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    Published on: October 13, 2004

    The Boston Globe reports this morning that Albertsons-owned Shaws Supermarkets plans to develop an online capability that will allow it to compete in this venue with Ahold-owned Peapod.

    "To be honest with you, we're not really doing this for the 1 or 2 percent of the people who might some day want us to deliver groceries to their home," Albertsons CEO Larry Johnston told the Globe. "We're doing it because we believe that the Internet and having a personal portal with your grocery company will be the key catalyst to driving people to change the shopping process in our stores."

    Johnston did not say when Shaws would launch the service, but did say that it would use the Internet infrastructure that the company has used elsewhere in the country, and that it would be called Shaws.com in the New England markets served by the company.

    Albertsons acquired Shaws from Sainsbury earlier this year for $2.1 billion.
    KC's View:
    The Globe correctly notes that the Boston area once was a hotbed of e-grocery competition, with companies like Homeruns, Shoplink and Streamline all testing out their premises in the densely populated, affluent marketplace. Only Peapod has survived of the major players, and while officials there might not admit it, we think it is fair to say that the entry of a new player helps to expand the pie for everyone. It also helps to legitimize the notion of e-grocery for people who haven’t yet tried it, which can only help sales.

    E-grocery companies that didn’t make it failed because they were a little early and had excessive expectations. They were born in a time when all the hype suggested that they would change the world, and the survivors ended up finding that they only were going to be able to nudge it a bit.

    As you get older, you learn that a nudge can be as effective as a shove, and can have longer-lasting effects.

    Published on: October 13, 2004

    At the urging of a federal mediator, representatives of the United Food and Commercial Workers (UFCW) in Cincinnati and the Kroger Co. have returned to the negotiating table, just a day after the UFCW recommended that its members authorize a strike against the company.

    The union had revoked a contract extension that was agreed to last weekend, when the original contract expired. While the agreed-to extension was indefinite, it now will expire on Friday. A two-thirds majority is required for a strike authorization.

    The union has referred to the latest offer as “gutting” existing health benefits because Kroger wants workers to start paying some of their health-insurance premiums.
    KC's View:
    Cooler heads.

    Published on: October 13, 2004

    Starbucks announced that its president and CEO, Orin Smith, will retire next March, and will be replaced by Jim Donald, the current president of Starbucks North America and the former chairman/president/CEO of Pathmark Stores. Donald also is a former Wal-Mart executive.
    KC's View:
    This move will do nothing to slow Starbucks down or reduce its ubiquity. Nothing.

    Jim Donald is smart, aggressive and ambitious…and there will be few limits on his ability to innovate and imagine new vistas for what used to be just a coffee company.

    Published on: October 13, 2004


    • The Chicago Sun-Times reports that new Peapod CEO Andrew Parkinson intends to continue expanding the online grocer’s geographic presence.

      “Plans call for Peapod to serve new markets in New Jersey by the end of the year, to expand services in Connecticut in 2005 and to push into the Philadelphia market either next year or in 2006,” Parkinson told the paper. “The online grocer also will seek to venture into New Hampshire and expand in existing markets such as Maryland, Rhode Island and in the Washington area.”

      Peapod is a division of Ahold, and is profitable in 13 of its existing U.S. markets, according to the company. The e-grocer was founded by Parkinson and his brother, Thomas Parkinson, who serves as the company’s CTO. Andrew Parkinson had been serving as CFO, but was promoted when former CEO Marc van Gelder decided to return to the Netherlands.

    KC's View:

    Published on: October 13, 2004

    The Irish Times reports that McDonald’s is eliminating the use of its familiar Golden Arches logo in a new UK advertising campaign, replacing the image with a golden question mark that is meant to emphasize the fact that the company is changing its nutritional profile.

    Facing both bad public relations because of obesity concerns in the UK, as well as declining sales, McDonald’s is using the slogan “McDonald’s…But not as you know it” to define the shift in priorities. The ads will feature large photos of healthy foods (salads, fruit, etc…) now available at the chain; the company also is distributing 17 million booklets that describe the new menu items and the company’s new commitment to healthier eating.
    KC's View:
    Let’s be honest. A Big Mac and fries are never going to be good for you, and McDonald’s menu changes – in the UK, the US, and elsewhere – have to be described as defensive and probably not cultural in nature.

    That said, we have to admit that we’re impressed by the company’s willingness – driven, to be sure, by a fear of incipient irrelevance – to take the steps it feels are necessary to regain a solid footing in the marketplace. (Even if some of the steps are heal-hearted, like selling salads but using dressings that sometimes have more fat than is good for anyone.)

    The only problem is that, at least when we go to McDonald’s, the siren call we hear is from the fries and the burgers, not the salads and fruit cups. But that’s our problem, not McDonald’s.

    Published on: October 13, 2004

    The Boston Herald reports that Dunkin’ Donuts is launching a new, $25 million advertising campaign that 1) focuses on coffee, not doughnuts, and 2) stresses the fact that the company’s hot beverages offer consumers a physical as well as spiritual revival.

    The slogan being employed in the campaign: “Bring yourself back.”

    "One of the most prevalent and powerful needs today is the need for the ritual to revive,'' John Gilbert, Dunkin's vice president of marketing, told the paper. "It's something that's done frequently, and clearly our product with caffeine offers physical revival, but also emotional revival. We set out to define that on our terms.''
    KC's View:
    We mention this because it is our impression that Dunkin’ Donuts has done a better job than Krispy Kreme, at least to this point, in redefining its retail experience in terms of the coffee – which helps it avoid at least some of the problems caused by the low-carb craze.

    Certainly Krispy Kreme is trying much the same thing, but Dunkin’ Donuts seems to have a head start…not least because coffee always was an intrinsic part of the experience.

    We also sort of like the notion of creating the image of Dunkin’ Donuts being restorative. Certainly, the company could easily push the image too far…but there’s something to be said for being offensive about the shopping experience, not defensive.

    When was the last time anyone suggested that going to the supermarket was a revitalizing experience? And yet, it should be – it is the place from which you fill the larder, provide for your family’s health and nutrition, and acquire the products that can bring great pleasure and satisfaction. But almost nobody casts it that way…rather, it always is about prices and coupons and speed.

    Which strikes us as being defensive.

    Published on: October 13, 2004

    A new study from the American Pharmacists Association (APA) suggests that there is a clear correlation between the strength of the relationship between the consumer and his or her pharmacist and that consumer's being properly informed so as to use medications with lower risk of adverse effects and better health outcomes.
    KC's View:
    We have to admit to being of two minds about this survey.

    On the one hand, it sounds like it makes sense both for the consumer and the retailer. After all, in an increasingly technological store environment, the pharmacist can be a valuable touch-point through which a relationship with the consumer can be forged.

    That said, we’ve been getting prescriptions at the same CVS for more than a decade…and we haven’t the foggiest idea who the pharmacist is, nor do we care. We just want the stuff to be ready when we need it, and for the right pills to be in the right bottle – and in neither case do we need a personal relationship.

    Hate to sound cranky, but there it is…

    Published on: October 13, 2004

    Here’s something MNB didn’t know until we read it in the Wall Street Journal: Russia is the world’s second-fastest growing beer market, with a seven percent increase in beer consumption expected this year alone. (Only China is drinking more beer faster.)

    And something else we didn’t know: that a third of all beer in Russia is consumed in public parks and similar venues. Just five percent of beer is downed in Russian bars and cafes because they is simply too expensive.

    Now, according to the WSJ, this may be changing. Not only has the Russian parliament restricted much of beer advertising, but it reportedly is considering a ban on public beer drinking – a move seen with consternation by Western beer brewers, which have invested some $2 billion (US) in Russia over the past dozen years or so.

    Legislators in favor of such a ban say that they are concerned about the country’s rising rate of alcoholism, though it remains a fact that more Russians drink vodka than beer and there are no such restrictions on vodka. But while beer sales are up, vodka sales are flat or down a bit…so a larger cultural shift may be taking place.
    KC's View:
    One can only imagine what the Russians would make of the new beer about to hit store shelves that contains caffeine, guarana and ginseng.

    It might assuage them. On the other hand, it might relaunch the Cold War.

    We’ll let you know after we taste it. Schast'ya i zdorov'ya!

    Published on: October 13, 2004


    • 7-Eleven Inc. announced that total September sales increased 10.7 percent to $1.03 billion from $931.7 million last year. Same-store sales were up 6.5 percent.

      Total merchandise sales for the month were up seven percent to $679.6 million, compared with $635.5 million a year ago. Gasoline sales for September were $352 million, an 18.8 percent increase compared with $296.2 million in the prior-year period.

      Year-to-date, U.S. same-store merchandise sales rose 5.7 percent, and total merchandise sales increased 6.4 percent to $5.96 billion. Gasoline sales total $3.12 billion, up 21.4 percent year-over-year.


    • France-based retailer Carrefour reported that third quarter sales were the equivalent of $24.67 billion (US), up 4.2 percent from a year ago. However, sales in the company’s core market – France – were flat at $12.1 billion (US)…and the company is projecting that its annual sales will be less than five percent, a projection that analysts and shareholders are not expected to find comforting.

    KC's View:

    Published on: October 13, 2004

    …will return.
    KC's View:

    Published on: October 13, 2004

    It started out looking like a rout, but then turned into a nail biter (or a hair-puller, depending on your perspective)…as the New York Yankees defeated the Boston Red Sox 10-7 in game one of the best-of-seven American League Championship Series.
    KC's View: