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    Published on: March 8, 2005

    California Governor Arnold Schwarzenegger, who first came to fame as a bodybuilder and later, in addition to a hugely successful movie career, served on the President’s Council for Physical Fitness, plans to introduce legislation that would, he said, “ban all the sale of junk food in the schools.”

    He said that schools should be selling milk and fresh vegetables, not sodas and junk food.

    According to the Contra Costa Times, “the governor's chief of staff, Pat Clarey, said the governor is supporting legislation by state Sen. Martha Escutia, D-Norwalk, to extend to high schools existing limits on the sale of sugary sodas.

    “The administration is also working with school officials and food manufacturers to develop a series of bills to make more nutritious foods available on school campuses, which could lead to a ban of junk food in schools.”
    KC's View:
    Food manufacturers should take this very seriously. The Governator is enormously persuasive, and this is an issue on which he has more than a little credibility.

    There seems to be a lot of this going around, by the way. Arkansas Gov. Mike Huckabee has found religion in this area, losing 110 pounds by eating right and exercising – and just the other day completing the Little Rock Marathon, along with Iowa Gov. Tom Vilsack. (This cuts across political lines, apparently – Vilsack is a Democrat, while Huckabee and Schwarzenegger are Republicans.) Huckabee has even written a book on the subject, and is pushing for expanded obesity education in his state.

    Marketers have a choice. Embrace this trend and be part of it. Or ignore it at their own risk.

    Published on: March 8, 2005

    Nice piece in Mass Market Retailer about Loblaw Cos. CEO John Lederer, who told a recent retail conference that he considers the company “not great marketers. We’re very good merchants, but we can be a lot better marketers, in the true definition of the word. After more than 25 years in the general merchandise business we are still neophytes in that sector.’’

    Lederer says that one of the things that the company has learned from the quarter-century in the GM business is that the company does “best with anything that is in some way related to food — barbecues, small appliances, kitchen equipment, tabletop — as well as everyday household items, electronics and children’s clothing,’’ he said. ‘‘We do not see general merchandise as a panacea.’’

    What has been a panacea for Loblaw has been its President’s Choice private label brand – which has virtually redefined the notion of own-label products – and, increasingly, its Real Canadian Supercenter format, which allows it to preempt and/or position itself against other competition.

    Lederer also says that Loblaw plans to continue to upgrade its food offerings as well as expand its service offerings, which currently include gas stations, car washes and a variety of financial services.
    KC's View:
    One of the things that always has distinguished Loblaw is a willingness not to settle for the status quo, but to stretch itself and try new things. In a competitive and fast-evolving marketplace, being behind the curve usually means that you’ve lost momentum and risk being out of touch with the consumer.

    And that’s a potentially deadly combination.

    Published on: March 8, 2005

    The Cleveland Plain Dealer reports that Ahold-owned Tops Markets wants to eliminate all meat cutters from its 49 northeastern Ohio supermarkets, and instead use boxed beef.

    The existing contract requires that Tops management give the United Food and Commercial Workers (UFCW) 45 days notice before making such a change; the company reportedly has scheduled a meeting with the union to discuss its plans, and already has lined up a supplier for boxed beef.

    The goal, according to a company spokesman, is to “strengthen itself” in the market as well as cut costs so that it can better compete with Wal-Mart.

    Tops recently closed six Northeast Ohio stores that it said were underperforming. The company operates a total of 155 stores in western New York, western Pennsylvania and Northeast Ohio, but only the meat departments in the latter region would be affected by this move.
    KC's View:
    What Tops seems to be aiming for here is addition by subtraction…at least, that’s what “strengthening” through cutting would appear to be.

    Now, we don’t know the specific financials for the stores that would be affected. There may, in fact, be some compelling financial reasons for making these cuts.

    But management may be kidding itself if it thinks that it can better compete with Wal-Mart by cutting away at the things that make it different from Wal-Mart. They’re not alone in this self-delusion; a lot of folks think they can out-Wal-Mart Wal-Mart, only to find out that they’ve played right into the Bentonville Behemoth’s hands.

    That said, this is almost certainly a done deal in Tops’ northeastern Ohio stores, and the meat department employees everywhere else in the chain better get ready for the initiative to spread.

    Published on: March 8, 2005

    The Chicago Tribune reports that Roundy’s CEO Robert Mariano may once again be positioning the company to try and acquire Dominick’s from Safeway.

    Mariano, who used to run Dominick’s, refused to comment, as did Willis Stein & Partners, the investment firm that owns Roundy’s.

    "Yes, we would be interested in buying Dominick's," one Roundy’s source tells the Tribune. "We think it's a good fit for us, but Safeway isn't quite ready to sell it until it at least has a deal with the union over a new labor agreement."

    Safeway has not had a labor agreement at Dominick’s since November 2002; while management has said that getting a new deal is a priority, the two sides have not met this year and have no negotiations planned.

    One sticking point, however, could be the price that Roundy’s may be willing to spend: $325 million, far less than the $1.8 billion that Safeway bought Dominick’s for seven years ago; Safeway also has spent more than $400 million to revamp the chain, but has been consistently criticized for embarking on a centralized merchandising and procurement strategy that ignored the chain’s local roots. Safeway tried to sell Dominick’s in 2003, but reportedly was unwilling at the time to accept an offer for $800 million.

    Roundy's has the cash; it recently sold two distribution centers to Nash Finch for some $225 million.
    KC's View:
    Hard to imagine that Safeway would take so little money for Dominick’s, but at this point its ownership of the chain has become like a bad joke.

    Maybe it’s time to just get rid of Dominick’s, write it off as a nightmare, and move on.

    Except that the debacle that has been Dominick’s will forever be part of CEO Steve Burd’s legacy.

    And that from everything we hear, Safeway isn’t learning from its Dominick’s mistakes, isn’t making fundamental changes in the way it operates.

    Published on: March 8, 2005

    The South Florida Business Journal reports that Kroger is interested in using Winn-Dixie’s bankruptcy as a way to get into the Florida market.

    The paper reports that active negotiations are taking place between the two companies that would have Kroger becoming a supplier of goods and services to Winn-Dixie, leading to an eventual buyout and/or takeover of the company.

    The paper writers that Kroger would “get stores in northern Florida and other states (and) assume $800 million in debt, while Winn-Dixie would survive as a pared-down central and South Florida grocery chain.” Any deal, of course, would have to be approved by federal regulators.
    KC's View:

    Published on: March 8, 2005

    There’s a very interesting piece on that looks at the nation’s sudden preoccupation with eliminating trans fats from foods, on the premise that the “artery-hardening enemy du jour is a fat that's now thought to be so incontrovertibly bad for you that even the notoriously laissez-faire Bush administration recently advised citizens to consume as little of the stuff as possible.”

    The problem, writes Salon’s Katharine Mieszkowski, isn’t that getting rid of trans fat is a bad idea. It is a good idea, and eminently doable because trans fat doesn’t have a lot to do with taste.

    But, she writes, “Nutritionists fear that focusing on one ingredient creates the illusion that purging it will make up for our other crimes against the waistline. Health advocates say the war on trans fat has become little more than a marketing opportunity for the major food companies to continue serving junk food with a healthy conscience. Meanwhile, with its new guidelines about avoiding trans fat, the USDA can appear to be doing the healthy thing without really causing the food companies to change their fatty ways.”

    Mieszkowski even takes readers on a field trip to Tiburon, California, a community across the Golden Gate Bridge from San Francisco that has declared itself the first trans fat-free city in America – all 18 restaurants there have stopped using trans fats in their food preparation.

    This makes for what some would consider a healthy meal: “After I help my husband Jim polish off the 30-piece appetizer of fried Monterey calamari, I lay into a 12-inch pepperoni pizza, which supposedly serves one. Jim has four veal medallions glistening with prosciutto and fontina. For dessert we split an order of profiteroles -- two baseball-size pastries stuffed with vanilla ice cream and doused in dark Godiva chocolate. Yum. And it's trans fat free!”
    KC's View:
    Yum, indeed…

    Mieszkowski makes a good point about the all-or-nothing-at-all approach favored by Americans (mostly because when you take an absolute position, it absolves you of actually thinking). It isn’t just trans fat that is a nutritional nightmare. It’s too much food. It’s too much of the wrong kinds of food. It’s too little exercise.

    And, she actually raises another good question. Has the jihad against trans fat become more about marketing and less about health?

    If so, the focus will be transitory, lasting only until the next craze comes along.

    Published on: March 8, 2005

    Advertising Age columnist Al Ries has a good piece in which he notes that “there is a widely held belief, especially among top management, that marketing is nothing but common sense. And nothing is more common among CEOs than the belief that they have a full deck of common sense.”

    The problem, Ries writes, is that “marketing is 90% strategy and 10% execution. With the right name, the right target audience, the right position and the right timing, most marketing programs are bound to work. The difficult part is the 90%. The easy part is the 10%.”

    Two other phrases from Ries worth keeping in mind:

    • “Good strategy improves execution. As a matter of fact, good strategy can be defined as a strategy that will allow better, more consistent execution.”

    • “Good execution cannot change or improve a poor strategy.”
    KC's View:
    Boy, does this hit home…especially in the supermarket industry, which sometimes confuses marketing with merchandising.

    You look around at the major chains, and you wonder how many first rate marketing strategies are being conceived, and how much time is being devoted to clear, dispassionate, and passionate consideration of how to present and differentiate the shopping experience, how to define and target the audience, and how to build short-term and long-term marketing plans that serve the customer’s needs and concerns.

    As opposed, say, to negotiating slotting allowances and figuring out how to cut costs and get more efficient.

    Another question. How many retail CEOs are marketers – real marketers – as opposed to accountants?

    Published on: March 8, 2005

    The Toronto Globe & Mail reports that a US federal judge has rejected a request by the American Meat Institute (AMI) that the US border be reopened to Canadian cattle under 30 months of age.

    The border was supposed to be opened yesterday, but a different judge granted a temporary injunction overriding the Food and Drug Administration (FDA) decision to re-open the border, which has been closed because of concerns about bovine spongiform encephalopathy (BSE), better known as mad cow disease.
    KC's View:

    Published on: March 8, 2005

    • The Baltimore Business Journal reports on diminishing support for a bill being considered by the Maryland State Legislature that would impose a special tax on companies that have more than 10,000 employees and pay less than eight percent of their total wages for health benefits.

      When first introduced, the bill was supported by Giant Food, the Greater Washington Board of Trade and the Maryland Retailers Association. Of the three, however, only Giant remains supportive of the legislation; spokesman Barry Scher tells the Journal that while Giant has about 19,000 Maryland employees, it also spends more than 20 percent of its payroll on benefits and would not be affected by the bill. "This sends an important signal to the business community: You need to pay decent benefits so your employees don't require subsidies when they seek medical attention," Scher said.

      The Board of Trade has decided not to support the bill because of concerns that its provisions eventually would be extended to smaller retailers. The Retailers Association has decided to abstain from supporting or opposing the bill.

      Wal-Mart spokesman Nate Hurst told the Journal that the bill unfairly targets his company, which, he said, offers health care to full-time employees after 180 days of employment and part-time employees after two years and spends seven percent to eight percent of its total payroll on health insurance. "I think that there's a misconception out there that we don't.”

    • reports that Wal-Mart has postponed its plans to open stores in Russia, saying that it couldn’t come to an agreement for a proposed joint venture with local retailer Ramstore, which is owned by Migros Türk.

    • There are reports in the Chinese media saying that Wal-Mart plans to open 50 new stores there within the next five years, with all of them to be located in Beijing, Shanghai and Guangzhou. Wal-Mart reportedly plans to expand in secondary markets by acquiring smaller retailers there.

      This announcement comes as Wu-Mart, the Beijing-based supermarket retailer, announced that it plans to open 100 new stores just in its home market this year, with the focus on smaller stores as opposed to hypermarkets.

    • There’s a long and interesting profile in Illumination a publication put out by the University of Missouri, of Emek Basker, who was used as the sole academic source by Business Week in evaluating the various controversies surrounding Wal-Mart’s rapid expansion in the US.

      Basker “found that five years after the opening of Wal-Marts in most markets, there is a small net gain in retail employment in counties where they're located, with a drop of only about one percent in the number of small local businesses," Business Week reported. At the same time, she told the magazine, “retail prices for many goods fall 5 percent to 10 percent.”

      While going into Basker’s methodology with such academic thoroughness that it would make a non-economist’s hair hurt, Illumination notes that Basker is not backing away from her conclusions, even though she has become a lightning rods for criticism by Wal-Mart opponents. And, the publication makes an interesting concluding point:

      “In the end, Basker's findings raise an obvious question: ‘Could the controversy over Wal-Mart's entry into local markets find its source in emotionalism over rationality?’ Basker would rather not say. She responds instead with a measured, almost Alan Greenspan-esque assessment. ‘The small magnitude of the estimated effect of Wal-Mart on retail employment is,’ she says, ‘striking in light of the level of public discussion on this topic.’”

    KC's View:

    Published on: March 8, 2005

    The World Health Organization (WHO) has recommended that people consumer less acrylamide, a chemical formed at high temperatures during frying, roasting or baking that is believed to be carcinogenic. And, the WHO suggested that food manufacturers "lower significantly" the acrylamide content in foods such as French fries, potato chips, and bread.

    The dangers of acrylamide consumption first came to light in 2002 when Swedish scientists reported that it caused cancer in rats. While there was much debate over the subject, most countries – including the US – decided that more research was required.

    While the WHO says that more research is needed, it also says that there is enough information available to warrant changes in dietary habits and food preparation.
    KC's View:

    Published on: March 8, 2005

    MNB had a story yesterday about how 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.

    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.”

    Our comment: 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.

    MNB user Lisa Malmarowski observed:

    Seems like pork marketing mavens should follow their own advice. This sort of 'advertising' smacks of decision by committee - Don't be too edgy, don't offend, don't be too wacky - I know, be insipid!

    Another MNB user wrote:

    You are so right! They should focus on the taste and innovative and simple= ways to fix pork. Roosted pork in the oven or grill covered with coriander is a = mouth watering combination. Try it!

    And yet another MNB user wrote:

    At least they didn't go with "Got Pork?"

    How about…“when you really want to pig out…”?

    The problem is that the slogan doesn’t make us hungry. Or interested. Or curious.

    And it was just last week that we were writing about the deliciously tender pork medallions served with creamy chorizo risotto at Emeril’s Delmonico in Las Vegas…a meal so good that will stay in our mind and heart for a long time.

    This slogan reads like it was written by a copywriter who might as well be a vegetarian.

    In our story about Publix opening a new Hispanic-themed format, we suggested that this kind of innovation suggests the distance between Publix and Winn-Dixie. But one MNB user thought that we were being too tough on Winn-Dixie…

    Winn-Dixie has an extensive line of Hispanic food ingredients in their larger stores, both fresh and packaged from corn husks to Mexican cheeses. Publix has just started adding some basic items. Publix gets all the great press, but WD has a lot going for it. I shop there because their variety is better than Publix, especially store brands. The service is fine, too. The press is helping the demise of WD by printing all of these negative comments. None of the national press shops there nor for that matter does the local press. I have found in my thirty years in the industry that most “expert” comments are spurious. One has to actually shop in a store to determine its merit. It would much better if the press encouraged people to support a great retailer. It may be too late but what is gained by all the criticism?

    Fair point. Though we’re not sure that the messenger can be blamed for all of Winn-Dixie’s issues.

    We had a piece yesterday referencing a Washington Post story about how Wal-Mart is finding creative ways to get around local zoning restrictions - in some cases splitting stores in two and building them next to each other so that technically they stay within code, or calling for referendums that would supersede government decisions, or coming up with store plans that live within zoning restrictions (even if just barely).

    While some would suggest that fighting Wal-Mart is a futile endeavor, we actually think that Wal-Mart’s Borg-lime, “resistance is futile” demeanor could at some point work against it. “We happen to be a fan of good, old-fashioned moral outrage. It’s good for the soul, even if not always successful.”

    And, we offered the following inspiration from Dylan Thomas:

    "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.”

    One MNB user responded:

    Or how about Continue to bang your head against the wall because it will feel really good when you stop. Listen, polemics against Wal-Mart are going to have little, if any, effect. This attitude of small company good, big company bad‚ sounds like it’s informed more by Hollywood than by reality. As many have pointed out, consumers are making the decision and have been since the early days of Wal-Mart when they were supplanting the local Mom -and-Pops.

    Is this a bad thing or a good thing? Should government step in for the “good of the people”? You seem to be reflexively saying yes to both, thinking of yourselves…as champions of the "Little Guy". But guess what? The Little Guy works at Wal-Mart and shops and saves at Wal-Mart. The Little Guy’s shot at the American Dream is enabled by lower prices and a stepping stone to a career in management or as a means of supplementing social security income. Historically, the government has done a fairly poor job of helping the Little Guy by blockading capitalism or raising the minimum wage.

    We’ve banged our head against more than a few walls in our time. And while you cast our positions as “little guy vs. big guy,” we actually think of our role in the same way old time journalists did: ‘to comfort the afflicted and afflict the comfortable.” And size doesn’t matter.

    For the record, we would make one point. While it can be fairly said that we are critical of Wal-Mart, we would like to think that we are much, much tougher on its competition…especially when that competition doesn’t do what is necessary to survive. We like to point out that “compete is a verb.”

    And in this, as well, size ultimately doesn’t matter.

    But if you want to smack us around for being too pro Little Guy, we can live with it.

    One MNB user wrote:

    I've been reading that Wal-Mart is supposed to be 15-20% less on groceries than most of the major chains.

    Over the weekend, I went to Kroger for something and chanced to see some cheese spread--same brand we had purchased at a Wal-Mart the week before. At Wal-Mart, it was $2.50. At Kroger, $3.99.

    I couldn't believe the difference, so double-checked several 8 oz. containers to be sure there wasn't a price-sticker error.

    I also found that Kellogg’s All Bran is 80 cents cheaper at Wal-Mart than at Kroger or Meijer.

    We used to be dedicated Kroger shoppers but go there very seldom now--and less in the future as we check other prices.

    MNB user Thomas D. Murphy wrote:

    I am sorry, but contrary to the Morning News Beat perspective, I believe that the majority of consumers want a Wal-Mart. Unfortunately, this majority is silent and not as motivated or organized as the aggressive minority who fight Wal-Mart...often led by the competition and unions. I believe that as long as the grocery industry hangs its hat on regulatory control of Wal Mart as any part of their defense...the industry will lose. It is time to wake up and compete in a manner that offers the consumer what they want...differentiation will it price, assortment or service.

    We agree, at least about the need to compete and not hang onto the false hope of regulatory intervention.

    Not everyone thought we were too tough on Wal-Mart, though.

    MNB user Richard L. Gramza wrote:

    Abraham Lincoln nailed it when he said,

    “Nearly all men can stand adversity, but if you want to test a man's character, give him power. “

    The folks in Bentonville are just too big for their britches; they have a little too much power with not much oversight. Their real power lies with the citizens who are struggling with make ends meet from one paycheck to the next. These folks don’t really care if their taxes are subsidizing the Wal-Mart store, they just want to provide as much as possible for their families.

    And you know what they say about absolute power…

    Another MNB user wrote:

    I'll see your Dylan Thomas and raise you a Bob Marley:

    It's not all that glitters is gold;
    Half the story has never been told:
    So now you see the light, eh!
    Stand up for your rights. Come on!

    Get up, Stand up: Stand up for your rights...
    Get up, Stand up: Don't give up the fight!

    And finally, another MNB user sent us an email that was, in the scheme of things, inevitable:

    You improperly attributed the verse to Dylan Thomas. In actuality, it was Rodney Dangerfield in “Back to School” - at least, that’s how I like to remember it…

    We actually got several emails from members of the MNB community referring to that scene in “Back to School.” And all of them made us smile.

    After all, who can ever forget Rodney saying, “Bring us a pitcher of beer every seven minutes until somebody passes out. And then bring one every ten minutes.”

    Those were the days…
    KC's View: