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    Published on: March 7, 2005

    The Orlando Sentinel reports that Publix will convert two of its stores, in Hialeah and in Kissimmee, to a new, Hispanic-themed prototype that it is calling Publix Sabor, which translated to “flavor.”

    The new stores will feature bilingual store employees and an expanded selection of fresh and packaged Hispanic foods. The company already has said that it plans to bring out a line of private label Hispanic foods later this year.

    Publix CEO Ed Crenshaw said, “It's important for us to continue to change, as the neighborhoods we serve change.” And, he said, "Publix Sabor will be an important steppingstone for Publix. We are very excited about these stores, and the impact they will have on our ability to serve our customers. And this is only the beginning for us."
    KC's View:
    Not just a strong step forward for Publix, but also an indication of why Winn-Dixie is in such trouble.

    Published on: March 7, 2005

    Unionized employees at Kroger-owned King Soopers have voted to ratify a new contract proposal that was drawn up by a federal mediator at the chain’s request, despite the fact that the United Food and Commercial Workers (UFCW) negotiating committee recommended that they reject the offer.

    The new contract takes effect immediately, and affects almost 9,000 union members who work for King Soopers and City Market.

    “This is wonderful. We are very pleasantly surprised and pleased by the vote,” Trail Daugherty, director of human resources and spokesman for King Soopers, told the Colorado Gazette. “The good news is that a labor dispute has been avoided.”
    KC's View:

    Published on: March 7, 2005

    The Washington Post reports this morning that Wal-Mart is finding creative ways to get around local zoning restrictions that threaten to inhibit its plans for growth, in some cases splitting stores in two and building them next to each other so that technically they stay within code.

    Wal-Mart says that these instances are just examples of it being “flexible.”

    "It almost points out the futility of municipalities developing ordinances and laws that restrict the size of stores," Kenneth E. Stone, professor emeritus of economics at Iowa State University and a Wal-Mart expert, tells the Post. "There's always a way around them, and an outfit as big and smart as Wal-Mart will think of a way."

    The Post notes that Wal-Mart also finds other ways to deal with these regulations. In Inglewood, California, the company (albeit unsuccessfully) went directly to the voters for a referendum on whether it should be able to open a store there. In other areas, where stores aren’t allowed to be as large as 100,000 square feet, Wal-Mart came up with a 99,000 square foot model.
    KC's View:
    We believe that communities that do not Wal-Mart should not accept on faith Professor Stone’s comment that trying to slow down Wal-Mart is “futile.”

    Tough, sure. Sometimes even impossible.

    But we actually think that these kinds of moves can engender greater community resentment, because it suggests that the company is not taking resident concerns seriously.

    We happen to be a fan of good, old-fashioned moral outrage. It’s good for the soul, even if not always successful.

    "Do not go gentle into that good night, Old age should burn and rave at close of day; Rage, rage against the dying of the light.” -Dylan Thomas

    Published on: March 7, 2005

    The CBC reports that the continuing closure of the US border to live Canadian cattle younger than 30 months old has had one desirous effect, at least in the minds of American cattlemen – auction market prices of US cattle are up by as much as 10 percent.

    This report comes as a federal judge in Montana granted a request for a temporary injunction blocking the reopening of the US border to Canadian cattle under the age of 30 months, and the US Senate voted 52-46 to order the US Department of Agriculture (USDA) to abandon its plans to drop restrictions on Canadian cattle (a decision that means little if the House of Representatives does not sign a similar bill, and the legislation is signed by President Bush – who has indicated that he would veto any such bill).

    "We're cattlemen, I mean that's our living, hopefully it (prices) will stay up," cattle producer Dick Weldon tells the CBC.
    KC's View:
    That sound you hear is the moral high ground slipping away.

    Even if they are happy about increased prices, the US cattlemen ought to have the decency to shut up. There are a lot of Canadian businesspeople who have suffered mightily because of the embargo – and whether you agree with it or not, you ought to have the decency not to delight in their misery.

    Meanwhile, it is reported that Vietnam’s government has decided to once again allow the import of US Beef, saying that it was convinced that there was no danger of the spread of bovine spongiform encephalopathy (BSE), better known as mad cow disease.

    To which we can only say, “Whew!”

    Published on: March 7, 2005

    Interesting piece on MSN Money about the possible impact of Wal-Mart going into the financial services business.

    “Imagine for a moment if the world's biggest retailer put the pricing squeeze on one of the world's more profitable businesses: financial services,” MSN writes. “Who would pay the price? Perhaps:

    • Mortgage lenders who surprise their borrowers with last-minute junk fees.”

    • Banks that nickel and dime their small account holders to death.”

    • Auto lenders who add discriminatory surcharges on loans to black and Hispanic buyers.”

    • Credit card companies that use every excuse to jack up rates.”

    • Check cashers and payday lenders that levy usurious charges on their customers.

    “Wal-Mart's relentless push for ever-lower prices has revolutionized retailing and is sometimes even credited for helping to keep U.S. inflation low. It's not hard to make the leap into imagining the retailer bringing similar price discipline to an industry grown fat on escalating rates and fees.”

    In addition to driving down charges, one of the things that Wal-Mart would bring to the table, according to the piece, would be an ability to target lower income consumers who often are ignored by financial services companies.
    KC's View:
    It would seem, based on reading the piece, that the way the existing financial services industry is dealing with a possible Wal-Mart incursion is to try and keep it out by whatever means possible.

    Which is a very different thing than actually positioning the industry to compete with Wal-Mart.

    An MNB user who emailed us this piece made the best point: that the exact same piece could have been written about the supermarket industry a decade ago.

    Except for one thing.

    There are still retailers out there who wait until Wal-Mart opens down the street before trying to figure out how to compete with it.

    At which point, we think, retirement seems like a far better option.

    Published on: March 7, 2005

    The New York Times reports that the National Pork Board has decided to shift the emphasis of its advertising message from the 18-year-old “other white meat” campaign to a new one that will say, “Don’t be blah” and urge people to try new dinnertime alternatives.

    Steve Murphy, the pork board’s CEO, tells the NYT that the goal is to overcome "barriers to demand growth" for pork. Statistics show that pork consumption, which has grown since the old “other white meat” campaign was introduced, seems to have leveled off…while chicken consumption continues to grow and outstrip pork.

    The “other white meat” message isn’t being abandoned completely. Whereas the old campaign was “Pork: The Other White Meat,” the new one will say “Pork: The Other White Meat: Don’t Be Blah.”
    KC's View:
    We had a piece last week about how mass market advertising has gotten so uninspired that people have begun saying that the mass market is dead.

    And this “don’t be blah” ad seems like the poster child for lack of inspiration.

    Published on: March 7, 2005


    • The Contra Costa Times reports that the California State Assembly will be considering legislation that would limit people’s ability to sue restaurants, food retailers and manufacturers for health problems associated with obesity.


    • The Detroit Free Press reports that employees at Kmart’s longtime headquarters in Troy, Michigan, have been told that the company is closing up shop there and will be moving marketing, merchandising and store operations personnel to another Detroit-area facility, while other jobs will be moved to a new Sears-Kmart combined office near Chicago.

      However, according to the Free Press, “Aylwin Lewis, Kmart's CEO and president, gave few other details during the meetings about how many of the 1,800 headquarters employees would have jobs after the $11-billion merger with Sears Roebuck and Co.”

    KC's View:

    Published on: March 7, 2005


    • Robert Connolly, Wal-Mart’s executive vice president of marketing, announced that he will retire at the end of the year. Connolly joined Wal-Mart in 1989 as VP and merchandise manager, and has been there ever since with the exception of two years when he was at Montgomery Ward.

      A successor has not been named.



    And, in other executive moves…

    Longs Drug Stores announced that:

    • Bruce E. Schwallie, Executive Vice President and Chief Merchandising
      Officer, has been named Executive Vice President of Business Development and
      Managed Care.


    • Richard W. Dreiling, Executive Vice President and Chief Operations Officer,
      has been named Executive Vice President and Chief Operating Officer.


    • Todd J. Vasos, Senior Vice President of , has been named Chief
      Merchandising Officer and will be responsible for the pharmacy marketing as
      well as front-end merchandising and marketing.


    • Steven F. McCann, Senior Vice President, Chief Financial Officer and
      Treasurer, has been named Executive Vice President, Chief Financial Officer and Treasurer.

    KC's View:

    Published on: March 7, 2005


    • Amazon.com has been hit with an $18,000 fine by a New Jersey Superior Court judge, who said that the company had violated her order not to violate its exclusivity agreement with Toys R Us until a pair of lawsuits is resolved.

      The toy retailer sued Amazon last May, saying that the online retailer had violated a 2000 agreement that had Toys R Us giving Amazon $200 million in exchange for exclusivity on certain products. Amazon countersued, saying that Toys R Us broke faith by not keeping these items in stock.

      The judge scheduled the case to begin March 16, unless a mediated settlement can be reached.

    KC's View:

    Published on: March 7, 2005

    Some widely varying comments on the ongoing debate about whether Canadian cows should be allowed into the US, despite concerns about mad cow disease.

    MNB user Ralph Markham wrote:

    A week or so back I responded to one of your articles and was supportive of NAFTA; in fact I defended it. Well I have changed my mind. First the court in Montana issues an injunction and now the US Senate orders the USDA to abandon its plans to drop restrictions on Canadian cattle. Then this morning I am enjoying my coffee listening to the news and an article comes on where a spokesman for R-CALF (the Montana lobby group behind the injunction) is interviewed as stating if Canada had supported the US in its war in Iraq and also joined the US continental Ballistic Missile Defense system we wouldn’t be having these trade disputes and the border would have been open by now.

    Message to the United States of America, we are an independent and sovereign nation who for many years have tried to be and are good neighbours and friends to the USA. What has happened? Why have you become so protectionist? When did we become a threat to the you? NAFTA was an agreement between friends and now you want to ignore it. The USA is enjoying selective benefits of NAFTA but where it is politically unpopular such as cattle, such as softwood lumber, you ignore the agreement. It is time for Canada to invoke the 90 day clause in NAFTA and abandon the treaty. And at the end of the 90 days we should jack the prices of Canadian commodities you enjoy at Canadian prices (because of NAFTA) such as oil and natural gas, to world levels. Do a check… the USA imports more oil and gas from Canada then it does from Arab states, in fact we are your #1 supplier of oil and petroleum products.

    Canadians are a distinct unique and important part of the North American fabric. We are not Americans but love and respect your nation. To the politicians and protectionist forces in your great nation I say grow-up and join the rest of the world. You will be respected more if you were more conciliatory than as a bully.


    While we have concerns about mad cow disease, we can understand why Canadians might feel jerked around.

    But we wouldn’t pay too much attention to people linking the current trade debate with Canada’s lack of support for the war in Iraq. While some cattlemen and senators may link the two, it just doesn’t make sense – because it is the Bush administration that is trying to open the border. If the administration were ticked off, it wouldn’t be working so hard to lower the trade barriers.

    And MNB user Brenda Strombeck wrote:

    I am an American living in Quebec Canada and so thankful to be here. I am in the organic industry providing organic/biologic fresh, frozen retail boxed and processed pork, chicken and turkey products to also include deli slices, bacon, etc. to the Canadian and US consumer.

    According to my findings from even the US pork board, there have been over 400 cases of mad cow disease in the United States although USDA is claiming only one? It seems every time they test a possible diseased cow in the US, they have preliminary after preliminary testing that come up positive until they finally receive a negative reading. I have read so many US newspapers that claim 2 tests out of three are positive but count the negative test as a negative all around and that is what apparently the USDA or protocol guiding the US. How real is that? Canada comes to the forefront right away when they just "think" a preliminary test has shown a positive reading. Really, how safe is it for Americans to eat any beef in the United States? My thinking is to just stay away completely from US beef…


    And if you feel that way, so you should.

    Somehow, though, we’re more concerned about the cows not getting tested than we are about the cows that in the end test negative.

    But that’s just us.




    We had a bunch of stories last week about quarterly results, which prompted one MNB user to write:

    The trend continues with the release of Feb. comps. Target same store sales continue to grow at a rate double that of Wal-Mart. Are we seeing consumers walking-away from Wal-Mart or is Target doing that much better a job of merchandising? Clearly the investment community is not going to allow Wal-Mart to continue this trend, how Bentonville deals with this will be very interesting to watch.





    On the subject of the recent retailing mergers, MNB user Philip Herr (who notes that Macy’s is one of his clients) wrote:

    I disagree with your comment that the Federated-Mays deal is similar to the Kmart-Sears merger. I think they are very different scenarios and believe the Federated deal makes more sense. Federated -- specifically Macy's has strength on the coasts but not in the interior. The re-badging of various May's properties will make for a truly national department store chain. And while each region will continue to merchandise appropriately for its local customer, the philosophy that Macy's can bring to the renewed May's chains will create news and excitement again. Additionally, a national chain will enable Federated to buy advertising on a national basis which can create millions of dollars in savings.




    And since everyone else in the world seems to be obsessing about Martha Stewart, we have to post a couple of emails that we received. One MNB user wrote:

    Regardless of whether you think Martha deserved to be hauled off to jail, or that she was made the scapegoat in this whole affair, putting someone under "house" arrest on a 153 acre estate gives a whole new meaning to the term "Big House".

    Right. “Up the river” has an entirely different meaning when you actually own the river.

    Another MNB user wrote:

    Martha has served her time and Kenny Lay still isn't in court, what a country!

    We were reading over the weekend about how the SEC is considering trying to keep Stewart from serving as a corporate officer at the company she founded. And, as a taxpayer, we’d like to say that we think that any more money spent prosecuting this woman is an utter waste. The government prosecuted her, sent her to jail, and now she’s out.

    They should leave her alone, let her get back to work, and start dealing with cases of far more import.

    And a memo to all the various television networks: Stop the wall-to-wall coverage.

    Please.
    KC's View: