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    Published on: September 20, 2004

    Next Monday, September 27, we’re going to try something new for MorningNewsBeat - a special toll-free audio conference call during which members of the MNB community can come together to discuss an important subject – in this case, the obesity/nutrition issue, and what the food industry can and should do to use it as a fulcrum for marketing and merchandising strategies.

    The audio share group is sponsored by Heaven’s Bistro – the official frozen pizza of MNB World Headquarters – and will be hosted by Kevin Coupe, MNB’s “Content Guy.

    Here’s how it will work. The share group will be restricted to a limited number of participants, and you can apply for membership by sending an email to: . Please tell us your name, title, company and email address.

    Once we finalize the size and composition of the group, we’ll send you an email giving you a toll-free number to call and a password to use to access the conference call.

    The call is scheduled to take place on Monday, September 27 at 1:00 pm EDT/10:00 am PDT. It will last between 30 and 45 minutes…and we’ll attempt to use it as a forum that will, to use one of our favorite phrases, generate big ideas for thought leaders.

    We hope it’ll be fun, engaging and enlightening…sort of like a sports radio talk show, but without the scores and commercials.

    So if you’d like to join us, send us an email…and hopefully, we’ll talk to you soon.
    KC's View:

    Published on: September 20, 2004

    Procter & Gamble is being attacked by two conservative Christian groups over the company’s opposition to a local statute that would exempt gays and lesbians from civil right protections.

    The groups – Focus on the Family and the American Family Association – say that by opposing the statute, P&G is implicitly endorsing same sex marriage, which the two groups are trying to ban via a proposed amendment to the state constitution. "For Procter & Gamble to align itself with radical groups committed to redefining marriage in our country is an affront to its customers," said Dr. James C. Dobson of Focus on the Family. The groups are calling for a boycott of P&G products.

    Procter & Gamble said through a spokesman that the two groups were connecting unrelated issues – that opposing a law that would prevent discrimination against gays and lesbians is not the same as supporting gay marriage.

    "The issue that these organizations are trying to put in our laps is one that we have not taken a position on," said Doug Shelton, a spokesman for the company.
    KC's View:
    Shame on these groups for engaging in the demonization of P&G for reasons that are at best specious, and at worst suggest these groups’ utter cynicism. They are trying to paint P&G into a corner that the company clearly and rightly wants to avoid.

    P&G has both customers and employees that are gay, and by opposing a local statute that would allow these people to be discriminated against, all the company is doing is standing up against bias. Compassion, apparently, that is beyond the grasp of these groups.

    We only hope that P&G’s management does not allow itself to be swayed by this nonsense. The company has the moral high ground on this one…and the groups that are trying to victimize it ore standing on a kind of moral quicksand.

    Published on: September 20, 2004

    R. Randall Onstead, who took over as president of Safeway’s embattled Dominick’s division in Chicago just nine months ago, resigned from the post last Friday.

    Onstead said he was quitting because, after the recent death of his father – Robert Onstead, the founder of Randall’s Food Markets in Texas – he needed to administer the family’s portfolio of investments.

    Onstead will be replaced by Bruce Everette, executive vice president of Safeway, who will add leadership of the Chicago division to his responsibilities.

    Safeway had tried to sell Dominick’s after several years of declining sales and a history of fractured labor relations. However, when it couldn’t get what was considered an appropriate deal, it recommitted to the chain and named Onstead to the president’s job. Onstead had promised to improve the company’s relationship with employees and expand and improve the division in a way that made sense for local consumers.
    KC's View:
    While Onstead hadn’t made everyone a believer in his ability to turn the division around, at some level we suspect he may have had a fighting chance because he wasn’t a longtime Safeway insider. Everette, we suspect, will have a tougher job convincing employees of his good intentions, if for no other reason than he is keeping his Safeway corporate job.

    This doesn’t sound like a positive scenario for Dominick’s employees, and nor for the chain’s long-term prospects.

    Published on: September 20, 2004

    The Los Angeles Times reports that the US Attorney’s office in Southern California is offering immunity from prosecution to Ralphs employees who crossed picket lines during the strike/lockout there and worked under false names and Social Security numbers.

    The condition for immunity is that the employees who come forward have to help the government with its investigation of how the scenario came about, and perhaps help it win indictments and convictions against managers and executives at the chain.

    Ralphs reportedly forwarded a letter from the US Attorney guaranteeing the immunity to all its employees, while also sending its own letter to employees promising that there will not be repercussions against employees that cooperated with the federal probe.
    KC's View:

    Published on: September 20, 2004

    Fascinating piece this morning in looking at Wal-Mart’s investment in radio frequency identification (RFID) technology and what it means to the retailers with which it competes.

    “What do you call it when a company announces a multibillion-dollar technology initiative with no preexisting infrastructure, no software code and an 18-month deadline to delivery?” Salon asks. “In most cases you'd call it a recipe for disaster. In the case of Wal-Mart, a company with the power to force others to follow its technology agenda, you'd simply call it ‘tough love.’”

    Or, in Wal-Mart’s case, standard operating procedure.

    While noting that a number of manufacturers have gone along with Wal-Mart’s demands because they have decided that it is imperative that they “set their strategic clocks to Arkansas time,” Salon also notes that other major food retailers such as Safeway, Kroger and Albertsons have made the same determination and set their sails to head in the same direction.

    Salon poses the question: “But is it really the right direction for anyone besides Wal-Mart? Some industry observers suggest that supermarket chains that are attempting to survive in a Wal-Mart world may find that no matter how many technological ‘efficiencies’ they introduce, they will never be able to challenge Wal-Mart in the area where it remains supreme -- price.” And, in fact, Wal-Mart’s sheer size makes it almost impossible for these other retailers to match Wal-Mart’s level of investment.
    KC's View:
    We’ve speculated for a long time that RFID is actually Wal-Mart’s master plot to drive every other retailer into bankruptcy. The Salon piece has done nothing to disabuse us of that notion.

    The other important part of the Salon piece is that it reaches the conclusion that Wal-Mart’s competition may want to focus on things other than RFID and low prices if they are to be effective. Like, maybe, better customer service. Doing a better job stocking products that people want to buy rather than those that manufacturers want to sell. And finding new and innovative ways to be relevant to the customer’s needs and desires.

    Published on: September 20, 2004

    Market research firm Mintel has released a study reporting that vegetarian food sales have reached $1.6 billion, double the amount of just six years ago. For purposes of this study, vegetarian foods were defined as those products that directly replace animal or meat-related products, such as soy milk.

    In addition, MSNBC reports that the Vegetarian Resource Group “estimates that 2.8 percent of adult Americans consider themselves vegetarian, up from 2.3 percent in a 2000 survey. Another 6 percent to 10 percent of the population said it was ‘almost vegetarian’ and another 20 percent to 25 percent are ‘vegetarian inclined,’ or intentionally reducing meat in their diet.”
    KC's View:
    Eight out of ten people, according to MSNBC, say that meat should be part of a healthy diet, and more than seven out of ten people have changed their eating habits because of health concerns. While we’re not sure that there’s a threat of pervasive vegetarianism breaking out, we do think there is pretty good evidence that this is a category around which more retailers ought to be strategizing…especially as baby boomers get older and probably even more self-involved.

    Published on: September 20, 2004

    The Times of London reports that Tesco is planning to get into the mortgage lending market, offering the service through the company’s UK stores.

    The mortgages would be offered through Tesco Personal Finance, the retailer’s existing partnership with the Royal Bank of Scotland. The deal is expected to be in place by the end of the year.
    KC's View:

    Published on: September 20, 2004

    • reports this morning that Smart & Final CEO Ross Roeder has said that the company may bring its non-membership warehouse format to the northeast US sometime in the next two or three years, though he also said that there remains “room to grow” in its west coast markets.

    • The UK’s William Morrison Supermarkets has agreed to sell 10 of the Safeway Plc stores that it acquired earlier this year to Tesco for the equivalent of $157 million (US).

    • Still trying to recover sales and market share in the Netherlands in the wake of its accounting scandal, Ahold’s Albert Heijn division announced a new round of price cuts, trimming between five and 25 percent on about 1,000 private label products.

    • Fast food chain Jack in the Box has announced that it may open as many as 300 JBX units – stores that offer healthier food than its traditional outlets, in a so-called “fast-casual” setting – over the next five years, with expectations that the JBX concept will account for as much as 15 percent of its fleet.

    • The Wall Street Journal reports that the University of Michigan's preliminary report on consumer sentiment for September is down to 95.8, from 95.9 in August and 96.7 in July.

    • The Washington Post this morning reports that, frustrated with the low price of potatoes, a Maine farmer has decided to start producing small batches of vodka that he believes can be sold at a premium price.

      It would be Maine's first commercial distillery. In addition, the Post notes, “there's thought to be only one distillery in the United States that currently makes vodka from potatoes,” in Rigby, Idaho, where Silver Creek Distillers produces the Teton Glacier, Blue Ice and Zodiac brands.

    • When R. Michael Mondavi resigned last week as a vice chairman of Robert Mondavi Corp., he was awarded a severance payment of $1.5 million – plus up to 50 cases of any wine he wants from the Mondavi cellars.

    KC's View:

    Published on: September 20, 2004

    In week two of NFL Football action…

    NY Jets 34
    San Diego 28

    St. Louis 17
    Atlanta 34

    Pittsburgh 13
    Baltimore 30

    Houston 16
    Detroit 28

    Chicago 21
    Green Bay 10

    Denver 6
    Jacksonville 7

    Carolina 28
    Kansas City 17

    San Francisco 27
    New Orleans 30

    Washington 14
    NY Giants 20

    Indianapolis 31
    Tennessee 17

    Seattle 10
    Tampa Bay 6

    Cleveland 12
    Dallas 19

    New England 23
    Arizona 12

    Buffalo 10
    Oakland 13

    Miami 13
    Cincinnati 16
    KC's View:

    Published on: September 20, 2004

    We had a piece on Friday about how A&P-owned Farmer Jack Food Markets in Michigan and Ohio have instituted a new promotional program designed to build traffic and sales – the company says that if a customer finds a product in the store that is not fresh or is out of date, the product will be replaced free.

    The program, called “Take The Fresh Challenge,” is part of a freshness-oriented strategy launched by the company more than a year ago.

    Our comment: Just out of curiosity, under what circumstances would a supermarket not take back and replace a product that was either not fresh or past its sell-by date?

    Now, if the company actually is saying that if you find a non-fresh or out-of-date product in the store, it will give you a fresh version of that product for nothing, that’s a different matter. (Though to be honest, it doesn’t seem like such a big deal, either.) But that’s not what the company press release says.

    What Farmer Jack is offering to do, it seems to us, is the bare minimum of what any supermarket should do under normal circumstances. If it was doing less before this, it may explain why the chain has been having its share of competitive problems.

    We got a number of emails like the one sent to us by MNB user Jamie Bradburn:

    A&P's Canadian divisions played that angle up heavily a couple of years ago, but a Toronto newspaper discovered an odd side effect - people were going through their stores and digging through the nooks and crannies of every shelf to discover outdated merchandise, racking up significant amounts of free food. I think some stores may have eventually set limits as to how much bad merch one could turn in. I can't wait to see the crowds of people huddled around the cheese shelf next time I'm in a Farmer Jack.

    Another MNB user chimed in:

    What Farmer Jack is doing is a repeat of a program the had to put a stop to a few years ago because it backfired on them. Seems "professional" customers would come into the store, find something like $10,000 of out of date product at 3am, and then the poor night manager had no choice but to let them walk out with $10,000 worth of free product.

    Believe me, finding $10,000 of outdated product in an A&P operation is probably not too difficult. I'm sure A&P will have some severe restrictions in order to keep from being taken by this promotion. In the end it doesn't really matter what name A&P puts on their stores or what promotions they have. They are still A&P and the result will always be the same. This company has been going backwards for several years and there are no signs of this trend slowing.

    MNB user Dennis Sirianni wrote:

    Talk about reducing the number of employees needed to run a store! Sounds like A&P is onto something, maybe they could extend the thinking to the check-out, if you bag your own groceries, they will throw in the plastic bag Free!


    Even now, someone may be taking that suggestion seriously…

    Another MNB user wrote:

    Are you kidding me? Take The Fresh Challenge almost implies that it would be FUN to get home from the store with out-of-date yogurt. What is the incentive they're going for here - If you find some wilted lettuce (and we
    think you just might!) it's a win-win for everyone!!

    Give me a break. If you want to impress people, how about "If you find spoiled product, then you can shop here free for a year." To me, that says, first: We DON'T think you'll find anything but the freshest product in our
    store. And second, if you DO, it would be such a major screw-up, that we're willing to show you just how sorry we are and how much we value your business.

    If you're truly "fresh obsessed" (an A&P slogan), then doesn't the latter idea make more sense?

    Not unless you have utter confidence in your ability to deliver on the freshness promise. And we suspect they don’t.

    One member of the MNB community wrote:

    If they were looking for a way to build their fresh image and build customer loyalty why not just continue to promote the “We’re Thinking Fresh” campaign through more in-store demo’s, better merchandising or through promotional sales. I know these ideas are probably rudimentary, however, anything would have been better than the statement they are making with this campaign.


    And yet another MNB user chimed in:

    Get real, Farmer Jack. What's the big deal about replacing a product that's not fresh? I agree, it shouldn't be in the store in the first place! Our local Meijer store had 8 containers of cottage cheese that were 5 days past the sell-by date. I put the containers on the floor and told the dairy supervisor about them. When I returned to that section about 20 minutes later, those containers were back in the refrigerated case!

    You've stated the obvious about freshness, so what exactly does Farmer Jack hope to achieve by this "Fresh Challenge" strategy? Are they just searching for ideas to bring customers back into their stores? Aren't executive supposed to have some common sense? I think it's time they have a chat with their marketing team if this is the best they can come up with.

    MNB user Murray Raphel offered a relevant anecdote:

    Interesting story on Farmer Jack giving an item "free" if it's out of date.

    Reminded me of the time I visited one of the Woolworth stores in New Zealand (not the defunct 5&10 but the supermarket chain.)

    I saw signs for "Our Double Guarantee". I asked what it meant.

    They said, "If you buy ANY perishable from us, bring it home and are not satisfied with what you bought, bring it back and we'll give you a new item AND refund your money."

    "WOW," I said. What a positioning statement. They had their own, and effective USP. When I came home I went to a local independent and said he needed something to position himself separate and apart from the chain store competition. I told him to use this idea since he could then say he was so proud of the freshness of all his perishables that he was the ONLY one to offer this guarantee.

    He looked at me and said, "Do you know how many people will return what they bought!"

    "Wait a minute," I replied. "Are your apples mealy? Are your bananas all overripe? Does your seafood had a funny odor?" He said, "Of course not. But you don't known my customers," and walked away.

    Oh well, another great opportunity that won't knock twice.

    We also had a story on Friday about how researchers at the University of Western Ontario have published a study saying that one beer a day can provide drinkers with the same benefits that red wine is believed to offer.

    More than one beer apparently inhibits the antioxidant properties of beer. But one beer can fight the “free radicals” in the body that can cause cancer and heart disease and a host of other ailments.

    We also noted that the study was funded by Guinness and Labatt.

    MNB user Jack Ericsson wrote:

    A Guinness-funded study that states “one beer a day can fight the “free radicals” in the body that can cause cancer and heart disease… Brilliant!

    Hey, let’s not look a gift beer in the mouth.

    Another MNB user wrote:

    With all the things out there now that do cause cancer, it is amazing that beer may actually be good for you (one a day). Interesting. Beer companies behind it? Of course. I doubt the government would throw money at a new study presented as "Beer, a healthy choice..."

    Beats the hell out of a lot of other things the government funds…

    And another MNB user wrote:

    Beer comes in ones?

    Yeah, that confused us, too.

    Finally, we noted last week that we’d gotten some emails that were uncivil, and some that suggested certain topics should be off-limits because it would be safer. We’re not inclined to play it safe, so we’re going to keep sticking our neck out.

    We also got the following email from MNB user Denise Remark-Lundell, which we’re posting because it isn’t so much about us as it is about the MNB community:

    Aside from the business information I enjoy reading so very much on MNB, I particularly like the commentary and repartee of MNB community members/

    I certainly don't agree with everything I read from either you or the respondents, however, the beauty is that we can all agree to disagree at some time or another! The MNB community is an amazing thing to me; those of us who comprise the community combine our individual energies and give it life.

    I hope this doesn't sound corny, but I feel a real connection with people I have never met! I look forward to reading comments made by various persons whose names I recognize because I've come to learn that they are thoughtful & insightful.

    Kevin, you have a stellar forum in MNB!

    We agree. This community of people that make up MNB is a remarkable group…and we’re lucky to be a part of it.
    KC's View: