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    Published on: November 8, 2004

    An Essay by Kevin Coupe

    There’s nothing like the 21st mile of a marathon to get you thinking about mortality.

    In my case, during the 29th annual Marine Corps Marathon in Washington, DC, last weekend. I had been thinking about mortality anyway, both professionally and personally, but there was something about going over the 14th Street Bridge on creaky knees that focused my attention.

    There had been numerous warning signs popping up in my life that had suggested to me that this was a subject worth considering…

    I’d been talking to a retailer friend of mine, a successful entrepreneur who runs a family-owned supermarket, who told me that despite the fact that the company was profitable and always had been debt-free, the banks were unwilling to lend him money to expand. Wal-Mart was on the horizon, convincing the banks that any loan to the competition was foolish. So, my friend was considering his options, wonder whether a decades-old business simply wasn’t viable anymore. It was like facing professional mortality at too young an age.

    At the same time, I was facing my 50th birthday. It’d been a pretty good year, with new experiences (like learning to drive a race car) and fresh challenges (training for my second marathon, and my first since knee surgery). But on the other hand, someone had pointed out to me that unless I defied the actuarial tables, it was unlikely that I’d see my 10-year-old daughter live to be my age…a sobering thought, at best.

    And, my wife and I had made plans to go to London to see my favorite actor, Richard Dreyfuss, do the West End version of Mel Brooks’ “The Producers”… only to have our plans dashed when Dreyfuss had to drop out of the production. At 56, his knees and back were simply not up to the rigors of a Broadway-style musical…and since I’d thought of him as a contemporary since “Jaws,” “Close Encounters Of The Third Kind” and “The Goodbye Girl” (and related to him since he also was short, bearded, wore glasses and was occasionally weight challenged), this also was depressing news. Again, professional mortality at too young an age.

    So there I was, running my 26.2 miles, hoping that’d I’d survive and at least equal my time from three years before. I knew that I’d write a column about the experience, and was mentally prepared. It would be a column about individual toughness…about the “loneliness of the long distance runner”…about how in any sort of challenging situation, one has to be independent and resolute, because in the current environment, there is very little you can count on.

    But I was unprepared for what I experienced.

    There were more than 20,000 runners in the Marine Corps Marathon, and I was one of the few who ran alone. In this marathon, and I suspect in others, the feeling of community support is palpable.

    It begins at the starting line, as you look at the shirts and faces of the runners. So many of them are there not just for the physical challenge, but to run in the memory of a deceased serviceman or relative, to raise money for one cause or another, to heighten attention about some issue of importance to them. They are together, creating community and providing support and a kind of contagious enthusiasm.

    It continues as you run, mile after mile, as spectators you’ve never met cheer you on, shouting words of encouragement, urging you on to the next water stop, the next mile marker. Some of them are Marines, who have their own unique form of encouragement, and many of them are just observers and nice people who want to participate in the event.

    Some of this I remembered from three years before, but that marathon was run just weeks after 9/11, and the raw emotions of those weeks dominated the landscape, just as the image of a devastated Pentagon seen from the race course almost obscures all else from memory.

    What really was remarkable this time was the way in which cell phone technology was utilized by runners to alert their support groups along the way if they needed water, or energy bars, or just a hug and a quick massage because the calf muscles were starting to tighten. I heard this all around me, listening as people talked to their loved ones, gave them updates, and elicited encouragement.

    It was a heightened sense of real community. Even running alone, without a cell phone, I felt it.

    And it changed my mind about this column.

    Sure, to survive in the modern business climate one needs to be personally tough. And an air of individuality certainly can help one get through the tough times, making it possible to stand out from the crowd. That can help us both as people who work in companies, and as companies looking for differential advantages.

    It seems to me, though, that the necessity of creating community – especially within the retail environment – too often is undervalued. Sure, there are plenty of stores that call their employees “associates” or “team members,” but those often are shallow references with little resonance in the employees’ lives.

    There is a kind of sweeping power that can come from a sense of connection. It can happen in a store, as people feel a common linkage to mutual goals and strategies. And it can happen in a grueling 26.2-mile race, in which the kinship of fellow runners and the fervor of the crowds can carry one past bad knees, a sore back and even a shaky resolve.

    Sure, in a marathon there is a finish line, and even the slowest of us only need six hours to run it. In life, the finish line hopefully is out of sight (unless you’re turning 50 and feeling sorry for yourself), and the obstacles both tangible and intangible.

    But as the saying goes, life is a marathon, not a sprint. I used to think that just was a cliché…but no longer. It’s just symbolic of something a lot bigger than I had expected.
    KC's View:

    Published on: November 8, 2004

    The Rocky Mountain News reported over the weekend that the United Food and Commercial Workers (UFCW) - which represents some 17.500 employees at Colorado Safeway, Albertsons and Kroger’s King Sooper stores – called a halt in the voting on a “last best” contract offer made to the union by the chains.

    The UFCW has recommended that its members turn down the offer and authorize a strike, but speculation is that the vote was halted because it was feared that the members would instead approve the contract proposal in certain specific areas. However, this rationale has not yet been confirmed.

    Denver-area workers voted last Thursday, while workers in Pueblo, Fort Collins, Evergreen and Idaho Springs were set to cast ballots Friday.

    The existing contract expired last Wednesday, and the chains can lock out the employees any time.
    KC's View:
    Sometimes you read these stories, and you wonder if the workers are working for the union, or if the union is working for its membership.

    Published on: November 8, 2004

    Interesting piece in the Washington Post the other day about all the wonderful things that a well-maintained and utilized database can do for businesses.

    For example, there was a woman who tried to return some clothes to a boutique where she’d bought them, only to have the return rejected by the computer because it said she’d indulged in “excessive returns.” She’d never worn the clothing, and was operating well within both ethical and actual rules, but the computer treated her like a criminal.

    Or the company that created a website that aggregated the names of people who filed malpractice claims as a resource for doctors – implying that perhaps doctors ought to avoid treating such people. (The site went offline when patients complained that it didn’t differentiate between legitimate and fraudulent claims, but doctors are lobbying for the company to resurrect it.)

    Or there’s the St. Louis company that, according to the Post, “compiled more than 100 million employee records that contain names of companies, dates of employment and job titles. More than 1,000 firms, including American Airlines, FedEx Corp., Hewlett-Packard Co., Kmart Corp., Marriott International Inc., Microsoft Corp. and PepsiCo Inc., make use of the service to speed along the screening process for potential new hires.”

    The question being wrestled with both by companies and consumers, according to the piece, is how much aggregation of information is too much, and how much is perfectly appropriate. (And, to a certain extent, how much doesn’t cause companies to get a public relations black eye.)
    KC's View:
    It so happens that we think all three of the examples cited above have their share of public relations disaster potential.

    After all, how many returns are too many? And by rejecting a return, what kind of risk does a store run of alienating good customers as well as those who abuse the system? Whatever happened to “the customer is always right” as a retailing credo?

    As for the malpractice database, whatever happened to the Hippocratic Oath? And that database of questionable employees seems simply ripe for abuse and eventual lawsuits (which will probably land those people on yet another database).

    Short story, we think these kinds of examples run the risk of suggesting to the consumer that he or she needs to be on the defensive…which is precisely the wrong message to send.

    However, there must be something in the air…

    The Wall Street Journal reports this morning on how consumer electronics retailer Best Buy is using its databases to rid itself of its least profitable customers – representing 100 million of its 500 million customer visits each year made by “devils” who “buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts.”

    This year, the WSJ writes, “Best Buy has rolled out its new angel devil strategy in about 100 of its 670 stores. It is examining sales records and demographic data and sleuthing through computer databases to identify good and bad customers. To lure the high-spenders, it is stocking more merchandise and providing more appealing service. To deter the undesirables, it is cutting back on promotions and sales tactics that tend to draw them, and culling them from marketing lists.”

    One of the reasons that best Buy is pursuing this approach is because it sees greater price-oriented competition coming from the likes of Wal-Mart, and believes it has to be smarter in its marketing and customer relationship management (CRM) in order to withstand the onslaught.

    And that makes sense.

    Published on: November 8, 2004

    The Detroit Free Press reports on Hank Meijer, cochairman, CEO and grandson of the founder of Meijer Inc., and how he is trying to carve out a distinct position in the marketplace opposite the likes of Wal-Mart.

    Food for Wal-Mart, Meijer tells the paper, “is a tool to get people into the general merchandise part of their store and increase the frequency of visits. For us, food is our reason for being.

    “The whole idea here is abundance, assortment. There's not much selection at a Wal-Mart,” Meijer says.

    Since 2000, Wal-Mart has been a fierce competitor of Meijer’s in Michigan, but the company – after a period of cost cutting – has begun mapping out a growth strategy again – focusing on food, sharp pricing and extensive selection. Also working in the company’s favor – being private, which frees it from having to satisfy brokers and analysts. Instead, it can just work on satisfying customers.
    KC's View:
    Meijer has definitely been through a rough patch, but it is our sense that the company wants to may significant and credible changes in the way it operates – needing to be slimmer and tougher and yet more competitive than ever.

    Published on: November 8, 2004

    The Napa Valley Register reports that analysts believe that when Constellation Brands finished acquiring the Robert Mondavi Corp. for about $1.36 billion, it could be a good thing for the winery since it is likely to maintain quality standards while increasing production and distribution, and therefore add to both the sales and luster of the Mondavi product line.
    KC's View:
    Which would be good and well-deserved for the company founded by the man who practically invented the Napa Valley and the upscale US wine industry.

    As long as they don’t screw it up. If they don’t, it’ll be worth case studies someday.

    Published on: November 8, 2004

    In the current edition of Facts, Figures and the Future, a monthly e-newsletter from Phil Lempert, the Food Marketing Institute 9FMI) and ACNielsen, Lempert writes about the gulf that sometimes exists between good ideas and great execution – a gulf that can swallow up a business.

    Remembering that as a child, Sundays were a special day because of regular visits to food stores on New York’s Lower East Side, “Forty years later, my 'food' Sunday starts with a trip to the Farmers Market that luckily, is right around the corner from our home. Stands of organic veggies, honeys, flowers, and breads along with a dozen vendors making fresh omelets, crepes, burritos, fresh juices, coffees and caramel corn creates a fresh food extravaganza. It's our neighborhood's meeting and greeting place. Practically everyone has a smile on their face as they juggle the bags hanging from their arms.

    “One stand at the farmer's market sells freshly grilled corn, which is a terrific concept. Imagine, hot fresh corn on the cob that is roasted and mechanically rotated over an open fire. They offer an assortment of add-it yourself flavorings and spices. It is fun, nutritious and should have a line around the block. But it doesn't.”

    “While the Farmer’s Market opens at 8 a.m., he writes, “most weeks, the corn roaster isn't ready to sell his corn till 9:15 or so. As you would imagine, competing with a sweet smelling caramel corn maker on one side and a 30 foot long table of colorful fruits and vegetables on the other is a challenge for any marketer. So, the corn roaster doesn't even try. There is no display of fresh corn piled nearby or mini-samples offered to those who pass by.

    “I have witnessed shoppers who stop by the stand and are told that the corn isn't cooked yet and walk away puzzled wondering why the ‘corn man’ even shows up.” Lempert writes, ”Food ideas and concepts are easy to create -- it's the execution that matters!”

    In other articles in this month’s F3:

    • FMI’s Michael Sansolo writes about shifting consumer diet-related priorities, as “low carb” gets exceeded by shoppers’ interest in low fat, low calories and low sodium,


    • F3 offers an analysis of the private label customer demographic.


    • And, F3 reports, “today's American consumer is a little older, a little grayer and a lot more wrinkled than ever before….Unfortunately for marketers serving this burgeoning stratum, there is an inverse relationship between household income and head-of-household age. While more mature seniors represent just eight percent of households with incomes in excess of $70,000 per year, they comprise more than one-quarter of households at the lower end of the economic spectrum (less than $20,000 per year).


    For these and other stories, go to:

    http://www.factsfiguresfuture.com/
    KC's View:

    Published on: November 8, 2004

    The Motley Fool has an interesting dissection of the problems plaguing Wild Oats.

    Beyond suggesting that the company’s stated desire to attract a more mainstream customer that chief rival Whole Foods actually means that it is offering a less differentiated – and therefore less compelling - shopping experience, Motley Fool writes that a major issue is focus and consistency:

    “The company operates about 100 stores under at least four different formats: Wild Oats Natural Marketplace, Henry's Farmers Market, Sun Harvest Farm, and Capers Community Market. Critical to success in retail is execution, and it is hard to imagine how the company can optimize processes across these different brands and formats. In addition, the company is further diluting management's focus by pursuing other, marginal strategies -- sales through Internet grocer Peapod and a store-within-a-store concept with Stop & Shop.”
    KC's View:
    Exactly.

    Published on: November 8, 2004

    Talk about price wars.

    Wal-Mart, Blockbuster and Netflix are going at it big-time in the DVD rent-by-mail business

    Wal-Mart has cut the price of renting three DVDs at a time (ordered via the Internet, delivered and returned via the mail) to $17.36 a month. That beats the newly lowered prices for the same type plan offered by Netflix ($17.99) and Blockbuster ($17.49).

    Part of what seems to be driving the price war is the possible entry into the business of a company that hasn’t announced its intentions yet – Amazon.com. And the bigger question seems to be whether anyone, at these prices, can operate business model that is profitable.
    KC's View:
    Even though it is 63 cents a month more expensive, we’re sticking with the pioneer and original – Netflix. We like the service and the selection, and we’ve never been disappointed by them. That’s worth a lot.

    Published on: November 8, 2004


    • The Kantar Group, the consulting division of WWP, reportedly has acquired Cannondale Associates, published of the well-known Power Ranking that evaluates retailers and their manufacturer trade partners.


    • Published reports say that French retailer Auchan is spending the equivalent of $1.36 billion (US) to acquire the foods division of retailer La Rinascente SpA, a move that will expand the French company’s Italian presence.


    • UK retailer Tesco, according to the Wall Street Journal, has launched a new digital music download service designed to compete with Apple’s iTunes – selling music for the same amount but offering a service compatible with a broader number of operating systems.

    KC's View:

    Published on: November 8, 2004

    We had a piece last week about how the new president/CEO of Kmart, Aylwin Lewis, plans a four month trip around the country visiting the company’s stores and meeting with customers, employees and vendors as he attempts to map out a viable strategy for the company.

    This prompted a number of emails.

    One MNB user wrote:

    I suggest the CEO of Kmart travel undercover and travel alone. First, probably 99% of the employees and managers in the stores have no idea who he is or what he looks like. If you walk into a store with a group men in monkey suits (or women with bad hair and briefcases), you will blow your cover and put everyone on edge. You won't get an honest answer from anyone. He should tell his fellow execs which stores he is going to and then go the opposite direction into an entirely different group of stores.

    MNB user Glenn Cantor wrote:

    Note to Aylwin Lewis, as you embark on your Kmart store road trip:

    While you are in your stores, try to secure an RMU, with a working battery, in order to correct and refill out of stocks in your stores.

    The exercise of trying to find a working RMU is a microcosm of what you will need to fix.

    Also, when you visit your stores, don't tell them who you are or when you are coming, and then try to find rear-view mirror windshield adhesive (or some other obscure but important product that you sell). Or, once again, don't tell them who you are, and then buy a bag of heavy lawn fertilizer. See if anyone offers to help.

    That's what you need to fix.


    MNB user Richard Sokolnicki wrote:

    So what has the rest of Kmart’s HQ management been doing...sitting in their offices and evaluating their ailing sales figures? This is only a great symbolic gesture by Lewis in my mind.

    I've stopped at Kmart stores in recent months. They're sick and on life support. It doesn't take a four-month fact finding mission to figure that out. It's a company with name recognition but little image equity at this point.


    Another MNB user wrote:

    You got it Kevin,.... he will need a lot of luck.

    However, I applaud his effort in getting to ground zero to determine what the plan needs to incorporate to turn the place around as a retailer. At least he won't be hiding out away from his associates and customers in his corner office looking at the P&L to figure out what to tell Wall Street about their business.





    We have made the observation that too many retailers treat their employees like costs and liabilities rather than as assets…and that such an approach can undermine a retailer’s ability to be effective.

    To which one MNB user responded:

    I started in the grocery biz 30 yrs ago and then the employee was treated like an asset. When Chainsaw Al Dunlop got away with firing everyone for management's benefit, it seems all the companies took notice and followed suit.

    The economy will pick up and those companies that were the worst offenders may find that they will get help, but the help will be the bottom of the barrel available and that serves them right if it happens.




    We got several emails responding to our piece about Jungle Jim’s International Market. One MNB user wrote:

    I happen to be one of the very fortunate few who work in the food industry and live less than 5 minutes from one of the best run retail food operations in the world. Not only does our family shop there but I also have the privilege of walking the store with industry colleagues when they visit our company. Most people's first impressions are the eccentricities of Jungle's (Jim Bonaminio) operation. From the singing Elvis bear (how many retailers have 3-8 year children dancing in the aisles of your grocery stores?), to the mammoth provolone, to their own branded wine fermenting in Oak Barrels, to restroom entrances with port-a-potty facades, to full size replicas of the S.S. minnow, to the fish farm, etc, etc, etc...

    What most people miss is how savvy of an operator he is by requiring employees take owner ship of their departments. Employees are not a liability there are a major part of the stores success. It is a true store within in a store concept as each department manager is responsible for managing inventory and generating sales, running each department as its' own business. Knowledgeable employees talk to you. You are treated as you are the most important reason for being in the store. No matter what they are doing, if they see you coming, you are the first priority, they stop and pay attention to your needs. Sampling is everywhere. They feed the masses, setting up 8' folding tables loaded with store made cheese balls and specialty crackers. Must be profitable, especially when cheese balls average $7 per pound and they sell. On weekends, it is a packed wall to wall with shoppers, yet all employees personally talk to you and encourage sampling and cross selling. How many grocery store deli departments run no weekly deli specials to generate traffic and sales? It has been at least a year since I have seen an advertised "special" in Jungle's Deli.

    If you want a real treat, call and arrange a personalized tour. They have a full time employee dedicated to giving tours. Hint, it is another profit center. The most revealing comment I heard came from a 48 year old third generation owner of 22 stores, " I grew up in and thought I knew the grocery business, now I know I am not in the grocery business."





    Last Friday, we interviewed Tim Hammonds, president/CEO of the Food Marketing Institute (FMI), about the impact of last week’s elections on the industry’s agenda for the next four years.

    We got two emails that questioned the piece. One was from MNB user Dave Lichtman, who wrote:

    Identifying Tim Hammonds solely as the President/CEO of the FMI and not referencing that he is a very prominent Bush backer (and one time a member of the Bush transition team) was a disservice to your readers.

    That full disclosure would have given your readers a better context in which to read his comments.


    Good point. For the record (and this doesn’t make things any better), we were sloppy rather than deliberate in that omission. Tim Hammond’s personal political involvements have been a matter of public record and well-known within the industry, and it simply never occurred to us that we had to mention them.

    It should be noted that many industry folks that we’ve spoken with believe that Hammonds’ connections are a positive for FMI and the industry. Many folks, but not all…as MNB user Lisa Malmarowski wrote:

    I know you work closely with FMI and while I appreciate some of the lobbying work they do on behalf of the grocery industry, they do not represent all of the grocery industry.

    Yes, we need an energy policy capable of addressing the realities of today's global marketplace. Will we get that with this administration? Doubtful. Unless we as a nation and as the largest user of global natural resources use our technological smarts to figure out how to develop sustainable usable energy sources and fund these initiatives appropriately, we will continue to see rising energy costs.

    The mega-supermarkets of today use an enormous amount of energy just to run equipment, light the aisles, etc. What are stores doing to decrease their energy consumption? We as an industry have the potential to really make a difference. What are we doing?

    I can tell you that we have remodeled and built our locations using sustainable design. We have integrated day-lighting systems. We use environmentally friendly finishes. We've built a building that will live on in the event we no longer house a store there - it will have other uses and not sit empty like a big metal warehouse. We've done what we can, but our stores are small (under 15,000 sq. ft.).

    What are the big guys doing? What is FMI doing for stores like ours?


    In the interest of fairness, perhaps we should have suggested that there is an excellent counterpoint to Tim Hammonds’ view of the potential for the next four years, and it can be found over on Phil Lempert’s SupermarketGuru.com. It details the potential impact on consumers of four more years of George W. Bush, and can be found at:

    http://supermarketguru.com/page.cfm/11157




    Finally, we continue to get email about the episode of “South Park” that satirized Wal-Mart’s impact on America…

    One MNB user wrote:

    ”South Park” was a very funny episode, but the writer did not mention to you that they were careful to spell it Wall-Mart in the show, to avoid any lawsuits. It was hilarious.

    At least they spelled “Bentonville, Arkansas” right.

    MNB user Joe Fraioli wrote in about the episode of “Without A Trace” last week that had as one suspect the manage of a Wal-Mart look-alike store:

    I saw the episode too and it not only talked about no overtime but that employees were accustom to not being able to make it financially and a second job was a necessity. Perhaps Wal-Mart will decide not to carry “Without a Trace” on DVD because they were truthful.

    Maybe.

    Last week, like many weeks, was one replete with Wal-Mart news and commentary, but apparently the “South Park” and “Without A Trace” references were more than MNB user Paul Higham could take:

    Enough of the arbitrary Wal-Mart bashing. It’s getting real tiring.

    Wait a minute. Wal-Mart gets criticized on “South Park,” and we’re being arbitrary?

    Ironically, there are sites out there on the Internet that refer to MNB as being a “Wal-Mart apologist.” And there are those who believe that we have cast Wal-Mart as the devil in some sort of climactic battle between good and evil.

    Some think that this is appropriate casting, some think it is absurd. Both are wrong.
    KC's View:

    Published on: November 8, 2004

    In week nine of National Football League action…

    NY Jets 17
    Buffalo 22

    Oakland 27
    Carolina 24

    Dallas 3
    Cincinnati 26

    Washington 17
    Detroit 10

    Arizona 24
    Miami 23

    Philadelphia 3
    Pittsburgh 27

    Kansas City 31
    Tampa Bay 34

    Chicago 28
    NY Giants 21

    New Orleans 17
    San Diego 43

    Seattle 42
    San Francisco 27

    Houston 13
    Denver 31

    New England 40
    St. Louis 22

    Cleveland 13
    Baltimore 27
    KC's View: