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    Published on: January 16, 2004

    Kash n' Karry, the Florida-based division of the Delhaize America, announced yesterday that it is closing 34 stores in central, eastern, and northern Florida by the end of February. The company will now focus its efforts on its core markets on the west coast of Florida, and will open or remodel 20 stores this year with a capital improvements budget that is 50 percent higher than last year.

    In addition, Kash n' Karry reportedly has a three-year growth plan that will allow it to be more competitive in markets such as Tampa.

    The move leaves Kash n' Karry with 103 stores. The closings impact some 1,500 employees.

    A few of the stores being closed reportedly will be sold to other retailers. The vast majority, however, are just being shut down.

    Sources outside the company told MNB that this retrenchment is perceived as a positive move that solidifies the company's operations, and that Kash n' Karry's new CEO, Shelley Broader, has made a "tremendous difference" on both morale and sales since moving to the Florida operation last year.
    KC's View:
    We've always been big fans of CEO Broader, and think that this seems like a prudent move to strengthen Kash n' Karry's competitive position. It’s always tough to amputate a limb like this, but sometimes it makes sense so the rest of the body can survive.

    Published on: January 16, 2004

    In the more than three-month-old supermarket strike in Southern California, the unions are making strategy moves even as the chains reportedly consider dramatic actions that would change the nature of the game being played between the two sides.

    • Published reports say that the United Food and Commercial Workers (UFCW) union is working to organize a weekend demonstration of civil disobedience that will attempt to shut down a single Vons store by forming a human chain around it.

      The event is tied to the Martin Luther King Jr. holiday on Monday, and reportedly will be attended by local politicians and religious leaders, in addition to union members.

      Vons is owned by Safeway, and always has been the prime target of UFCW actions since the strike/lockout affecting more than 70,000 employees began on October 11, 2003. The dispute is over compensation and health benefits issues, with little or no progress made in the few bargaining sessions that have been held.


    • The Los Angeles Times reports this morning that there is some strategy disagreement among the seven United Food and Commercial Workers (UFCW) locals that are involved in the four-month-old strike lockout affecting Southern California's three biggest supermarket chains - Safeway's Vons, Kroger's Ralphs, and Albertsons.

      Mostly, the argument has been over how to handle Ralphs, which generally has been perceived as the least intransigent of the three chains. Pickets were removed from the Ralphs stores on October 31, but some of the locals apparently wanted to start picketing the chain again to remind consumers that it was involved in the labor strife.

      The solution to the disagreement was to simply let the locals handle things the way they wished. Some decided not to return pickets to Ralphs, while others decided to picket store loading docks.


    • Meanwhile, the Los Angeles County Employees Retirement Assn., which holds stock totaling $25 million in Safeway, Kroger, and Albertsons - has voted to urge the chains to solve the labor dispute, echoing a similar move made by the California Public Employees' Retirement System.

    KC's View:
    While we've generally had the feeling from talking to folks in Southern California that there was absolutely no progress being made, the sense we've had lately is that things may be coming to a head fairly soon…not in the sense of successful negotiations, but in terms of the chains taking some sort of action that will change the game.

    The biggest speculation - and we've gotten this from a number of sources - is that the chains are looking to very shortly do whatever is necessary to decertify their Southern California stores and convert them to non-union operations. That could mean closing down operations for a period of time and then reopening them, an option that reportedly is on the table at Albertsons. Or, it also could mean changing the name on the door so as to make a clean break with the past - a solution that reportedly has been considered by Kroger, sources told MNB.

    What seems to be fluid at this point in the timetable for such dramatic moves - though we're also told that mid-February is considered to be a kind of "tipping point" at which time the chains might feel not just empowered, but compelled to do something drastic.

    Hard to know how decertification efforts might play out in Southern California. But just the knowledge that these possibilities are on the table no doubt puts pressure on the UFCW to figure out a compromise. And as much as civil disobedience might be the kind of drama that it feels can illustrate its cause, it isn’t going to help feed strikers' families and put their kinds through school and pay their mortgages.

    The heat is on.

    Published on: January 16, 2004

    Greetings from the frozen tundra of Connecticut, where a nice glass of red wine is a great way to stave off the cold.

    Two that we've enjoyed over the last week…

    • A 2001 Mark West Sonoma County Pinot Noir, a light, inexpensive wine that went great with a pasta-and-tomato sauce dish.
    • A 2001 ADW Shiraz called ‘Nova’, from the Barossa region of Australia. We have to admit, though, that we didn’t have this one while suffering through the cold. We drank it while in Scottsdale, Arizona, at the estimable "Cowboy Ciao!" restaurant, which continues to serve, the best chopped salad we've ever had.

      But it would be great in cold weather, too.


    Have a great weekend!
    KC's View:

    Published on: January 16, 2004

    We got a lot of email in response to yesterday's story that the Bush administration is proposing that in the case of any national emergency - such as a release of anthrax, a nuclear plant accident or an outbreak of mad cow disease - the decision of what information to release and when will be left up to the White House Office of Management and Budget (OMB).

    The White House says that by centralizing peer review, evaluations will be more consistent. OMB was created as a tool for the White House to evaluate agency budget, policy, legislative, regulatory and management issues.

    The move by the White House already has come in for criticism from what is described as a non-partisan group of former officials from various federal agencies objecting to the change because it could place political and partisan concerns above scientific issues.

    MNB user David Brewster wrote:

    Who defines an emergency? When does a local problem become a national emergency?

    Is big brother paying attention to everything in our lives -- just in case my horseshoe's nail looses us a kingdom?

    Utterly silly and very dangerous. Not only would this place scientific issues at the disposal of politicians, but it also would place privacy issues in those same hands even more firmly.


    Another MNB user wrote:

    I remember when I was in elementary school learning to duck and cover in case an atom bomb was dropped in our area. As a kid, I found this very scary and, having seen pictures of atom bombs exploding, did not really think that it would protect me. However, this has to be the scariest thing that I have heard in my lifetime. Again, I do not think that it will protect me. Kill me maybe, but not protect me.

    Another member of the MNB community wrote:

    Sounds like the beginnings of a police state.

    MNB user Sue DeRemer chimed in:

    I wonder how long it will be until this administration creates a bureau to start re-writing history?

    To be honest, as many emails as we received on this subject, we did not receive a single one that endorsed the proposed change as a good idea.

    Not one.
    KC's View:

    Published on: January 16, 2004


    • Boots, the UK HBC retailer, reported that fourth quarter sales in 2003 were up 5.2 percent compared with the same period a year ago. The company, which just yesterday announced that it was laying off 900 employees, said it was helped by strong Christmas sales.

      Tesco, of course, recently announced a broad cut in IBC product prices as a way of competing more strenuously with Boots in 2004.


    • For the six-week period ended Jan. 3, CVS posted sales of $3.36 billion, up 31.8 percent from the same period a year earlier. Same-store sales increased 9.4 percent. Pharmacy same-store sales increased 11.2 percent, while front-end same-store sales rose 6.1 percent.


    • McDonald's Corp. reported that same-store sales at its US restaurants were up 12.2 percent in December, and that fourth quarter sales are expected to be up 16.6 percent over the year before.


    • McDonald's is scheduled to report fourth-quarter results Jan. 23. It was just a year ago that it reported a larger-than-expected loss of $344 million and announced the closing of 700 restaurants.

    • Bake-Line Group, a private label and branded baking company, has ceased operations and filed voluntary petitions under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court in Wilmington, Delaware.

    KC's View:

    Published on: January 16, 2004


    • A federal judge has ruled that Schick can continue to sell its four-blade Quattro razor, rejecting a claim by Gillette that it constituted patent infringement on its three-blade Mach3 razor.

      Not only had Schick denied the allegations made by Gillette, but it filed its own suit against the rival razor company saying that it engaged in false advertising by claiming in its ads that the Mach3 provides the best shave "a man can get."


    • Gillette announced yesterday that it is introducing a new, battery-powered, "pulsating" version of its Mach3 razor, which it says will lift hairs away from the skin and give a better shave.

      The better shave won't come cheap. The handle, including two blade cartridges and a Duracell battery, will cost about $14.99.

      The product is scheduled to hit stores in May.

    KC's View:

    Published on: January 16, 2004

    A coalition that includes the American Public Health Association, Center for Science in the Public Interest and the Consumer Federation of America, has asked the US Department of Agriculture (USDA) to release the names of supermarkets and restaurants that may have purchased meat from the Washington State cow that was infected with mad cow disease - information that the federal government has so far refused to provide.

    The USDA has recalled about five tons of beef from Vern's of Moses Lake Meats, the plant in Washington that slaughtered the cow diagnosed just before Christmas with the first U.S. case of mad cow disease. That beef had been sent to food stores in Washington, Oregon, California, Nevada, Idaho and Montana, the USDA said, though it maintains that there was an "extremely low likelihood" that the beef contained any infectious material since the cow's brains and spinal cord were removed at slaughter.

    Companies such as Safeway, Kroger's Fred Meyer, and Albertsons all voluntarily asked consumers to return beef to their stores.
    KC's View:
    This "managing information" trend seems to be growing within the federal government, doesn't it?

    Published on: January 16, 2004

    Ahold announced yesterday that two senior executives who were forced to resign last year in the wake of a billion-dollar accounting scandal - former CEO Cees van der Hoeven and CFO Michael Meurs - have agreed to pay back bonuses from the period during which profits were being overstated.

    The decision came a day after the company announced that it would be taking back some of the bonus money paid to current members of its supervisory board who were directors of the company when its profits were being inflated.
    KC's View:
    Good. They must have read our admonition in MNB yesterday.

    Published on: January 16, 2004

    The Cincinnati Enquirer reports that Kroger Co. is the target of a federal lawsuit filed by three of its female employees, alleging that the company violated their rights under the Family Medical Leave Act by not maintaining their full health benefits while on leave and not restoring them to positions with equivalent benefits when they returned.

    The plaintiffs in the case reportedly are looking to achieve class-action status.

    The company did not comment on the suit other than to say that it was "without merit."
    KC's View:

    Published on: January 16, 2004

    Reuters reports that Italian researchers are developing a pill that contains a mixture of sugar, amino acids, polyphenols and the other healthy ingredients in red wine - meaning that people who can't or don't drink now will be able to reap the health benefits associated with consuming the fruit of the vines.
    KC's View:

    Published on: January 16, 2004

    Concerned that the discovery of a single case of mad cow disease in the US could have a negative impact on hamburger sales, McDonald's Japan plans to give away ten million hamburgers this Sunday as a way of assuring customers that its beef is safe.

    History shows that Japanese hamburger sales decline with each new outbreak of mad cow, no matter where it happens. It wasn't that long ago that the company slashed prices for a period of time to get people back into stores; in this case, McDonald's Japan seems to be trying to make a pre-emptive move.
    KC's View:
    This always has been an intriguing phenomenon to us…that Japanese consumers stop eating hamburgers because of mad cow concerns, unless, of course, the burgers are really, really cheap or free. In which case, the risk is worth taking.

    Published on: January 16, 2004

    Starbucks, the ubiquitous coffee retailer that has changed the nature of preparing and drinking coffee in the Us and elsewhere, finally opens its first store in Paris today.

    The store is being run in partnership with the company’s Spanish partner, Grupo VIPS. Starbucks already operates stores in European markets that include the UK, Switzerland, and Austria.

    However, "Our success in other countries does not provide us with an entitlement to be successful in France," CEO Howard Schultz told the Associated Press. Schultz noted that the French tend to like their coffee short, black, bitter, and cheap - and so, expensive venti lattes may be a tough sell.

    It's a long-term play, Schultz said. "Their curiosity will drive them into the stores."

    A second Parisian Starbucks opens next week, with 10 more planned for Paris over the next year.
    KC's View:

    Published on: January 16, 2004

    Stories from Japan…

    • The Financial Times reports that Tesco has been taking a slow, calculated approach to its operations in Japan, which have been focused on c-store chain C-Two, which it acquired last year. Research into the country's shopping habits precluded opening hypermarkets or large supermarkets, according to Tesco's deputy chairman, David Reid, who said that "In Japan we learned that some housewives shop on bikes and shop daily, they visit six or seven shops looking for deals. You've got to understand these things."

      That doesn't mean that Tesco won't attempt to get into the hypermarket business at some point, Reid said, or that the company won't make further or different sorts of acquisitions. It's just that the company is being careful to understand the market's possibilities before making additional moves.


    • Japan's Seiyu Ltd, which is 37.6 percent owned by Wal-Mart, announced that it plans to eliminate a quarter of its workforce, or some 1,500 jobs, within the next two months.

      The chain termed the cuts a "voluntary retirement program" that will target full-time employees aged 30-58.

    KC's View:
    Seiyu may only be 37.6 percent owned by Wal-Mart, but the notion that it is eliminating full-time employees who are precisely of the age where they likely have responsibilities for feeding their families, paying for houses and college educations, supporting aging parents…well, that seems sort of familiar doesn’t it?

    How many 30-year-old people with full-time jobs voluntarily retire?

    Published on: January 16, 2004

    The Food Institute reports that "on the heels of a scant 1.3 percent increase in 2002, retail food-at-home prices rose 2.1 percent last year, slightly exceeding projections of a 1.5 percent to 2.0 percent increase.

    "By far, the major driving force behind that gain was the run-up in beef prices, which ended the year averaging 9.0 percent more than a year earlier. During December, prices were up an astounding 23.5 percent from a year earlier according to Consumer Price Index data from the Bureau of Labor Statistics.

    "For 2004, beef prices are projected to rise another 3.0 percent to 4.0 percent for the year, although the finding of a case of mad cow disease in the U.S. is expected to result in somewhat lower prices through the first quarter and possibly half of this year."

    While beef prices were up nine percent last year, they weren't the fastest growing prices in the food category, according to the Food Institute. Egg prices, in fact, were up almost 14 percent.
    KC's View:
    Meaning we finally have an answer to the age-old question about which came first, the cow or the egg…

    Published on: January 16, 2004

    The Arkansas News Bureau reports that Wal-Mart plans to open almost 160 c-store/gasoline stations in the parking lots of its supercenters in 2004, a significant increase over its previously stated goal of opening 100 such units a year.
    KC's View:

    Published on: January 16, 2004

    In California, the Tri-Valley Herald reports that Wal-Mart is spending more than a half-million dollars to persuade residents of Contra-Costa County that they want to overturn a ban on big box retailers.

    Supporters of the ban have raised a comparatively small $93,000 to support their cause - including $25,000 donated by the United Food and Commercial Workers (UFCW), and $20,000 contributed by Safeway Inc.

    The referendum is scheduled for March 2. It was scheduled after Wal-Mart organized and paid for a signature-gathering campaign in response to a vote by the county board of supervisors to ban supercenters larger than 90,000 square feet that devote more than 5 percent of floor space to the sale of nontaxable items.
    KC's View:
    To us, the most interesting question is: what will Wal-Mart do if it loses? Pack up its bags and move elsewhere? Or look for another way into Contra Costa County?