retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: December 2, 2003

    In Monday Night Football action, the New York Jets defeated the Tennessee Titans 24-17…demonstrating that at least one NY-area football team plays with some heart.
    KC's View:

    Published on: December 2, 2003

    Yesterday, in a report about encouraging economic news, we wrote that "at the risk of seeming cynical and pessimistic, we need to point out that this consumer confidence is built like a house of cards. A stiff wind of cold reality, like a terrorist attack on these shores or some sort of massive loss of soldiers in Iraq, could bring it tumbling down."

    Few seemed to agree with our assessment. One MNB user wrote:

    What a depressing response to good news. You can pick up your 'Vote Dean' card on your next trip to New Hampshire.

    MNB user Al Kober wrote:

    Boy, is your glass only 1/2 full. Don't you like good news? What a pessimist.

    I always thought you as more an upbeat person, but this issue you are really a downer.

    Must be the holidays…

    Then again, we've always been a little worried about the economy. As one MNB user pointed out to us, it was almost a year ago that we wrote:

    "No matter what the spin, the economy ain't pretty."

    Our assessment hasn't changed. And if you disagree with that, think about the underpinnings of the Southern California labor situation, and what it says about a variety of economic issues that could bring this country to its knees if they are not addressed. (And this isn't a political statement - we're not sure any party is facing the real issues facing the nation.)

    Interesting email from an MNB user about customer service issues:

    I have been thinking about the whole concept of customer service as a true differentiator lately. In the past three weeks I have experienced the full spectrum of customer service.

    I stayed at two Marriott properties in the past 2 weeks, one the Marriott World Center in Orlando and another Marriott property in Dublin, Ohio. Customer service, going the extra mile was evident from the server in the restaurant to the bell captain, desk clerk, to the maintenance man who was lickety split to correct issues in our room to the cleaning lady who went the extra mile to show us a peek at a guest suite.

    Another true leader in customer service in Orlando is the Disney company. Courteous, professional, with clean and efficient parks. Disney "cast members" all 50,000 employed in the Orlando area are trained to put on their smile as the first order of preparing for work. Did you know the Colorado Rockies hired the Disney company to train their employees in Denver when the new (baseball) park opened several years ago. An expensive training cost but the Rockies management saw the benefits of customer service and happy customers, more concession sales, more ticket sales...

    Now the other end of the spectrum, today at a Wal-Mart Neighborhood Market store I had to wait for the checker to finish reading her magazine to check me out. When I approached the checkout I said hello to her with no response. Many people shop at Wal-Mart for economic reasons, not for the customer service.

    Also today, I waited in line for 30+ minutes at the US post office to mail a Christmas package. There were about 15 people in line with 1 employee working. Exactly at 9:00 am another US postal worker magically appeared, not one second before 9:00 even though there was clearly a backup in the lobby and the stamp machine was broken so many in line just needed to buy stamps. Does the US postal service not know this is the Christmas season and should staff appropriately? A good friend of mine uses a third party mailing services to mail packages just for the convenience and customer service even though she pays more. Seems like these mailing places are in every strip center now, just how much business has our US government lost?

    More companies and government agencies need to take a look at their employee training programs and customer service functions. Unfortunately measuring customer service is one of those soft benefits that many companies cannot put a dollar value on, so it is not a focus. Well, maybe when their company goes out of business or loses substantial market share because of lack of customer service they will get the message and focus on this very important success driver. It is easier (cheaper) to keep a customer than to gain a new customer.

    We had a story yesterday about a proposal to put RFID chips under people's skin, allowing them to pay for purchases or get cash from an ATM without any card or key fob. We expressed some alarm at the privacy implications, and even made a veiled reference to the old Patrick McGoohan television series "The Prisoner." (A series, by the way, which is a little bit dated but amazingly prescient about the depersonalization of modern society. It is that rare thing - a television series with a specific and unrelenting vision.)

    MNB user Dan Raftery wrote:

    The Applied Digital folks have been around for a while. Their chip implant got them some notoriety about a year ago, when they "did" a Florida family on one of the morning TV shows. Their GPS partner is Digital Angel and the technology has been most widely accepted as it applies to animals. The chips can also send some biometric data, which can indicate the health as well as the position of the "tagee."

    I wholeheartedly agree with you on the Big Brother implications here, but that only holds if free choice is not part of the future scenario. Which it isn't for pets, by the way.

    Several parts of the population (human) might want an implant. Think about all those folks with the newly discovered heart attack gene (only the ones who care to know, of course). Folks in elder care environments currently wear similar devices, but most of them don't work outside the range of their land-based station. Lots of examples could be made.

    The point is, this is very potent technology. Hopefully, privacy concerns won't short circuit the potential good it can bring, while keeping the harm at bay. This won't be easy, but should be fun.

    Another MNB user wrote:

    As an industry I agree that we are going to need to get in front of the privacy issue sooner rather than later. This is not a time for us to act in our usual reactive mode but to try and set standards that I think everyone in the industry is already pretty much adhering to. FMI put forth a membership privacy policy a few years ago. It may be time to either review that to make sure it keeps up with changes in technology; or, if it is considered to be sufficient, to start to tell the story that we as an industry are responsible with our customer's information. The stakes are too great to stand silently by and let the consumer draw their own conclusion.

    And yet another MNB user wrote:

    My only question:

    Revelation 13:16

    "He causes all, both small and great, rich and poor, free and slave, to receive a mark on their right hand or on their foreheads, that no man may buy or sell except one who has the mark or the name of the beast, or the number of his name."

    (This passage from revelation concerns the mark of the Anti-Christ) - Tell
    me - wouldn't your RFID tags embedded in skin leave a mark? And, I
    suppose you couldn't buy or sell unless you had this tag?

    Have we seen "The Omen" a few too many times? (Great movie, though…)

    In an email yesterday, one MNB user wrote, "Are we a society that is so rich in information that must be consumed fast and on the go that we're starving in knowledge? Do we base all of our assessments on what can fit into three lines of text or five seconds of airtime? Whoever sold us "Fast Is Better!" has probably got a bridge he'd like to talk to us about."

    MNB user Spencer Johnson responded:

    It's amazing how the world has been so excited about doing things more efficiently via the computer world, cell phones, PDAs, etc, yet they are working longer hours, sporting more carpal tunnel injuries every year, and losing more and more time at home eroding the family life. What has happened to society? Sad thing is a lot of my life has elapsed in the computer era and I would not be able to live without it, but I still think it's disgusting how horribly separated many people become from their family b/c of work, not to mention the degradation of those social skills that make people better team players at work. There is a quote that an ex-coworker of mine used to say, and she worked long hours every day: "I work to live, not live to work." I hope I don't get caught in the trap of working long hours, like in the case of many companies, while my kids are asking "where's daddy?" at the dinner table or, even worse, having to wait until late at night to eat as a family with Chinese takeout. It's one thing to have it happen once in a while, entirely another when it's expected of employees every day.


    The problem for many of us is that there is no employer to blame for 20-hour workdays. When you prize autonomy as much as we do, the price of self-reliance and the absence of superiors is too much work and too little life. (Of course, it helps when you love what you do…)

    Regarding Wal-Mart, MNB user Mark Rodrigues wrote:

    In your article on Wal-Mart, it is true that they have created an environment in which shoppers can buy more and cheaper goods, but at what price?

    We are going to have to factor in the human cost (of employing child labour because they are the cheapest) and the global environment (goods are cheapest in countries where there are NO environmental regulations).

    Another MNB user wrote:

    Regarding Wal-Mart as "the quintessentially American success story," I see a difference between winning with grace and winning with applied humiliation. If you have two kids' baseball teams and one team is significantly ahead, do you encourage the winning team to steal home and win by the most points it possibly can?

    Yes, winning is the reason to play the game, but to what degree and at what price? After all, if Wal-Mart continues to put all of their competitors out of business, who will be left to shop at Wal-Mart?

    Regarding possible changes at Ahold's Tops Markets in upstate New York, MNB user Bob McMath wrote:

    While statements made to me by friends in the local and management positions of Tops Markets in Upstate New York may not be true -- although I think they were at the time -- Tops Markets was either THE or one of the "top" (no pun intended) groups for Ahold when it purchased the chain.

    Among other things, the Tops name was what was chosen for the name of Asian expansion over there, using the model that Tops had in the US. Some of Tops leading store managers went over to help set up the new stores or modify older ones over there.

    Now Ahold may be thinking of changing the name of the upstate New York group to Giant Market. I for one certainly hope not. Is it possibly the Ahold people have forgotten -- or have not understood -- the problems with Safeway when it picked up the chain in the Chicago area and tried to model it after Safeway stores and practices?

    Why is it that bigger companies that pick up well run groups don't try to build on what they purchased instead of molding them into an entirely new entity, foreign from the way it was run, before? Many need help to grow -- but many others that are doing well don't need to be changed so drastically -- and doing so ends up wrecking the operations, such as happened in the case of Safeway in Chicago.

    Sometimes it seems like even Safeway doesn't remember what happened at Safeway in Chicago…

    Yesterday, we ran a pre-Thanksgiving letter from MNB user Glenn Cantor that was a meditation on the on-going conflict between the drive for lower prices and costs, and the ethical responsibility of business to provide for the welfare of the people in markets in which they chose to do business.

    MNB user Patricia Pagels responded:

    Mr. Cantor's comments were very reassuring--even though they seem to be a minority opinion. I keep wondering how companies expect their own businesses--let alone the county--to survive if the continual pursuit of low prices overshadows corporate citizenship, leaving the average worker with nothing but low-paying jobs. Same for those who will only buy on price, with no consideration for where and/or how the goods were produced. But, this is not a new mentality, and it's going to take a lot of time and energy to turn this ship around.

    Fifteen years ago, I was a new mother in Southern California. Many co-workers (professional, highly compensated) encouraged me to hire an "illegal" for daycare. "They cost so little and they will watch your child, do the laundry, cook and even take care of yard work!" they all told me. The fact that it would be a legal issue and a terrible abuse of a person caused them no concern. Even the thought that, should my child be abused, taken or otherwise mistreated, I'd have a compromised legal position and possibly no chance of tracking the person down, didn't stop my "friends" from questioning my judgment in finding a certified (expensive!) provider. So, if people don't care enough to "hire the very best" for their children, what's the chance they will concern themselves with the labor practices of the foreign companies producing the lowest-priced sneakers?

    We can only hope that more and more people will make the connection between fair and equitable compensation, reasonable prices and a healthy economy. Thank you, Mr. Cantor, for keeping the momentum going.

    And finally, in a commentary about a story detailing how many discounters are using Santa Claus visits to get people into the stores, we wrote that "Santa had better be careful about who he hangs out with. Wal-Mart looks like a friend now, but pretty soon it'll start putting pressure on the old guy to start cutting wages and benefits for the elves, which could lead to a labor action.

    Let's face it, Wal-Mart has managed to do a lot of damage to Toys R Us and other toy retailers…but it really hasn't achieved world toy domination until Wal-Mart can knock Mr. Claus into retirement".

    One MNB user responded:

    Now, why in the world would Wal-Mart want to knock Santa into retirement.

    Who would take his place?

    Children identify with Santa and Wal-Mart wants them to identify Wal-Mart with him too, so why would they want him retired? To live forever in everyone's mind would be the best action and if the past weekend is any evidence of his presence in everyone's thoughts and mind, he won't be going anywhere any time soon.

    As far as damaging toy retailers, you have to be able to run with the big boys if you want to gather any attention from the fans.

    And I doubt that Wal-Mart doesn't worry about what Santa pays the elves. They're on a profit-sharing plan for sure.

    Yeah, but as far as we know Santa isn’t outsourcing his toy building business to cheap foreign labor.

    MNB user Rick Parmelee seemed to reflect our prevailing mood:

    Let's hope Santa's green card is in order if he is working at Wal-Mart. I would hate to see the Feds haul him away just before Christmas.
    KC's View:

    Published on: December 2, 2003

    • Kmart Holdings Corp. named James Donlon III, a 25-year veteran of Chrysler, as its first post-bankruptcy chief financial officer.

      The company also named John Goodman, a Gap veteran, as its chief apparel officer.

      Both men will start their new jobs in January 2004

    • Safeway Inc. announced that its CFO, Vasant Prabhu, will leave the company to become CFO at Starwood Hotels and Resorts Worldwide.

      Prabhu will remain with Safeway through the end of the year. A search is underway for a successor.

    KC's View:

    Published on: December 2, 2003

    Reuters reports this morning that Wal-Mart Stores will invest $18 million (US) to open three stores in Shanghai, its first units in what is described as the "rich but intensely competitive eastern coastal arena."

    To date, Wal-Mart has opened 31 stores in 15 Chinese cities.

    Wal-Mart has some tough competition in China from France's Carrefour, which has 40 supermarkets in 21 cities, including six stores in Shanghai.
    KC's View:

    Published on: December 2, 2003

    The Detroit Free Press reports this morning that Farmer Jack, the A&P-owned chain of supermarkets with stores in Michigan and Ohio, has decided to stop operating about 30 of its 77 units on a 24-hour basis. These stores will now close at midnight and reopen at 6 a.m.

    A company spokesman told the paper that the decision was made because it is easier to restock stores "when we are not bumping into customers," though store managers said there were few customers to "bump into" during the midnight-to-6 a.m. period.

    The company also said the hours cutback was not related to the chain's cost-cutting movement.
    KC's View:

    Published on: December 2, 2003

    Roundy’s announced that it plans to build a new 950,000-square-foot distribution center in Oconomowoc, Wis., which will replace a smaller facility in Wauwatosa, Wisc.

    Employees at the old facility will be offered jobs at the new one when it opens in 2005, according to the company.
    KC's View:

    Published on: December 2, 2003

    The Associated Press reports that lawyers for bankrupt Fleming Cos. are saying that the wholesaler is considering the possibility that it will keep and not divest its Core-Mark International convenience store distribution company.

    However, Fleming management continues to look for a possible buyer as its ponders the possibilities.
    KC's View:

    Published on: December 2, 2003

    The Lakeland Ledger reports that Winn-Dixie continues to take it on the chin as Wal-Mart expands its supercenter and Neighborhood Market fleet across the south and southeast United States.

    The problem: once Wal-Mart started to stake out Winn-Dixie's traditional low price leadership, the company tried unsuccessfully to emulate the higher end Publix approach.

    The results: in the last five years, Winn-Dixie's sales have dropped by $2 billion, to $12 billion. The company has closed or sold almost 200 stores. Same store sales have been in negative numbers for most of the last two years. And management is refusing to give analysts any guidance on what the current quarter's earnings might be.
    KC's View:
    The strategy now seems to be to continue lowering prices and stressing promotions.

    But the problem is that Winn-Dixie isn't offering consumers a compelling reason to walk through its doors.

    No wonder the company is on the short list of companies likely to be acquired. The issue would seem to be who would want it.

    Published on: December 2, 2003

    Business First of Columbus reports that Kroger Co.'s successful testing of Fresh Fare, a higher-end supermarket with greater emphasis on prepared and gourmet foods, as well as expanded perishables, has been expanded from Southern California to a pair of Michigan communities, with three more scheduled to open soon in Michigan. In addition, the format could find its way to Central Ohio by late 2004, according to the paper.

    "We believe our customers will want it. It will be appealing in those communities (where residents) have a little higher disposable income," Leonard Terranova, zone manager for the Fresh Fare stores, told the paper.
    KC's View:

    Published on: December 2, 2003

    The Associated Press reports that Dollar General has become one of the fastest-growing US retailers, "opening more than half its 6,653 stores in the past five years," by focusing on smaller (7,000-8,500 square foot), more convenient stores in rural areas or in poor neighborhoods of midsize cities, and by selling only the most productive merchandise mix.

    "We have one thing in common with Wal-Mart," David Perdue, Dollar General's CEO, told the AP. "Both companies took a down-home approach to satisfying an underserved customer."

    However, this is changing a bit. Dollar General currently is testing a General Market format that is about twice the size of its traditional stores and that sell more food. Results to date at two test units have been positive enough to encourage the company to open another 20 such markets next year.
    KC's View:
    Differentiation can come in all different sizes and from all different directions. (See the next story for further proof…)

    Published on: December 2, 2003

    A guest column by Harvey Hartman & Jack Whelan
    Assimilation is what used to happen to immigrants when we thought that America was a big melting pot. Immigrants arrived as young men and women, adapting as necessity required to their new environment, but still living very much out of the traditions and values of their culture of origin. And as they grew older they watched as their children became more American, and as their grandchildren grew up with hardly any sense at all of the kind of world from which their grandparents came.

    The grandkids, maybe when they're older, will take an interest in their ethnic heritage, but it will have been too late. It will be a kind of hobby, not something that they live from as their grandparents did. We create museums for those elements in our culture that are no longer alive, and for the third and fourth generations and beyond the traditions of their grandparents have become, for the most part, museum pieces. These later generations have become Americans.

    It's a different story, though, for the Caribbean and Asian people who have come to this country since the 1970s because, for all kinds of reasons, there just isn't the same kind of Anglo-dominated mainstream culture for them to assimilate into anymore. What it means to be an American has been rapidly changing in the last 30 years. The old Anglo culture is still there, of course, and for now it's still very influential in the government and corporate halls of power, but we are seeing more and more people, mostly kids, who are prodigiously adaptive to any number of cultural influences, and they move from one subculture into another with equally prodigious ease. That's what the sociologists mean by "multi-acculturation."

    But we doubt this will remain a permanent feature in American society. In a few generations' time we will be seeing the emergence of a global fusion culture mediated through the inevitably homogenizing power of electronic information technologies. This fusion culture will draw from the pre-modern traditions of Asian, African, Latin American and various indigenous cultures, but in an increasingly hi-tech idiom.

    This fusion will occur most easily in the US where there is already hardly any vestige of the pre-modern world, but will slowly transform even those societies in Asia or the Middle East or Africa or Latin America where pre-modern cultural forms are still strong. It's not just about what happens to people who immigrate here; it's about the cultures that they import with them that are being slowly woven into the fusion culture and how that will be exported back to the cultures from which they came. This trend will be abetted by what we're exporting through the Internet and MTV. Rap, for instance, started in inner-city black culture and is now a style imitated throughout the world. A global style is something you can see already everywhere, and this is just the beginning.

    All traditional ethnic identity is rooted in pre-modern cultural forms, and the pre-modern roots of cultural identity will all but disappear by the end of this century. They won't go without a fight, as we're seeing now in the Islamic world, but we're convinced that ethnicity or any rigidly defined traditionalist worldview is simply fading as a dominating source of cultural identity. Ethnic identities simply will not be able to withstand the enormous consciousness-changing and power of the new information technologies.

    There will be from time to time moments of nostalgia when it will be cool to get into one's ethnicity and to search for one's "roots." And there will continue to be enclaves of traditionalists who reject the postmodern fusion culture. But they'll just live like the Amish live in Pennsylvania or the Hasids in Brooklyn. They'll just keep to themselves and vote, if they vote at all, for whoever promises to leave them alone.

    But the future does not lie in that kind of nostalgic clinging to the past. This is different from saying that the past isn't important for the future. The past will have an enormously important influence on the way we shape lifestyles in the fusion culture. That's where "retrieval" comes in. Retrieval is not about going back to the way things were, but of salvaging the all-but-lost elements - valued for their soulfulness - from fading pre-modern cultural traditions. The goal of retrieval is to integrate cultural elements from the past into a postmodern lifestyle that gives it more "soul," and this will be done in an eclectic, irrational way that will be very hard to predict except for its general outlines.

    This is a complex phenomenon and deserves more discussion than we can give it here, but the broad-strokes concept is this: If you want to understand the future, try to understand better what modern societies left behind. What the culture has lost to "modern progress," it wants now to retrieve, and that's the key to understanding what we mean by the soul age and soul values. Modern societies, dominated by commercial/technological values since the mid-19th Century, have become slick and soulless, and while hardly anyone complains about the material benefits that commercial/technological societies have generated, there is nevertheless a profound dissatisfaction with the fundamental soullessness that has become associated with them. There is a growing hunger now for anything that has a soulfulness about it.

    Tomorrow: "Cultural Connections & Disconnections"

    "Fusion Culture" is a product of The Hartman Group, one of the nation's preeminent research firms focusing on the health and wellness markets.

    For more information about Hartman Group publications, go to:
    KC's View:

    Published on: December 2, 2003

    • Busch's, the 12-store Michigan-based grocery chain, announced the rollout of a new online food shopping service that features what is called a meal-based approach to ordering, as opposed to item-based.

      Developed by Predixis Corp., which originally piloted the software with Webvan when that pure-play e-grocery service was still in business, the meal-based system allows shoppers to access more than 8,000 recipes and easily choose ingredients necessary to prepare these items. These meals are broken out by both type of cuisine and dietary requirements, which means that consumers can easily access only low-carb meals, only vegetarian meals, or from eleven other categories.

      The service is similar to one that Predixis reportedly is offering through the Bristol Farms website in Southern California, the difference being that the software company is hosting all of Busch's online functionality.

      Fulfillment is being done out of four of Busch's 12 stores.

      Predixis CEO Marc Campbell told MNB that the meal-based approach was developed in order to steer consumers away from commodity-based shopping, and toward a value-added, information-based shopping experience that is different from that offered by big box stores such as Wal-Mart.

    KC's View:

    Published on: December 2, 2003

    Retail Forward's Monthly Shopper update Survey, looking at the upcoming holiday shopping season, suggests that:

    • Holiday retail spending will show a modest improvement over last year, with an increase of 3.5 percent to four percent compared to last year
    • .

    • Overall, shoppers plan to spend an average of $698 on holiday gifts this year. For 31 percent of shoppers, this will be less than what they spent last year. A notably smaller percent of shoppers (20 percent) say they will spend more this year than last.

    • About half of all households (49 percent) are more concerned this year than last about finding the lowest prices for their holiday gifts.

    • Nearly half (45 percent) plan to spend more of their holiday gift budget this year than they did last year at stores that focus on low prices (e.g., Wal-Mart, Target, Kohl’s).

    • Generally speaking, higher income shoppers (more than $100,000 per year) are more confident than people making less money, and both the amounts that these respective groups plan to spend and where they will spend that money are reflected by their greater or lesser confidence. However, even higher income shoppers told Retail Forward that they want to get more bang for their buck this holiday season.

    KC's View:
    We think these figures suggest a cautious optimism on the part of many American shoppers…and that seems eminently sensible in such an unsettled time.

    It's funny. You'll see below in the Your Views section that we caught some grief for our pessimism about the nation's current economic state. Actually, pessimism is the wrong word. We were just trying to point out that the current revival seems vulnerable to all sorts of influences over which we have very little control.

    We were hardly the only one. There were numerous stories yesterday pointing out how some analysts and experts (neither of which we claim to be) believed that the outlook for this coming holiday season is mixed at best.

    This doesn’t strike us as doomsaying. It strikes us as being realistic.

    Published on: December 2, 2003

    California Attorney General Bill Lockyer announced yesterday that his office will probe the agreement that exists between Southern California's three major supermarket chains - Safeway's Vons, Kroger's Ralphs, and Albertsons - guaranteeing profit-sharing and revenue-sharing in the event of a labor strike.

    The agreement has been subpoenaed by Lockyer's office as it works to ascertain whether it violates state and federal antitrust laws.

    Details of the agreement have not been disclosed by the chains, though they have acknowledged its existence and have maintained that it is completely legal and proper.

    The United Food and Commercial Workers (UFCW) has challenged the propriety of the agreement, which has worked against its ability to divide and conquer in labor talks.

    It was on October 11 that union members of the United Food and Commercial Workers (UFCW) union 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. Some 70,000 employees have been affected by the labor action.

    Negotiations between the two sides, which so far have been sporadic and unproductive, are scheduled to begin again today.
    KC's View:
    Not being a lawyer, we're not ready to make a definitive statement on this issue. But it is hard to imagine how three major supermarket chains can agree to share profits and revenue if one of them either benefits or suffers because of a strike or lockout.

    But we'll see.