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    Published on: April 6, 2004

    The Washington Post reports that a study done by the University of Michigan Business School suggests that Americans are thoroughly disenchanted with customer service levels in the US.

    The average score for complaint handling, according to the survey, is 57 (out of 100) - not a very good score. Local telephone companies got the lowest score…but supermarkets, in fact, got the highest, at 76 points.

    The biggest problem seems to be that customer service has gotten so bad in the US that it is driving people away. Part of the issue - as retailers have sought to reduce labor costs and increase efficiency, customer service inevitably took the biggest hit in the budget cutting.

    Ronald C. Goodstein, a professor at Georgetown University's McDonough School of Business, told the Post that research suggests that 40 percent of customers desert companies because of poor service.
    KC's View:
    Here's the deal. If you are a retailer and you really believe that customer service isn’t the most critical part of your business, then you immediately should order and read Feargal Quinn's "Crowning The Customer." (You can get it from Raphel Marketing at www.raphel.com, or from Amazon.com…and we're not just suggesting this because we had the opportunity this week to spend time with both Feargal and Eamonn Quinn, and to walk their extraordinary stores.)

    If, after reading this primer on customer service, you still feel that this is a low priority, we'd suggest you make plans for retirement. Sell the business, close it down, divvy up the money to the family or the shareholders…just get out.

    Because the retailing business is the service business…no matter what kind of store you operate and what demographic you serve.

    If you believe you are just in the business of buying product, getting slotting allowances, and then selling product - without being connected to the needs and desires of the shopper - then you are a fool. And it is no wonder that you’re losing market share and the respect and loyalty of your customer base.

    Published on: April 6, 2004

    The Associated Press reports that Wal-Mart Canada employees in Jonquiere, Quebec, voted 74-65 not to unionize under the United Food and Commercial Workers Union (UFCW).

    While Wal-Mart Canada maintains that the vote clearly indicates that its employees prefer to avoid the yoke of unionization (our turn of the phrase, not Wal-Mart's), the UFCW says it plans to reapply for a vote in a few months. "We're not going away," said Michael J. Fraser, UFCW Canada's national director.

    With the vote, Wal-Mart remains a completely non-union company.
    KC's View:
    Forgive us, but 74-65 doesn’t strike us as a huge and comfortable margin for Wal-Mart, nor an insurmountable problem for the UFCW.

    And wasn't it less than a year ago that Wal-Mart employees in a Manitoba store voted 61 to 54 against unionization?

    Nine votes out of 139 in one case. Seven votes out of 115 in the other.

    Sounds to us like Wal-Mart had better do what it can to keep those folks in Canada happy…because the slightest affront to them could result in changed votes and eventual unionization.

    And here's where it gets difficult, even for the likes of Wal-Mart. After all, how hard is it to keep its fingers in every pot, making sure that the concoction is cool and nobody is trying to stir up heat and trouble.

    Published on: April 6, 2004

    Kroger and the United Food and Commercial Workers (UFCW) reportedly have agreed to extend the contract that expired last weekend, and to continue talking until their contract dispute is ended and a new deal is arrived at.

    The talks affect two Houston-area locals representing 10,800 union workers.

    Kroger reportedly is anxious to avoid a repeat of the four-month strike that crippled the chain in Southern California. As in California, the issues being debated are benefits, especially the sharing of heath care costs.
    KC's View:

    Published on: April 6, 2004

    The Wall Street Journal reports on a shift by marketers to attract older consumers, noting that "78 million Americans who were 50 or older as of 2001 controlled 67% of the country's wealth, or $28 trillion" and that "households headed by someone in the 55-to-64 age group had a median net worth of $112,048 in 2000 -- 15 times the $7,240 reported for the under-35 age group." Within five years, the WSJ writes, "about a third of the population is going to be at least 50 years old."

    Which has led companies such as Sony, Ford, Target, Virgin Megastores, Disney, Procter & Gamble and Anheuser-Busch to create products or store experiences that will appeal to this demographic.

    These older Americans, or "zoomers," have several things in common, according to the WSJ. They tend to have money, having worked hard. They're willing and able to spend it, become acquainted with the notion of self-indulgence back in the seventies. The kids are gone. And, these consumers appreciate it when products are designed and marketed to their specific needs and desires - including the illusion that they can keep themselves from getting old.
    KC's View:
    Of course, finding out on the front page of The Wall Street Journal that you’re just months away from being considered an "older American" has got to be one of the more depressing things that has happened to us in a while.

    Then again, it beats the alternative.

    Not to be overly critical here, but we wonder how many supermarket retailers will read this story and say, "Gee, I wonder how I can adjust my marketing message and merchandising to appeal to this demographic group?" We're not talking about just buying products that appeal to them - given the right promotional budget and slotting allowances, we know that products for these folks will find their way into the supermarket.

    No, we're talking about pro-active marketing at the store level.

    Too often, supermarket retailers believe that they cannot make the sorts of changes that a Virgin Megastore or a Disney can. We're not sure that's true.

    Published on: April 6, 2004

    Public pension funds that own just two percent of Safeway Inc. stock, met yesterday with the representatives of institutional investors that hold 55 percent of Safeway's stock, as they looked for a way to gain backing for the pension funds' move to oust company CEO Steve Burd.

    New York State Comptroller Alan Hevesi reportedly is spearheading the campaign with the controllers of at least three other states. Hevesi said the group wants a change in Safeway's management structure, as well as the election of a more independent board of directors. Hevesi called Burd's hard-line stance during the recent Southern California grocery strike "just blather and nonsense."
    KC's View:

    Published on: April 6, 2004

    JC Penney announced yesterday that, as expected, it has sold its Eckerd drugstore operations to CVS and Canada's Jean Coutu Group for a total of $4.53 billion (US).

    If approved by regulators, Coutu will acquire about 1,540 Eckerd stores, mostly in the Mid-Atlantic and Northeastern region of the United States, for about $2.375 billion.

    CVS, the nation's second-largest drugstore chain, gets 1,260 Eckerd stores, most of them in the South and Midwest, as well as the company's mail order Pharmacy Benefit Management business, for about $2.15 billion.
    KC's View:
    The challenge for both companies will be to refurbish Eckerd's moribund reputation and try to put some life back into a badly diminished brand. Locations and scale will help, but both acquiring retailers better be prepared for a long, hard slog.

    Published on: April 6, 2004


    • Following its expansion into providence, Rhode Island, and other parts of the Ocean State, Peapod reportedly plans to roll out its e-grocery service in Manhattan.

      The company already serves 13 regional markets, including Chicago, Boston, Washington, DC, and Long Island. This move will bring the Ahold-owned division into direct competition with the vaunted FreshDirect.com.

    KC's View:

    Published on: April 6, 2004


    • Publix Super Markets announced that it plans to spend about a half-billion dollars to open 57 new stores this year, as well as remodel and expand existing stores and enhance its IT capabilities.


    • Kohlberg Kravis Roberts (KKR), the US-based private equity firm, says that it is not interested in making a bid for Sainsbury.

      The statement follows a report last weekend saying that KKR was beginning to formulate a bid for the chain.


    • Ahold -owned Giant Food announced that it will work with fair trade certifier TransFair USA to offer five varieties of Fair Trade Certified coffee in its Giant and Super G stores.

      Fair trade products guarantee farmers are paid a fair price, more than half the Fair Trade Certified coffee sold in the US is also certified organic.


    • The Wall Street Journal reports this morning that the British Broadcasting Corp., "which licenses some of its children's-television characters for use in packaged foods, is cracking down on the sugar, salt and fat content of products that bear those names and images."

      This move actually combines two different issues - childhood obesity and the problems of marketing to children - and what some organizations, especially a publicly-owned corporation like the BBC, see as their responsibility to take the high road.


    • Supervalu has been hit with a $25.35 million personal injury lawsuit by a Virginia supermarket retailer who has retained OJ Simpson's former attorney, Johnnie Cochran, to represent him.

      The suit charges that Johnny Johnson, the owner of Marketplace Holdings - a four-store operator - has suffered health problems that include high blood pressure, bleeding ulcers, shingles and depression because Supervalu refused to help him acquire another company.

      Supervalu says the suit is false, and that it wouldn’t loan Johnson money because of debt problems.

    KC's View:

    Published on: April 6, 2004

    …will return shortly.

    We're headed back to the US today (assuming, after all we've eaten, the plane has a big enough cargo hold in which we can fit), and should be back on a more regular schedule tomorrow.

    Thanks for all your patience.
    KC's View:

    Published on: April 6, 2004

    By Kevin Coupe

    Apple Computer may be to the likes of IBM, Dell and Compaq what independent grocers and small/regional supermarket chains are to the likes of Wal-Mart.

    And while it admittedly isn't a perfect metaphor, a visit to the Apple Store - one of the newest in the fleet, and certainly the biggest - suggests that there is a lot that food retailers can learn from the computer retailer/manufacturer.


    In addition to MorningNewsBeat, we also contribute longer pieces to a number of magazines; it gives us the opportunity to ponder big issues in an environment less pressured than the everyday deadlines of our usual venue.

    Through the gracious assent of the editors and publishers of these various periodicals, our contributions now also will be available on an occasional basis here on MorningNewsBeat. This isn’t meant to be a replacement for the magazines; quite frankly, you can read them there first. But by allowing us to reprint them, it is hoped that these articles will have a new and expanded audience.


    Reprinted with permission, FMI Advantage, Food Marketing Institute, 655 15th Street, NW, Washington DC 20005.

    On a recent trip to Chicago, I was wandering up Michigan Avenue when I encountered what can only be referred to as the Taj Mahal of computer stores - The Apple Store, a two-story monument to the vision and innovation as practiced by one of the world's most famous names in computers.

    Famous, but hardly most successful.

    Apple, in fact, has a market share that tends to hover below four percent, while companies like Dell and Compaq take the lion's share of personal computer market share. Over the years, Apple and its Macintosh computers have more and more been pushed into becoming niche products - highly desirable to a small group of obsessive Mac users, but by no means the power player that it might have been.

    In fact, despite the fact that Apple is a global, public company, known by millions of people, you might say that it is something of an independent, doing battle with behemoth companies with far greater sweep and resources.

    Sound familiar?

    It is my contention that Apple Computer is to the likes of IBM, Dell and Compaq what independent grocers and small/regional supermarket chains are to the likes of Wal-Mart.

    And while it admittedly isn't a perfect metaphor, my visit to the Apple Store - one of the newest in the fleet, and certainly the biggest - convinced me that there is a lot that food retailers can learn from the computer retailer/manufacturer.

    (Full disclosure: I am a Macintosh devotee, having worked on one for more than a decade. Given the option, I will never own a computer made by any other company. And, in fact, I am part of a Mac family: I work on an old G3 Powerbook, my wife works on a G4 Titanium PowerBook, my 17-year-old and 14-year-old sons have new iMacs (the kind that looks like a lamp) and my seven year old daughter works on a somewhat older iMac. There's also at least one iPod in the house. Not that any of this affects my objectivity…)

    So using the Michigan Avenue location as a model, let me suggest four things that mainstream and independent food retailers can learn from the Apple store:

    • Doors Wide Open. By their very nature, the front of most supermarkets (and even supercenters) tend to be big walls punctuated by relatively small entrances and exits. And when there's glass up front, it tends to be obscured by large sale banners that stress the low prices of this or that.

      Now, this isn’t something unique to the Apple Store among nonfood retailers, but it does a particularly good job at exposing the contents of the store through large glass windows, and with wide open doors that show a wide range of hardware that beckon the casual shopper to stop in. It's like looking into a particularly cool computer lab.

      Now, don't say that most supermarkets don't have to do this because they are destinations to which most people drive in their cars, therefore making the front window irrelevant. Particularly in this competitive environment, that's arrogant. Put a chef, or the bakery prep area in the front window - and start romancing the customer even before they enter.


    • Engage The Senses. Once inside the Apple Store, virtually every piece of hardware the company makes is on display - and out there for people to touch, play with, test. That goes from the least expensive i-Pod to the most expensive 17" laptop…and includes video conferencing capabilities, music downloading, etc…It's the old 'kid in a candy shop" experience - and it works.

      The applications for the supermarket business are obvious, and a lot easier to capitalize on. Since supermarkets are in the food business, it makes sense to capitalize on that fact - with great-smelling, great looking, and great tasting food everywhere you look. It means sampling - aggressive, relentless, omnipresent sampling. (You know - like Costco does.) Too few food retailers act on the proven theory that if it smells good and tastes good, people are far more likely to buy it. And in a supermarket, the ticket might by $5, as opposed to $500 or more at the Apple Store, and therefore have a much lower barrier to a possible sale.

      Amazingly, there are supermarkets in this country that have all the charm of a hospital ward.


    • Create Community/The Genius Bar. One of the things that effective retailers do particularly well is create a sense of community, a common bond that ties together all that work and shop there. (Whole health stores are expert at this, since they tend to hire people who are living the life, not just looking for a job. When a shopper ventures into a Wild Oats, for example, he or she tends to be able find help from people who share a certain outlook and commitment.)

      Beyond the fact that anyone who uses Apple products generally feels like part of a small community by virtue of the fact that we know we're outnumbered, the Apple Store uses two strategies to keep that feeling alive and even enhance it.

      On the second floor, up a beautiful glass staircase, is a small, open theatre in which seminars and interactive product demonstrations are held, and where videos about various products are running when there's nothing else going on.

      And, there's the "Genius Bar," a long counter staffed by a number of black-shirted computer-savvy types who are there to answer a wide range of questions, and even perform simple repair operations on computers that are brought in. These folks are smart, patient and personable - wonderful ambassadors for the Apple experience.

      Couldn't your store benefit from some version of the Genius Bar?


    • Get 'Em While They're Young…Or Idle. The Apple Store also features a small Internet café with more than a dozen computers, where people can just stop by to check their email. And, there's a kids corner with a half-dozen machines on which children can play with the latest software.

      These serve two purposes. One, they get people to stay in the store longer, giving it the sense of being that "third place" (other than the home and workplace) that Starbucks' Howard Schultz likes to say is a core value of his company. And, the more you get people interacting with the merchandise, the more likely that they may become converts if they use other brands, or upgrade their current equipment if they already are Mac users.



    The sum of all these individual strategies is that they clearly establish what Apple is, and what it is not. It accepts its role as a small player in the industry, but prides itself on being innovative both in terms of the technology it creates and the retailing environment in which it sells its wares. There's nothing defensive about the Apple Store, no sense of desperation or persecution complex about the bigger, badder companies that dwarf it - a complex common to many supermarkets that compete with supercenters.

    Because Apple knows what it is, the company has decided that customers will have to come to it…not the other way around. Apple isn’t going to focus on prices, or sales, or cheap knockoffs, just to build market share at the expense of its role as innovator and thought leader.

    That's a key learning for supermarkets, which often descend to lowest common denominator marketing at the drop of a freestanding insert.

    Next time you're in Chicago (or any other place that has one - there are more than 70 of them around the country, though not all as grand as the Chicago version), stop by the Apple Store. You could walk away with more than just a computer.

    For more information on FMI Advantage, go to:

    http://www.fmi.org
    KC's View:

    Published on: April 6, 2004

    Lovely final meal last night in Dublin's Temple Bar district, which thankfully was a little quieter than usual because it was a Monday night.

    (One of the things that we've noticed that has changed about Dublin since we lived here back during the summer of 1977 is the youth of the city…during the evenings, especially, the streets seem overrun by roving packs of young people looking for the next great party. A surprisingly high percentage of these young people seem to be females - dressed to kill, and moving through the city with a level of confidence that seemed rather daunting. Even the young men seemed to be giving them space, as one would a great white shark.)

    We went to an interesting little restaurant called Eden that overlooks Meeting House Square - one of several modern buildings nestled among the antiquities. We had an amazingly succulent appetizer - oven baked vine tomatoes stuffed with lentils, ricotta cheese, basil and parma ham - that simply melted in our mouth. The fish pie was hearty peasant food, thick with chunks of cod, salmon, prawns and mussels, with some veggies thrown in for good measure. The wine was a tangy little number, a 2002 peter Lehman Grenache from Australia, and dessert was a crème brulee made with white grapes and ginger.

    Then it was a walk home along the Liffey in the cool night breeze, thinking about the meals we've eaten and people we've met over the past week on the road. In coming days, we'll be musing more about those here in this space…

      Reading departure signs in some big airport
      Reminds me of the places I've been.
      Visions of good times that brought so much pleasure
      Makes me want to go back again…

    KC's View: