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    Published on: November 9, 2004

    So, we were in a chain supermarket over the weekend. (We won’t tell you which one, because the incident we’re about to describe may be an isolated case and it wouldn’t be fair. Suffice it to say that it is a major chain with stores throughout the Blue States of the northeastern US…)

    There was a woman there shopping, and she was perusing the dairy case, clearly not able to find what she wanted. She noticed an employee nearby, and asked if the store still carried a specific brand of lemon yogurt that she’d bought there before. The employee shrugged, said she didn’t know, and suggested that the woman might want to try one of the company’s superstores that is located a couple of miles away.

    The woman walked away annoyed, with no intention of going several miles. Instead, she confided in us when we were chatting in the checkout lane, she was thinking of going over to a nearby independent store, Palmer’s Market, to see if they carried or could get the lemon yogurt for her.

    (She also mentioned that she’d spent most of her life in the Minneapolis-St. Paul area, and yearned for the days when she could go to Byerly’s to shop.)

    About an hour later, we needed to pick a few things up at a nearby Trader Joe’s in Darien, Ct. (We’re happy to name the store in this case because experience tells us that this is not an isolated case.

    We were waiting on the checkout line when the cashier, a nice woman named Rose, looked at the woman in front of us and asked if she’d tried the chocolate truffles that were being sampled. The woman said, no, they were probably loaded with calories.

    Rose smiled. “No,” she said, “we have a special today – all the calories have been taken out!” The woman cracked up, went over and tasted one of the truffles – and ended up buying a box.

    Obviously, we don’t have to spell out the differences in culture that made these two occurrences so different. The problem is clear, and the lack of engagement on the part of that chain employee is, we’re afraid, likely to be the rule, not the exception. And many will say that a big chain simply can’t have the same kind of employee attitude that a store like Trader Joe’s has.

    But Trader Joe’s is no small company – it has well over 200 stores, spread across the country and mostly on both coasts. And yet we’ve never been in a Trader Joe’s that didn’t have friendly, enthusiastic associates who went out of their way to create a connection between themselves and shoppers.

    Salesmanship is an enormously undervalued commodity in the supermarket industry. Too many people simply put the products on the shelves, collect their slotting allowances, and hope the customers buy them.

    We can’t help think that one of the reasons that salesmanship is undervalued is that employees also are undervalued…and that too many big companies (to use a phrase that we have often mentioned in this space) think of them as costs and liabilities, not assets and salespeople who can contribute mightily to the bottom line.

    Looking for a differential advantage? Hundreds of them may be working for you…if only you’ll think of them that way, train them, coach them, reward them, and nurture their talents and ambitions.

    Rose, who works on the checkout lane at Trader Joe’s in Darien, is one of those people…and we suspect that she’ll be with the company for a long time.
    KC's View:

    Published on: November 9, 2004

    MNB often complains about supermarket chains that keep opening the same old boxes…but there is evidence this week of companies that are throwing change-ups at the consumer, hoping that a whole new approach will capture shoppers’ imaginations and food dollars.

    In Seminole, Florida, Kash n’ Karry has opened its first Sweetbay Supermarket – which is bigger, more inventively designed, with a greater range of SKUs and an emphasis on fresh foods and local specialties. It is, in the words of CEO Shelley Broader, “all about the food.”

    And, in Detroit, Meijer is opening a new store designed by theatrical architect David Rockwell – which the Detroit Free Press describes as having “expanded and updated clothing, electronics and grocery departments. The new look includes a warmer color palette, lower merchandise displays, wider aisles and easy-to-follow signage.” The store also features “other test items such as an expanded bakery, cheese and wine section along with organic food throughout the grocery, deli and meat departments. Customers can have their meat selections hand-trimmed by a butcher. The deli will offer chicken and ribs to go along with deli sandwiches, salads and frozen gourmet meal items.”
    KC's View:
    Sometimes, you can teach an old dog new tricks.

    The fact is, it is only through this kind of innovation – both in style and content - that supermarkets can break through the clutter and away from the competition. We applaud the moves by both companies.

