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    Published on: May 14, 2004

    The Chicago Tribune reports that now that Sears has opened two “Sears Grand” stores that are more than 200,000 square feet in size and include a selection of convenience groceries and cosmetics, it’s future plans for the format have been downsized.

    Sears CEO Alan Lacy told shareholders at the company's annual meeting that the retailer is considering alternative directions for the format, with the biggest future version being about 185,000 square feet and a smaller edition that would be 100,000 square feet.

    Lacy did not address how the product mix might shift at these new formats, though he did say they would be likely to carry wine.
    KC's View:
    This was predictable. Sears is too late to the party, and seems to be bringing too little to the table.

    Published on: May 14, 2004

    The Financial Times reports that a new study done in the UK by the Co-operative Group, a leading convenience store chain, suggests that consumers are more concerned about how their food is harvested and manufactured, reflected by a willingness to pay more for what they feel is “ethical food.”

    Eighty-four percent of those surveyed said they would pay “a littler extra” for such products, a marked increase from the 62 percent of consumers who said the same thing a decade ago.

    Nine out of ten people said that misleading food labels should be banned (as opposed to 62 percent in 1994), and eight out of ten people said that retailers should support food producers in developing countries (55 percent in 1994).

    "Today's consumers want and expect higher standards of integrity and they'll vote with their wallets to support or veto products," said David Croft, head of the Co-op chain. The company already has announced that it will stop “using chemicals such as phthalates and artificial musks in its household cleaning products because of their possible toxicity,” according to FT.
    KC's View:
    One can only hope that people would actually spend the money, as opposed to just saying that they would do so and then vote differently with their wallets.

    Published on: May 14, 2004

    Wal-Mart’s Asda Group announced that it will spend the equivalent of more than $700 million (US) to build four new stores this year and expand another 21 units.

    The company also announced that its same-store sales for the first quarter were up between six and eight percent, on overall sales that were up in the “high single digits.
    KC's View:
    The Asda-Tesco battle in the UK (or, as it is known in some quarters, the Tesco-Asda battle) represents one of the most fascinating, focused retailing struggle for dominance that you could ask for.

    Revealing, and vastly entertaining. Or, if you prefer, vastly revealing and entertaining.

    Published on: May 14, 2004


    • Burger King announced that it is rolling out a new line of salads, offering Fire-Grilled Shrimp and Fire-Grilled Chicken with either Garden or Caesar salads. Suggested retail price of the Fire-Grilled Chicken salad is $3.99, while the suggested retail price of the Fire-Grilled Shrimp salad is $4.39.


    • The Milwaukee Journal-Sentinel reports that Roundy’s Inc. and a former senior executive have been cleared of charges that they conspired in an insurance fraud. The accusations reportedly were made by another executive who had been fired by the company after a series of DWI arrests.


    • In the UK, Sainsbury has made a deal with William Morrison Supermarkets to buy 13 former Safeway Plc stores that Morrison acquired last March, plus a single Morrison unit. Total cost of the deal: $200.9 million (US).


    • Martin Grass, the former Rite Aid CEO, has signed a plea deal with the US Department of Justice that will have him spending as many as 10 years in prison after having pleaded guilty to conspiracy to defraud and conspiracy to obstruct justice. Grass also will pay $500,000 in fines.

    KC's View:

    Published on: May 14, 2004


    • The Food Institute reports that sales at the nation's grocery stores (consisting mainly of supermarkets) totaled $38.6 billion during March, up 3.3 percent from 2003. This brought cumulative 2004 grocery store sales to $113.7 billion, 4.7 percent more than a year earlier.

      Sales at all food and beverage stores during the month totaled $42.6 billion, up 3.7 percent from a year ago.


    • Target Corp. announced first quarter earnings of $438 million, up 25 percent from $349 million in earnings during the same period a year ago. Total sales were up 12.3 percent to $11.59 billion in the quarter, driven by a 14.0 percent increase at Target stores.

      Same-store sales for the entire company were up 6.6 percent.


    • French retailer Auchan announced that last year’s total sales were up 4.2 percent to the equivalent of $35.1 billion (US).

    KC's View:

    Published on: May 14, 2004


    • Unilever announced the appointment of John W. Rice as president/CEO of Unilever United States, Inc., while continuing in his role serve as president and chief executive officer of Unilever Bestfoods North America.


    • Starbucks hired Kenneth Lombard to be the company’s senior vice president and president of Starbucks Entertainment, charged with directing the chain's growing involvement in music and entertainment.

      Lombard formerly was with Magic Johnson’s development and theater company.

    KC's View:

    Published on: May 14, 2004

    We got a number of emails responding to yesterday’s story about privacy advocates attacking Wal-Mart’s Radio Frequency Identification (RFID) initiative.

    MNB user Glenn Cantor wrote:

    The following guidelines have been agreed to by all concerned parties planning to implement RFID. Also, Wal-Mart's requirement is to have pallets and full-cases tagged by Jan. 2005. It says nothing about individual products.

    The Auto ID Center's position on privacy standards:

    - Consumers have a right to know when & where EPC readers are being used, and which products contain tags;
    - - Consumers must be able to permanently deactivate the tags, without cost;
    - Consumers have the right to buy EPC tagged product without having their personal information (loyalty card data) linked to the product's EPC.


    And MNB user Marty Ramos wrote:

    We must remember that Wal-Mart is doing RFID because it's the next logical step in their supply chain automation process. They've already done everything else and created the most efficient supply chain in the industry (their out-of-stocks are less than 5%). Prior to the RFID mandate, they've had numerous other mandates (AS2, UCCNet, etc.). These and other efforts have served to automate their operations where it's tough to squeeze anything else out.

    How many other retailers can say these same things? Many ROI's for RFID build their case upon existing prerequisite technologies. Wal-Mart's implemented these already and are ready for the next step. This next step is a supply chain pilot, because there's really no other way to evaluate this stuff other than have it come in the door tagged.

    As for Wal-Mart tagging items...the three items being tagged (HP Printers/Scanner) are done via a customer removable label...where's the privacy issue?


    Another MNB user chimed in:

    Wal-Mart needs to take a lesson from the GMO folks. GMO advocates only talked about the advantages to the producers – higher yields, lower production costs, less pesticides, etc. They never translated the benefits to the consumer. Wal-Mart’s RFID must be shown to benefit the consumer in a tangible way, or they will be fighting an uphill battle they may actually lose.

    MNB user Dan Raftery offered:

    Like it or not, perception may be more important than reality here. The general public who are not involved in "the industry" already have a distorted perception of what we do with all that scan data. Next time you're at a gathering of regular folks, launch a line of conversation about supermarket scanners. I'll bet you a glass of wine that you'll hear something like "the stores know everything I buy."

    Look at the current battlefield of Genetically Modified foods. This week's decision by Monsanto is probably driven more by relentless reinforcement of the fear of franken-foods than by science. The smart fridge is probably doomed too, darn it. It will become way too scary for general public after special interest groups put it in their sights. It will be characterized as the spy in your house.

    Sometimes I think we live in a big Hollywood movie. Reality takes a back seat and we don't know who's driving the vehicle.





    We also got a number of emails about yesterday’s story concerning reimportation, and how it has entered the mysterious realm of presidential politics. Attacks by Democrats seem to be forcing the Bush campaign to back off their resistance to allowing prescription reimportation…which prompted a number of emails.

    One MNB user wrote:

    Safety is an issue on reimportation. But let’s call it what it really is PRICE CONTROLS IMPLEMENTED BY ANOTHER COUNTRY! If we want price controls then let’s just enact them ourselves and there will be no problem with safety. Our politicians are not brave enough to do this so they “hide” behind Canada.

    And another MNB user wrote:

    How is this going to help drug costs? My husband used to take Clariton when it was a prescription drug. Since it was a prescription, it was covered by his insurance and he had a $15 co-pay for a two month prescription. Now that it is over the counter, it costs nearly $3 per day. I don't see where this is going to help anyone, especially the elderly.




    We also got some reaction to the news that cholesterol-fighting prescription medicines could soon become OTC, as one MNB user wrote:

    Bring it on! It's good news to the consumer and a great move by the Bush administration to push for it. Those of us who are in need of such drugs look forward to the opportunity to purchase enough product so as we need not call the doctor each time our prescription runs out. More important to me is the option to purchase more than a months worth at a time… This is just plain good sense.




    Regarding the initiatives being taken by some wine manufacturers to find packaging that will appeal to young people and that has nothing to do with bottles or corks, MNB user Joe Devine wrote:

    My wife and I are "members" at Kendall Jackson, and received our first Pepi screw top last night. Having nothing better to do, we opened it. It was good, very good. I didn't take tasting notes except to note that the bottle was empty before we went to bed.

    My initial thought was this was some cheap wine they were peddling due to the screw top, so I better drink it fast. I was wrong.





    And regarding the ongoing discussion about how kids like sugary cereals because it makes them feel empowered, one MNB user wrote:

    I hate to be one of those "back when I was a kid.." types, but we boomers were probably in the golden age of sugary cereals and heavy promotion of them when we were kids. Great prize offers for buying/eating tons of Cap'n Crunch, cereals called SUGAR Smacks, the introduction of Pop-Tarts, sugary "Space Food Sticks." Why wasn't childhood obesity on the radar then? Because we were told to "Go outside and play"--we ran around, went swimming, played baseball in the neighborhood. We WALKED or rode our bikes to school, we had no computers or video games, and we had only 3 TV channels to grab our attention. It's a simple equation--whether it's carbs, protein, or fat, if you consume more calories than you burn, you gain weight. The solution has to focus on both parts of the equation.




    David Livingston had some thoughts about the layoffs taking place at Shaws now that Albertsons owns the company:

    I just found out that two of my colleagues have been laid off from Shaws who work in site location research. Normally I would just say "tough cookies," but I've gotten to know the people in location research at both companies and the Shaws people are pretty good at what they do. I think Albertsons should take a good look at how successful these guys were at Shaws and then compare that with the sophmoronic location research that lead to the closings of dozens of Albertsons stores in Louisiana and Texas.

    The Shaws people are light-years ahead of the Albertsons crew when it comes to location research. Bad move Albertsons - moves like that will come back to haunt you. One of the main reasons for buying out a company is so you can tap into its talent to strengthen your company - not make it worse.





    We had a story earlier this week about rising dairy prices causing a gallon of ice cream to be roughly the same as a gallon of gas, which led MNB user Gretchen Murdock to write:

    I work with a major dairy company that produces milk and ice cream, and is struggling with the increased cost of raw product. There are several factors that have contributed to these increases.

    Two major drivers of milk prices are butter and cheese. Increased demands for both products are driving prices upward. Low carb diets are helping to increase this demand.

    Dairy farmers have been hit hard, experiencing 25-year lows in milk pricing in the last year. This has resulted in fewer farms, which has reduced milk production by 2%, as compared to last year. Fewer cows are available for replacement herds due to the closing of the Canadian border because of mad cow disease.

    As you have said in your article, all factors coming together have contributed to the increased costs of all dairy products, including ice cream. And, in fact, the low carb diets are one of those factors. Even with the increased costs, there still is nothing like a nice bowl of ice cream while watching TV.

    Especially when you can’t afford the gasoline to go anywhere.





    We noted earlier this week that Wal-Mart’s new store in Fairbanks, Alaska, seems to pretty successful, which led one MNB user to write:

    Interesting to note, I spoke with my daughter this past weekend (who lives in Fairbanks) and she was telling me about the Wal-Mart opening. Her take is that they are pretty limited prior to this opening on their shopping selection, and the prices. Formerly, she said her only choice was Fred Meyer. Now that Wal-Mart has come to town, she is hoping the competition will be good for the consumer.

    As you are probably aware, everything is expensive in Alaska, so Wal-Mart seems to be a welcome relief. She said the parking lot was incredibly packed on opening, and is every time she drives by. I would say, Wal-Mart's coming to town is all in the perspective.


    It always is.
    KC's View:

    Published on: May 14, 2004

    We ended up leaping into summer weather this week in New England, as suddenly we were experiencing temperature on the eighties…which called for a wine equally as summery.

    And we discovered, from the Francis Coppola Diamond Collection, a 2003 Sauvignon Blanc that, served iced cold, was just delicious – with a strong citrus flavor that went great with some marinated chicken or shrimp. Some won’t like the initial taste of grapefruit that comes through when you first open the bottle…but it lessens a bit with time. This is a terrific and highly affordable summer wine…

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