make the label alterations. Already, the WSJ notes, industry groups are questioning whether the cost-benefit analysis would support such a change.

    While there have been numerous initiatives suggested within government circles to address the nation's obesity problem, a shift in labeling requirements happens to be one that the agency could implement unilaterally.

    The agency also is discussing the idea of a national nutrition-information plan for restaurants.
    KC's View:
    Our feelings on the issue of labeling have been clear for a long time. We believe strongly that as much usable and credible information as possible ought to be included on food products, especially at a time when there is so much concern about obesity. Seems to us that one other thing is needed, though - context. Because information without education about context ends up just being clutter, and we have more than enough of that in this industry already.