    Published on: November 9, 2004

    Del Monte Foods has developed something it calls the Del Monte Carb Clever brand, a new line of canned fruit that it says provides the same nutritional benefits of regular canned fruit, but with 50 to 70 percent fewer carbs.

    “Rather than packing the fruit in heavy syrup or natural fruit juices, Del Monte Carb Clever is packed in water and sweetened with Splenda® brand no calorie sweetener, made from real sugar,” the company said in a statement.

    The Del Monte Carb Clever line of products – sliced peaches, fruit cocktail, sliced pears, pear chunks, and peach chunks - began shipping to national grocers and Wal-Mart Supercenters this month.
    KC's View:
    If the conventional wisdom is correct and the low-carb craze is settling back into being a niche, then Del Monte may have to settle for niche-level sales.

    We think that the company might be smarter to position the products as being for a broader demographic…we stink that branded, packaged, value-added produce items are going to create a huge category, but companies need not to limit their appeal.

    Published on: November 9, 2004

    Kmart reportedly plans to launch its own credit card, which will offer rewards for purchases. The card will offer $10 off the first card purchase of $50 or more and a $10 reward for every additional $250 in account purchases. There is no annual fee and will be marketed through in-store promotion, print and online advertising.
    KC's View:
    And we have an idea for the advertising campaign that could promote the card:

    We’ve always given our senor executives big rewards…now it’s your turn.

    Published on: November 9, 2004

    • A new service, Harvesting America, has been launched that is endeavoring to allow customers to shop online for non-perishable groceries and have them delivered nationwide without delivery charges – for a monthly subscription fee of $14.95 per month. In addition, the Harvesting America model says it will compensate shoppers who refer new customers to the subscription service, though specifics about how much people will reimbursed is not detailed on the company’s website.

      “We are building a national community of individuals whose goal is to lower the price of food in America,” said Fred Weih, president/CEO of the company. “I believe Harvesting America’s grass root approach to engaging the consumer to participate in the grocery shopping experience will improve the quality of life for millions of Americans and change the way we shop for groceries forever.

    KC's View:
    Forever is a long time. We think that simply shooting for profitability in 2005 would be a pretty nice goal.

    That said, this is an intriguing model – a little Amway for our tastes, but interesting nonetheless.

    The question is whether demonstrable value can be proven, and whether people will be willing to pay a subscription fee to access the program. The company has some good people on its advisory board, and as readers of MNB know, we’re big on the whole “building community” concept.

    Be a fascinating business to watch evolve.

    Published on: November 9, 2004

    Interesting piece in BusinessWeek about clothing retailer Eddie Bauer, which continues to try and redefine itself after years of uncertainty and corporate tumult.

    The company’s new CEO, Fabian Mansson, is charged with turning around the retailer even as its owner, Spiegel, tries to find a buyer for the division while being in bankruptcy protection. Not an easy task – especially because Mansson has to accomplish the tricky feat of being true to Bauer’s historic tradition while creating styles that will being new customers into the stores and onto its website.

    Some relevant excerpts from the interview with Mansson:

    • ”We have a fantastic brand to start off with. We want to take the best parts of our heritage and keep it updated for today's consumers. We need to create a point of view that speaks to the Eddie Bauer lifestyle -- an outdoor lifestyle. It's about carving out a unique positioning that we're just going to have to execute better and better going forward.”

    • ”This company has a history of going left and right strategically. That's not good. They had jumped into the dress-casual era prior to me coming on, and that's not what Eddie Bauer has been about. We have gone back to the inspiration of the outdoors and are trying to carry it through the brand in a modern, relevant way.”

    • ”We're starting to see a better productivity. This is a company that has been sliding for a long time. So we're starting to turn the corner now, and we're seeing a lot healthier sales, less markdowns…We're flowing our inventory differently and working our way through it quicker. Inventory [is] like milk and bread. It doesn't get better with time."

    KC's View:
    When we first saw this story, it occurred to us that we’d be able to use it to make a cheap joke about wondering if a guy named Fabian should be running a place like Eddie Bauer. (Shouldn’t the CEO be some named Jake? Or Max? Or Sam? Or even Eddie?)

    But cheap jokes aside, we thought as we read the piece that Mansson is facing a kind of universal retailing dilemma – how to keep a brand tradition intact while appealing to an evolving customer base. In short, how to be authentic and relevant at the same time.

    The advantage that Bauer has, we suppose, is that the name is the brand – it makes a statement before one ever enters the store or goes on the site or opens the catalog. So it is starting from a definable base…unlike, say, a lot of supermarkets that have made their living selling other companies’ brands without clearly establishing their brand position in the marketplace.

    Of course, there can be a disadvantage there, too…because the brand name and image are so strong, it makes deviating from tradition a little risky. But we’d rather have a brand to build on than no foundation at all.

    Published on: November 9, 2004

    The new television commercial for the redesigned 2005 Mustang is a very cool piece of work – because it features Steve McQueen, who happened to die of cancer in 1980.

    The commercial starts with a “Field of Dreams” type sequence, as a guy carves a racetrack out of a cornfield. Then, when he’s done, he pulls a brand new Mustang up to the starting line…and out from the corn steps McQueen, dressed just like he was in “Bullitt” back in 1968, the film in which the high-speed movie car chase was practically invented (with McQueen driving a Mustang, natch). The digitally recreated McQueen then hops into the new Mustang and floors it – revving up both the engine and memories of one of the great all-time movie stars and one of his best movies.

    We don’t always like the use of dead celebrities’ images in advertising, but this seems to work because it a) has an organic quality that appropriately connects image and product, b) is technically seamless, and c) is just plain cool.
    KC's View:
    We thought this was worth mentioning because, in essence, Ford is engaging in brand re-definition…trying to re-establish a timeless brand for a new demographic. Ford doesn’t seem to be worried that a lot of younger people may not know who Steve McQueen is; the company thinks that the ad’s cool quotient will work regardless.

    That’s hard for us to judge, since appreciating movies like “Bullitt” and “The Great Escape” and movie stars like Steve McQueen is part of growing up in our household; we have a 15-year-old boy who thinks that McQueen is one the coolest guys he’s ever seen in movies.

    We’d like to think that means we’re doing our job.

    Published on: November 9, 2004

    • Wal-Mart Japan COO Jeff McAllister has said that the company plans to pump money into Seiyu, the Japanese retailer that it owns a piece of. "We are looking at the current equity situation within the company and do believe we need to address that in the near term,” he said.

    • Wal-Mart, which has found the German marketplace to be inhospitable to its plans for expansion and profit, has decided to create an environment of hospitality in many of its stores there – by hosting singles events on Friday nights.

      The Wall Street Journal reports this morning that “Wal-Mart officials in Germany say they know of about 30 couples who found each other at a singles shopping night. In fact, the events have become such hits in Germany, increasing Friday night sales 25%, that Wal-Mart has trademarked the name "Singles Shopping" to deter copycats.

    KC's View:
    We can’t help it. Whenever we think of singles nights at supermarkets, we think of Otter trying to romance Mrs. Wormer in the produce aisle.

    And if you don’t get the movie reference…well, you’re young enough that you should keep it to yourself.

    Published on: November 9, 2004

    • Local press reports say that Robert Miller, chairman of Rite Aid Corp. and the former CEO at Fred Meyer, is part of an investment group that has acquired two Bales Thriftway stores in the Portland, Oregon, area. Terms of the deal were not disclosed.

      Robin L. Thomas, formerly of Unified Western Grocer's Oregon division and United Grocers, reportedly has been named CEO of the new company.

    • In Canada, the CanWest News Service reports that “farmers and the federal government are creating a new agency that will use technology to track production of every major commercial livestock species, in a bid to safeguard herds from diseases such as bovine spongiform encephalopathy.

      Beginning early next year, livestock and fowl “will be identified using mandatory radio-frequency microchips, and possibly also bar coded ear or crate tags. The animals will be monitored from the moment they're reared, each time they're sold, through to their inspection at the abattoir or at the border as they are exported live.”

      The system is described by the government as “one of the most technologically advanced and comprehensive in the world.”

    • The European Union (EU) has filed a complaint against the United States and Canada at the World Trade Organization (WTO), charging that the two North American countries have illegally enforced sanctions against the EU because of its ban on beef treated with hormones.

      While the ban on hormone-treated beef has been relaxed by new EU legislation, both the US and Canada have refused to lift the sanctions, saying that there is no evidence that treated beef poses a threat to public health.

      The next step is 60 days of “formal consultations,” after which, if there is no resolution, a formal case will be filed with the WTO.

    • Royal Ahold today announced that it will move its corporate headquarters in The Netherlands from Zaandam to the country's capital, Amsterdam.

    • Jones Soda Co is launching a limited edition holiday pack of five new seasonal flavors which includes: Green Bean Casserole Soda, Mashed Potato & Butter Soda, Fruitcake Soda, Cranberry Soda and Turkey & Gravy Soda. All the product have zero calories and zero carbs.

    KC's View:
    Not to mention, from our POV, zero appeal. Mashed Potato Soda? Green Bean casserole Soda? Yuck.

    Sorry guys. This just doesn’t work for us.

    Published on: November 9, 2004

    • Safeway Inc. announced that Karl Schroeder, most recently president of the company's Eastern Division, will succeed Frank Calfas as president of the company's Northern California Division. Calfas is joining Safeway's centralized marketing team as president of marketing operations.

      Hank Cominiello, vice president of Retail Operations in the Eastern Division, will serve as acting Eastern Division President until a permanent replacement is named.

    KC's View:

    Published on: November 9, 2004

    • 7-Eleven, Inc. reported that total October 2004 sales were $1,082.5 million, an increase of 14.8 percent over the October 2003 total of $942.8 million. U.S. same-store merchandise sales increased 5.5 percent, on top of a 3.1 percent increase for 2003.

      Total merchandise sales for October 2004 were $680.4 million, an increase of 4.5 percent over the October 2003 total of $651.0 million. U.S. same-store merchandise sales for October 2004 increased 3.8 percent, on top of a 7.6 percent increase in October 2003.

      Gasoline sales for October 2004 were $402.1 million, a 37.8 percent increase compared to $291.8 million in the prior-year period.

    • reports that UK retailer Marks & Spencer announced that first-half pretax profits dropped to the equivalent of $524.9 million (US), from $582.8 million (US) during the same period a year ago. The company’s UK sales were down 0.4 percent to $5.9 billion (US), with same store sales off four percent, while its global sales were up 1.4 percent.

      While noting that its operations have been troubled, the company said that it did not believe the trend “to be entirely Marks & Spencer specific.”

    • McDonald's Corp. reported that its October growth was led by a 7.5 percent gain in U.S. same-store sales - less than half of the 15.1 percent rise a year earlier. Meanwhile, same-store sales added 2 percent in Europe and 6.1 percent at Asian, Middle Eastern and African locations.

      Systemwide sales at all McDonald's restaurants climbed 9.5 percent last month, the company said.

    KC's View:

    Published on: November 9, 2004

    Yesterday, we referenced the new attempt by Best Buy to identify “devil” customers that are the least profitable, and one MNB user observed:

    Best Buy culling "devil" customers is shortsighted in that it assumes peoples' behavior cannot be changed. If you agree with that philosophy, why advertise? Rather than casting out the "devils", better to resurrect them as angels ... and get them to evangelize about what a great retailer you are.

    In the words of a friend of ours, one of the most challenging and worthwhile efforts that can be undertaken by a retailer is to “convert cherry pickers to cherry buyers.”

    We also had a story yesterday about how Meijer is trying to differentiate itself in the marketplace, and MNB user Bob Vereen responded:

    Our local Meijer has just been remodeled, and is a very sharp-looking store. It has been competing with a new Wal-Mart Supercenter, which opened about a year ago. The new layout is more open, more stylish, and repositions some of the categories. It uses fake wood flooring in some of the apparel sections, for example. (I saw a test of this concept in Dayton, OH a year or so ago.)

    One of the more interesting treatments is bringing everything for babies into one area--food, diapers, clothing, furniture. Makes a great one-stop shop for parents.

    It also moved its pharmacy from the rear of the store, where it had been located to drive traffic through the store, to an upfront location, easier for older patients to reach. And comparable to Wal-Mart's strategy.

    I must admit, however, that I don't see much, if any, difference in the food assortments between WMT and Meijer, and we do visit both.

    And another MNB user wrote:

    I believe, anyone who has visited a Wal-Mart and a Meijer store for the purposes of buying groceries would find the comparison laughable. First, on the lowest common denominator, price, it is a virtual tie; however, Meijer frequently has hundreds of items on special vs. Wal-Mart where specials are found sparingly. Secondly on quality, try to go to Wal-Mart and find a "meat counter" (and I am not referring to the person counting the packages a pre wrapped meats) or a seafood counter. Better yet, let me save you the effort, don't try - you won't find either. Or perhaps you are in the mood for lobster or crab legs - you may find a lobster tank at Wal-Mart, but good luck finding someone capable of fishing them out of the tank for you! I am not suggesting the Meijer provides the feel of the local "corner" grocer, but it a heck of a lot closer than Wal-Mart.

    We wrote yesterday about the DVD rental price war breaking out among Wal-Mart, Blockbuster and Netflix, and one MNB user responded:

    Interesting thought on how anyone can make a profit at the price levels offered. Maybe one of the three isn't interested in a short term profit, just long term marketplace dominance. Would it be too cynical to ask if anyone can spell "predatory" pricing.


    And another MNB user wrote:

    Wal-Mart is going to have to offer a bigger cost savings than this! Blockbuster includes in-store rentals in its’ monthly rate making it the best deal.

    We were touched by the number of emails we received yesterday in response to our “Marathon Man” column, many of them from middle aged folks who related to our sentiments about aging, and others from marathoners of all ages who have dealt (or are dealing) with the rigors of training. We won’t post all of them, because it would somehow seem self-reverential…but there were two that we thought helped to advance the point we were trying to make.

    One MNB user wrote:

    Having both the experience running marathons and operating an independent supermarket company I must confess …running marathons may be easier. The external environment isn’t nearly as rough and good shoes and Gore Tex go a long way to helping in that category.

    And MNB user Paul Woodard wrote:

    Great introduction to the week, another reason why this is a daily must read. I'm about to turn 40 and I'm wondering whether the best of my life is behind me (this has to change or 50 is gonna kill me!). But enough about the glass being half-empty.... My daughter is a high school cross-country runner, and the teamwork displayed by her team and others during races is energizing, especially as they cheer the girl on their team crossing the finish line five minutes slower than the rest of the race, but still running. Finishing, not quitting.

    I agree some of this "team/associate" talk is only a shallow reference (thankfully not where I work). I think we tend to forget that we’re NOT robots. Losing the personal connection is why many businesses stop being successful. Business is personal, to the families who own and run the businesses, the "families" (co-workers/associates/team members...) within the business, and those who do business with them (consumers/suppliers). Humans want, no, NEED connection. When I see community among the employees of a business, I'm energized by their energy. I want to shop there, be a part of it, like I'm part of the team..

    Thanks for sharing the story, both personal AND business.

    We tell our kids that a marathon is one of the few things in life in which you can decide to do it, and once that decision is made – short of an injury – the only thing that can stop you is lack of will and perseverance. There are few things in life like that, where obstacles and distractions can be dealt with through the exercise of character.

    Which is why, once MNB is posted this morning, we’re gonna pull on the old New Balance running shoes and head out for a run.
    KC's View:

    Published on: November 9, 2004

    In Monday Night Football action, the Indianapolis Colts defeated the Minnesota Vikings 31-28.
    KC's View: