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    Published on: December 5, 2003

    We have a busy weekend planned for you…

    Hadn't been to the movies for a while, but have been doing some catching up…

    • Master and Commander: The Far Side of the World is a wonderful adventure story, filled with great performances (including an amazingly charismatic turn by Russell Crowe), beautiful seagoing cinematography, and some terrific action sequences that rely on energy, not special effects. It also has some old-fashioned notions about duty and honor and purpose. See it.


    • On the other hand, stay away from Matrix Revolutions, which manages to be even less coherent and interesting that Matrix Reloaded - which is saying something. The problem with this series of films is that the original Matrix had one, great, mind-blowing idea…and never could top it or even equal it. They shouldn’t have tried.


    • One movie that hasn't gotten much attention from audiences is Runaway Jury, based on the John Grisham novel. We saw it last weekend because we couldn’t get into something else, and liked it a lot - a good, taut script, plenty of suspense, a couple of twists we didn’t see coming, and great acting by John Cusack, Gene Hackman, and Dustin Hoffman. (Have any of these guys ever given a bad performance?) Good stuff, and worth seeing.


    • The Missing is an interesting western directed by Ron Howard, starring the always interesting Tommy Lee Jones and Cate Blanchett. While it is great to look at, it never really captured our imagination. It has a script with echoes of John Ford's magnificent The Searchers, but none of the complexity and emotional undercurrent that made that film so wonderful. Can't recommend this one…but go rent or buy The Searchers on DVD. It should be part of everyone's film library.


    • Another film that we just saw on DVD - mostly because we wanted to watch it with our sons - is Chinatown,, starring Jack Nicholson. This movie hasn’t lost any of its appeal after almost thirty years - it is timely and intriguing, and worth another look if you haven’t seen it in a while. (And if you haven't ever seen it - you have your marching orders.)


    Finally, we have a single wine recommendation this week - but it happens to be for a wine you can only get from the vineyard.

    Had dinner the other night at Café Niebaum Coppola in San Francisco, one of our favorite neighborhood restaurants anywhere in the country, and the place that makes the best chilaquiles that we've ever had. This time around, we washed the chilaquiles down with the 2002 Francis Coppola director's Reserve Carneros Pinot Noir - a limited edition wine that is just spectacular - full and flavorful, with the taste of rich fruit and just a hint of pepper. (In other words, yummy.)

    If you’re not going to San Francisco or Napa, you can always get it online:

    http://store.niebaum-coppola.com/

    Have a great weekend. Cheers!
    KC's View:

    Published on: December 5, 2003

    …will return. Soon.
    KC's View:

    Published on: December 5, 2003


    • Winn-Dixie Stores named Jim Thatcher to be division manager of its 59-unit SaveRite Grocery Warehouse division.

      Thatcher, who most recently was president of Southern operations for the retail division of Fleming Cos. and president of Fleming IGA, replaces Rob Rowe, who has left the company.

    KC's View:

    Published on: December 5, 2003


    • Wal-Mart Stores posted November net sales of $21.66 billion, up 11.2 percent over the same period a year ago. Same-store sales were up 3.9 percent for the period.

      The figures for the period include the $1.52 billion in sales done the day after Thanksgiving, which was 6.3 percent higher than the same day in 2002.



    • Costco Wholesale Corp. reported that total sales in the four-week period ended Nov. 30 rose 17 percent to $3.79 billion. Same-store sales were up 14 percent for the month.



    • Pathmark Stores reported that third quarter sales were $978.5 million, an increase of 0.7 percent from $971.5 million in the prior year's third quarter. Same-store sales increased 0.7 percent in the third quarter. The net loss was $0.2 million.

      For the nine-month period of fiscal 2003, sales were $2.9 billion, up 1.5 percent from the prior year's comparable nine-month period. Same-store sales increased 1.1 percent in the nine-month period of fiscal 2003. Net earnings were $6.9 million, compared to $5.4 million for the same period a year ago.



    • Target Corp. said total sales for the four weeks ended Nov. 29 rose 12.1 percent to $4.41 billion, with same-store sales up 6.2 percent.



    • Dollar General reported third quarter net income of $77.9 million, compared with $68.6 million for the same period a year ago. Net sales in the third quarter of 2003 increased 12.5 percent to $1.69 billion compared with $1.5 billion for the same period a year ago. Same-store sales were up 3.8 percent.



    • Longs Drug Stores Corporation reported preliminary total sales of $353.8 million for the four-week period ended November 27, 2003, a 6.6 percent increase over sales of $332.0 million in the comparable period a year ago. Pharmacy sales were 46.4 percent of total drug store sales compared with 45.4 percent a year ago. Same store sales were up 3.7 percent for the period.

    KC's View:

    Published on: December 5, 2003

    Business 2.0 reports that Toys R Us, struggling to remain relevant to consumers in a market where Wal-Mart owns 40 percent of the nation's holiday toy sales, is using its decades-old jingle - "I don't want to grow up, I'm a Toys R Us kid" - in television and radio commercials to remind shoppers of its long tradition.

    Invoking memories, according to the magazine, is just the latest strategy employed by the toy retailer. Facing a situation in which surveys show that Wal-Mart's prices are more than five percent lower on "top 50 toys," Toys R Us has responded with its own price cuts, coupon books, and efficiency-oriented moves such as closing down Kids R Us stores and the Imaginarium educational toy chain.

    Ironically, one of the few bright spots for Toys R Us has been its online business - which is run by Amazon.com. If you remember, the online business was a disaster a few years ago for the company when it took a lot of orders that it didn’t fulfill before Christmas. After that, it made a deal with Amazon, one that has appeared to pay off.
    KC's View:
    The only problem with the nostalgia-oriented use of the old jingle is that Toys R Us is counting on it evoking pleasant, warm memories. It makes us think of crowded stores, crummy sales help, and an element of holiday seasons past that we'd rather forget.

    Forget Toys R Us. Forget Wal-Mart. We're using Amazon.com this year, as we have every year for the past several.

    By the way…

    That wasn't a mistake above when we used virtually the same phrase to describe two different companies.

    Who would have thought a couple of years ago that we'd use the phrase "one of the new bright spots is the online business" when describing companies such as Safeway and Toys R Us - and on the very same day. It shows, we think, that there is tremendous vitality and innovation happening in the online segment…and that maybe retailers need to figure out how to transfer that to their brick and mortar operations.

    Published on: December 5, 2003

    (Thank God It's Atkins?)

    TGI Friday's, the casual dining chain, has made a deal with Atkins Nutritionals to create a line of low-carb appetizers, entrees and desserts that will be sold in the chain's 523 US restaurants.

    USA Today reports that this deal - which is just part of Atkins' marketing strategy to spread its wings - takes place within the context of a nation in which two-third of the population is overweight or obese, in which $15 billion worth of low-carb products are expected to be sold this year, and in which some 50 million people have at least tried a low-carb diet.

    The TGI Friday's products were all developed in Friday's kitchens with Atkins' assistance, according to the company.
    KC's View:
    The real bonanza in all this may be reaped by printing companies that are going to be doing up new menus for all these low-carb additions…and then have to do new ones for whatever the hot trend is in 2004, 2005, 2006…

    Published on: December 5, 2003

    The Columbus Dispatch reports that Whole Foods Markets has joined Giant Eagle and Kroger in the bidding for Big Bear stores being auctioned off by Penn Traffic.

    Results of the auction are not expected to be made public until next week.
    KC's View:

    Published on: December 5, 2003

    Reuters reports that Wal-Mart Stores wants to trim in half - from 96 hours to 48 hours - the amount of time it takes to get meat orders from its suppliers.

    The company plans to apply its sales tracking system to just-in-time ordering of meat - which it says is showing big sales increases because of the popularity of low-carb diets.
    KC's View:

    Published on: December 5, 2003

    The Chicago Tribune reports that the US Food and Drug Administration (FDA) is struggling with the notion of food safety when applied to food made from cloned animals.

    Quite simply, it can't yet define what might be safe and what might be a hazard.

    That's the problem of dealing with new technologies and uncharted waters. On the one hand, FDA has to write regulations for the cloning industry. On the other, there hasn’t been a ton of research done into the long-term impact of cloning technology, in part because it only has existed for a relatively short period of time.

    The FDA has conceded this problem even after it concluded two months ago that meat and milk from cloned animals was safe to eat - a decision that was immediately criticized by a number of scientists.
    KC's View:
    We've always said that while we respect people's right not to eat food that has been created through bioengineering - which is one of the reasons we favor GMO labeling - it isn’t a problem that we personally share.

    That said, this cloning stuff makes us a little uneasy. Not sure why. But it does.

    Published on: December 5, 2003

    The Pittsburgh Post-Gazette reports that a Pennsylvania legislator is calling for the state to open its own grocery stores in inner cities when major chains are refusing to open units.

    "There is a lot more that needs to be done with this issue, but I am certain we will work together to bring supermarkets into communities to ensure the health and well-being of residents," said state Rep. Frank Oliver, D-Philadelphia. It wouldn't be an enormous reach for Pennsylvania, which already has state-run liquor stores.

    "We want to revitalize these neighborhoods, and part of that revitalization includes having places to shop," Oliver said.

    Alternatives offered to actual state ownership include providing tax breaks and greater incentives to companies that open stores in such areas.
    KC's View:
    Gee, they can't get a Wal-Mart to open one of its urban stores in these underserved areas? Not even with tax breaks?

    Hard to believe.

    Where's the Bentonville Behemoth when you need it?

    Published on: December 5, 2003

    Safeway Inc. said that it cannot estimate the financial impact from an almost two-month-long strike by workers in Southern California, but reported that excluding stores affected by the strike, sales increased 0.4 percent for the fourth quarter through November 29. Sales increased 0.9 percent excluding its Dominick's Finer Foods chain, which also has been in turmoil because of an aborted attempt to sell it because of labor issues.

    Excluding the effect of fuel sales, same-store sales fell 0.8 percent excluding Dominick's, and declined 1.2 percent including Dominick's.
    KC's View:
    Can't? Or won't?

    When was the last time that Safeway provided the investment community with any good news? Or, for that matter, its customers?

    Safeway said yesterday that it intends to stay the course in dealing with the Southern California situation, and that it wants to get similar employee concessions next year when it deals with expiring labor contracts in its Northern California, Seattle, Denver and Washington, D.C. divisions.

    To which we would ask: what concessions exactly has it managed to get to this point?

    None that we're aware of.

    All that is has to show at this point is an eight-week-old and ongoing strike in Southern California and a Chicago division that it tried to sell and couldn't because of a labor force that didn't capitulate.

    No wonder that the UFCW seems to have targeted Safeway and its management as a prime target in Southern California. At the very least, talking about "similar concessions" seems a little, well, presumptuous.

    Amazingly, one of the real bright spots for Safeway - at least creatively - seems to be its online business, which continues to expand. We are consistently impressed with the level of the communications that consumers receive from Safeway.com…they highlight the best of what the food business should be about, and actually make the shopper hungry…which is high praise.

    We mention this because we don't want to be accused of being completely negative about Safeway. Of course, also to be fair, the online business is a partnership with the UK's Tesco.

    Maybe there's a lesson here.

    Published on: December 5, 2003

    The San Diego Union-Tribune reports that while the shelves are not empty, there is increasing evidence that when the Teamsters decided to support striking members of the United Food and Commercial Workers (UFCW) union by respecting picket lines set up at area distribution centers, they managed to significantly slow down the shipment of goods to affected stores.

    If the strike continues to next Thursday, it will be two months since union members 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.

    While replacement workers are being used both in-store and to make deliveries, spokesmen for the three chains are not commenting on the impact of the Teamsters' move on their in-stock positions.

    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, aided by a federal mediator, were restarted this week even as the state's Attorney General initiated an investigation into whether an agreement among the three supermarket chains that guarantees profit sharing and revenue sharing in the event of a labor strike violates state and federal antitrust laws.

    Among some of the instances cited by the Union-Tribune:

    • Meat at Vons and bacon at Albertsons carrying already-passed expiration dates.


    • "Many of the more popular selections of Gerber baby food had been depleted, supplies of packaged deli meats were dwindling and shelves reserved for five brands of Emeril's spaghetti sauce and Health Harvest Apple Sauce were empty."

    KC's View:
    Heavens! No Emeril's sauce? That alone would send us scurrying to an independent store not being picketed.

    There was an interesting column yesterday by Rick Nichols of the Philadelphia Inquirer, who wrote about the strike in terms of its causes and the economic impact on the state…and eventually, the country:

    "Scared to death of crushing competition, the chains are preemptively asking unionized clerks for concessions, including steep health-benefit cuts," he wrote. "Wal-Mart's bargains, of course, come at a price. Its nonunion workforce makes roughly $9 an hour, about half the pay of the 70,000 organized clerks. By slashing wages, Wal-Mart can easily undercut competitors on grocery prices (often by as much as 20 percent), dominating the wage and retail landscape.

    "But the state ultimately will end up poorer, two independent studies conclude - the result of generally lowered incomes and higher outlays for health and other services shifted to the public sector."

    The question Nichols raises is one that Wal-Mart supporters will dispute has having any relevance, and that its detractors will say is the ultimate issue"

    What is the price of a bargain?

    We keep hearing that there is little evidence that either side is ready to make any movement to settle this thing. If anything, the UFCW seems energized by the Teamsters' support and the antitrust investigation (even if the latter is not expected to gain it any real advantage), and the chains seem to be in denial about the impact the strike is having on business.

    And speaking of denial…

    Published on: December 5, 2003

    Sen. Joseph Lieberman (D-Connecticut), who is campaigning for his party's presidential nomination, has called for a Federal Trade Commission (FTC) investigation into the marketing practices of junk food manufacturers that would determine whether there is a connection between junk food advertising and the rise in obesity among youngsters.

    The senator, as part of what he is calling a "family-friendly" agenda, said that if elected president he would call for three interim steps to be taken by the FTC:

    • Require junk food advertisements to include nutritional information that includes parental warnings similar to those in movie ads.


    • Require the prominent posting of nutrition information on fast food chain menu boards.


    • Regulate the food sold in school cafeterias and in-school vending machines.


    A Lieberman campaign spokesman said that the senator will not define what junk food is, leaving that to dietary and health care experts.
    KC's View:
    Yeah, like a federal probe is a guaranteed fix.

    It doesn't take a genius to know that there is a connection between junk food advertising and the rise in obesity among youngsters. These companies spend a small fortune promoting their products in terms that appeal to children. The issue is what role the government should play in its regulation…and quite frankly, we're a lot more comfortable with the notion of requiring full disclosure and educational efforts than we are with regulating what can and cannot be sold to kids. (Actually, we'd prefer it if major manufacturers would simply pledge to spend a specific amount of their marketing dollars on improving nutritional education. Make the pledge loud and clear and then live up to it with more healthful food that doesn't cater to the lowest common denominator. If they'd do that on any sort of mass scale, maybe there wouldn’t be a need for regulation.)

    One of the few areas in which a high level of advertising doesn't seem to ignite the imagination of the consumer public would be campaign advertising - most of which, at this point, only seems to depress us and increase our natural cynicism. Based on his campaign results so far, maybe Lieberman ought to be hiring McDonald's marketing people, not criticizing them…