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    Published on: February 23, 2004

    Go figure. Safeway and the United Food and Commercial Workers (UFCW) have finally found something that they can agree on, even as they engage in a four-month-long strike/lockout in Southern California.

    The East Bay Business Journal reports that both Safeway and the UFCW are urging voters in Northern California's Contra Costa County to vote "yes" on a March 2 ballot initiative that would ban the opening of "big box" stores larger than 90,000 square feet that devote more than 5 percent of their space to nontaxable merchandise, like groceries.

    In fact, they’re not just urging a "yes" vote, they’re spending money - reportedly as much as $1 million between them - to turn out the anti-box store vote.

    That's a lot of money. It is roughly double the amount reportedly being spent by Wal-Mart - which isn’t named in the referendum, but clearly takes it personally since it wants to open 40 supercenters in California over the next five years, including at least one in Contra Costa. According to the Arkansas retailer, it has spent $577,000 to overturn the Contra Costa ordinance banning such stores, including $177,000 to gather signatures that created the referendum to begin with.

    The contra Costa County Board of Supervisors passed the ordinance last June, saying it was concerned that nonunion chains such as Wal-Mart were hurting the union chains and union members because they paid lower wages and offered lesser benefits.

    And that, as it happens, is a position that Safeway and the UFCW can agree on.
    KC's View:
    Raise up our voices in song now, brothers and sisters, in a rousing chorus of "Let there be peace on earth, and let it begin with me."

    Say amen.

    It's nice to know that the UFCW and Safeway can agree with something when it is in their own self interest; it'd be even nicer if they could build on that empathy to develop a workable, sustainable relationship in markets like Southern California. After all, if they both agree that Wal-Mart is the enemy - not each other - then maybe they could come up with some sort of plan that would have them working together.

    After all, Wal-Mart is a threat both to Safeway's bottom line, and to the livelihoods of the UFCW's membership. (And let's not forget Albertsons and Kroger, both of which also have a stake in the Southern California debacle, but from all reports seem to have been less militant than Safeway.)

    Deal with the real threat! Stop beating up on each other in a way that does nobody any good!


    By the way, it has to be noted that the million-dollar expenditure by Safeway and the UFCW may be a little suspect, since one of the places it has been reported has been in Wal-Mart's propaganda. In this case, Wal-Mart seems to be portraying itself as the underdog in this fight…which is, in itself, its own special kind of crock.

    Published on: February 23, 2004

    Albertsons announced on Friday that it is launching a company-wide Six Sigma Quality program, which company CEO Larry Johnston described as having "the potential to move Albertsons to an all new level of productivity and customer service in our industry. We are excited to be the first food & drug retailer in the world to launch a company-wide Six Sigma effort. Over the next 36 months, we plan to deploy hundreds of Black Belts into every corner of the company as we re-engineer our major processes in every function and discipline. The world has witnessed how Six Sigma can transform industrial giants like GE, Allied Signal, 3M and others ... we believe it holds the same exciting potential in food and drug retailing."

    Johnston's last career posting, of course, was at General Electric - which became the poster child for Six Sigma processes as its then-CEO, Jack Welch, became its best-known evangelist.

    The company named Jim Gentile, a three-decade veteran of the company who currently is president of its Northern California division, to be Senior Vice President of Six Sigma Quality.

    Albertsons also announced a series of other moves:

    • The company said that it has formed a new Price Impact Division. "In the future, the company plans to open price impact stores in multiple cities across the U.S." According to the statement, "this new division will be completely autonomous and operated separately from Albertsons traditional food and drug operations."

      Mike Clawson, formerly President of the Northwest Division, has been named President of the company's new Price Impact Division

    • It is establishing a new centralized Customer Service Operation, with one leadership team responsible for all dimensions of customer service for every major banner in all of its more than two thousand stores. Pam Powell, currently Group Vice President of Marketing, will lead the new team with the title of Senior Vice President of Customer Service.

      Said Johnston, "This new organization will allow us to accelerate that progress by spreading industry best practices more quickly across banners, by monitoring service delivery in a more consistent manner and by consistently executing powerful merchandising promotions that make life easier for our customers."

    • According to a statement released by Albertsons, "Four former divisions - Southwest, Intermountain, Northwest and Rocky Mountain - have been consolidated to form the new Intermountain West Division headquartered in Boise, Idaho. Bob Butler, formerly Executive Vice President of Western Operations, has been named to lead the new division and is also being named Executive Vice President of Food Operations for the entire company with the responsibility for co-coordinating all Division Presidents."

      In addition, "The former Acme and Florida Divisions have been consolidated into one new Eastern Division. Carl Jablonski, currently President of Acme Markets, becomes President of this new division headquartered in Philadelphia, Pennsylvania. Larry Wahlstrom, currently President of the Florida Division moves to Boise, Idaho and becomes Assistant to the Chairman for special projects."

      And, Donna Robbins has been promoted from her role as Senior Vice President of the Northern California Division to its presidency, succeeding Gentile. This division continues to be headquartered in the San Francisco, California area.

      According to the Albertsons statement, it now has seven Operating Divisions (6 Food & 1 Drug). All seven Division Presidents will now report directly to Johnston, but will now have a strong dotted line reporting relationship to Butler, who also assumes the coordinating role as Executive Vice President of Food Operations for the company.

    • Albertsons also announced that it is creating a new division "to develop new formats and also manage the company's large store construction and remodel programs."

    KC's View:
    We don't want to overstate this, but does it seem to anyone else that Larry Johnston essentially is betting the house on these moves? This would appear to be his ultimate play - that if these steps don't work in making Albertsons better positioned for the future, it means either than it cannot be done or that he's not the guy to do it.

    We wish Albertsons luck…though we have to admit that we wouldn’t be willing to bet our house on Johnston's ability to make good on his gamble. It's just an enormous task, and we're just not sure it all can be accomplished.

    But you certainly have to admire the effort.

    Published on: February 23, 2004

    Business First of Buffalo reports that Ahold-owned Tops Markets seems to losing market share in that city, as the number of people who described it as their "supermarket of choice" dropped from 55 percent to 47 percent just during the last year. It’s part of a long-term decline; in 2000, 59 percent of poll respondents preferred Tops.

    Wegmans, on the other hand, is moving up in customers' estimation, increasing the number of people who prefer it to 34 percent, from 31 percent a year ago.

    According to the paper, "Aldi's is preferred by 6 percent of the respondents while Jubilee is the first choice for 5 percent. Another 7 percent listed other stores, such as Dash's Market or Quality, as their preferred choice."

    But the big news clearly is the fact that Wegmans is tightening the competition. And here's the kicker. According to Business First, "Wegmans improved its market share without adding a new location in Erie or Niagara counties since 1999."
    KC's View:
    One of the things that the paper suggests is that Wegmans' growth and Tops' problems probably have nothing to do with Ahold's troubles, and that most people in the Buffalo area probably don't even know much about the billion-dollar accounting scandal that has plagued Ahold's operations, or about the centralization/consolidation move that is ongoing at Ahold USA.

    In fact, the paper quotes an expert of uncommon perspective (not to mention considerable modesty) as saying: "The growth is more of a testament to Wegmans' excellence than any corporate problems with Tops' parent company."

    That self-effacing expert, of course, is the Content Guy. (Us.)

    However, the paper did get one thing wrong. We are quoted as saying, "They (Wegmans) do a good job of communicating to their customers. They want to be more than just a source of food. They want to be a source of food, as it relates to eating."

    Now, either that is a typo or we didn’t say exactly what we meant, which would have been: "They want to be more than just a source of food. They also want to be a resource for information."

    Because that always has struck us as being one of Wegmans' greatest strengths - the trust that it has engendered in its customer base through constant and effective communications.

    Published on: February 23, 2004

    The Sacramento Bee reports that a new store is opening in the California capitol that will help US residents buy drugs from a Canadian pharmacy at cheaper prices than they would pay at home, a move that defies federal laws.

    The company running the store hopes that its operations will be small enough to "fly beneath the radar" and not get the attention of the US Food and Drug Administration (FDA), which has closed down a number of such reimportation companies while not doing anything about similar moves made by states and municipalities.
    KC's View:
    Of course, getting written about in the Sacramento Bee and MNB probably won't help the old "fly beneath the radar" scheme.

    The thing is that it is hypocritical for the FDA to close down businesses but not go after city and state governments doing the exact same thing. We can only assume that the FDA doesn’t go after governments because there's a big election in a few months. We suspect that could change, depending on what happens in November.

    Published on: February 23, 2004

    The Associated Press reports that Publix Super Markets "would be interested in looking" at Bi-Lo and Bruno's for possible acquisition from Ahold.

    Lee Brunson, a spokesman for Publix, said it was too early to speculate, but noted that both companies could fit into its expansion and growth plans.

    Kroger has been mentioned as another potential buyer for the chains, which Ahold announced earlier this month would be divested in its ongoing effort to retire debt in the face of its billion-dollar accounting scandal.

    Ahold bought Bruno's in 2001. The company operates 178 stores in Alabama, Florida, Georgia, and Mississippi and has 14,500 employees. Bi-Lo operates 292 stores in South Carolina, North Carolina, Georgia, and Tennessee, with about 27,000 employees.
    KC's View:

    Published on: February 23, 2004

    The Christian Science Monitor reports on the fact that Wal-Mart has become the object of both criticism and praise from various components of society.

    Lauded by many for its selection and low prices, it also is criticized for its labor policies, whether in its treatment of union organizers, alleged gender discrimination, and accused use of illegal immigrants.

    And the paper notes that much of Wal-Mart's advertising these days seems targeted at improving its public image, as opposed to actually selling stuff.

    In some ways, criticism could be good for Wal-Mart, Jim Hoopes, professor of business ethics at Babson College, tell the Monitor. "It may be that the corporate level could use some pretty serious self-examination," he says, "as to how well it is meeting its ethical responsibility to enable the front-line [workers] to live up to its 'values.'"
    KC's View:

    Published on: February 23, 2004

    The negotiations between the United Food and Commercial Workers (UFCW) union and Southern California's three major grocery chains - Kroger's Ralphs, Safeway's Vons, and Albertsons - continued over the weekend, described as "intense" by insiders and raising hopes that the four-month old strike/lockout could soon end.
    KC's View:
    We're reporting MNB this week from Southern California, and we've made it our business to go into a bunch of these stores. We can say that the view from inside them tends to be pretty depressing - service departments closed, shelves spotty with merchandise, and the aisles as active as a morgue on a slow day. And these stores were viewed on a Saturday afternoon.

    And then, you go to Trader Joe's, to Stater Bros., to Bristol Farms…and you see tons of customers, lots of sales, and a hubbub of activity.

    Published on: February 23, 2004

    • The Detroit Free Press reports that pizza manufacturers are engaged in a hunt for a low-carb pizza to compensate for a near-stagnant growth rate in the category.

    • Wal-Mart reportedly has instituted a broad series of price cuts on prescription medications in the Cleveland market, on reports that both Costco and regional chains were undercutting it on price.

    • There are published reports from Canada saying that the swelling population of Asian-Canadians there - there are more than 1.2 million, mostly in Toronto and Vancouver - means that there has been an increase in the number of mom-and-pop and regional ethnic chains that are changing the face of the nation's supermarket business.

    KC's View:

    Published on: February 23, 2004

    • Wal-Mart Stores announced that Coleman Peterson has retired as the company's head of human resources, and that it is looking for a replacement.

    KC's View:

    Published on: February 23, 2004

    The Associated Press reports that a Maine entrepreneur is looking to get into the doughnut business with an enterprise that will differentiate itself from both Krispy Kreme and Dunkin' Donuts.

    His secret weapon: Topless waitresses.

    The Madison, Maine, authorities are considering his application.
    KC's View:
    We don't make this stuff up, folks.

    What amazes us is that this guy is thinking about this up in Maine during February.

    Published on: February 23, 2004

    We reported last week that the Bush administration is looking at a new way to improve the nation's job numbers, especially in the manufacturing sector where statistics have not been looking good. According to the new Economic Report of the President, just sent to Congress, it has been suggested that fast food restaurant jobs aren't actually service jobs, but in fact are manufacturing jobs - because the employee is assembling the burger.

    N. Gregory Mankiw, chairman of the president's Council of Economic Advisers, says that properly classifying such workers is "an important consideration" in setting economic policy. And as we pointed out, Mankiw is the same guy who said in an interview the other day that outsourcing jobs to foreign countries was good for the US economy - which set off its own firestorm.

    MNB user Glenn Cantor wrote:

    Aren't these the same people who tried to claim that ketchup is a vegetable?

    Assembling a Big Mac isn't quite the same thing as assembling a Chevy.

    Another MNB user wrote:

    So burger making is just manufacturing. If that is the case, then it is just a matter of time before the voice at the drive-thru has a thick Indian accent and my food is handed to me by a robotic arm.

    MNB user Karmi Middlemiss wrote:

    How stupid do they think we are? Do they think the entire nation is unaware of the numbers games they play? When the day is done, we still feel no better about the job situation. Trouble is we no longer have any faith in our government's reports, either.

    And another MNB user chimed in:

    Wow. Did I just step into Orwell's 1984? That would be double plus
    ungood. Spin has been taken to frightening heights in the interest of winning that upcoming election. Then again, manufacturing news could be a new job in the manufacturing sector.

    Good line.

    And on the general jobs issue, one member of the MNB community wrote:

    We need more jobs. It could be a simple fix by further reductions in Capital Gain Taxes. I for one would roll more money out of commercial property investments if the Capital Gains was further reduced or eliminated. It is common for large companies to receive tax breaks for creating jobs. Just think of all the small commercial property investors if relieved of capital Gains all the cash freed up and the economical impact that would create.

    We wrote last week about Wal-Mart's Asda Group in the UK giving its employees $430 (US) bonuses, and noted that "the best way to get people to feel ownership about the place where they work is to actually give them a financial stake in the company…whether through stock ownership, profit-sharing, or some kind of bonus program." MNB also wrote, "We have to admit to thinking that four hundred bucks doesn't exactly rock our world…but hey, we're dealing with college financial aid issues these days and have a completely jaundiced view of the subject."

    MNB user Gerry Good wrote:

    At Super Fresh (a unit of A&P started in 1982) the associates got incentive payments of as much as $4000 (gross). They were really motivated to build sales and take care of customers at a reasonable cost. I know, I was the President and I passed out every check myself! Get common goals and the right management attitude and it can work.

    MNB user Steve Panza took us to task, though:

    Although (an average of) $430 may not be much to you, many others would be happy to get it. Before I started working for my current employer, annual bonuses for us grunts were $50 and a turkey. Management obviously received more. My wife's employer (along with many others) doesn't give bonuses.

    We wrote last week about the expansion of the single-serve-coffee-maker market, and noted that while a lot of companies seem to be investing in building these machines, we don't really understand the 'drink one cup' thing. One MNB user responded:

    We own at home a Nespresso espresso/cappuccino maker that uses 'pods' of pre-ground coffee -- one word: magnificent. Fantastic coffees with little time or effort, and NO MESS -- no grounds, no tamping, just quick and excellent (think Paris cafe quality) espresso.

    Please also remember that you at MNB control the quality of your own coffee -- because you make it. Those of us in offices are sentenced to the disgusting stuff that's brewed in the break room -- thin enough to read the paper through, with all the taste characteristics of last week's dishwater. If I had one of these pod machines, and I will if the price is reasonable, I could make as many cups as I could drink, right here in my office and never have to drink that revolting stuff again. It only makes one cup at a time, you say? No problem - I only drink one cup at a time. Lots of cups, but one at a time. (My sincere sympathies to those forced to drink machine/instant coffee by the way -- has there ever been potable coffee dispensed from a machine?)

    My worst work weeks are the first week back after a trip abroad -- not only is my inbox stuffed full, but it takes me days to get used to drinking crummy American coffee again.
    KC's View: