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    Published on: March 23, 2005

    The New York Times reports this morning that “after years of encouraging workers to take early retirement as a way to cut jobs, a growing number of companies are hunting for older workers because they have lower turnover rates and, in many cases, better work performance.

    “Some companies like Wal-Mart are making their pitches at senior centers and others are sending company brochures to churches and community libraries and posting their attractions on Web sites.

    “AARP, the advocacy group for older people, recently put on its Web site links to 13 "featured employers" - including MetLife, Pitney Bowes, Borders, Home Depot, Principal Financial and Walgreens - that are recruiting older workers with offers of health benefits, training and flexible work schedules. More than 71,000 people have used the Web site this month to seek job information.”

    One of the interesting twists: national chains are being extremely flexible about the jobs they offer senior citizens. The NYT notes that one man who works for Home Depot works half the year in Pennsylvania and the remainder of the time in Florida – which works for him and works for Home Depot.

    At Borders, 16 percent of the company’s employees are 50 or older, compared to six percent a half-dozen years ago.
    KC's View:
    As the calendar pages turn, we find stories like this to be immensely reassuring.

    The challenge, of course, is that these workers need to be able to relate to shoppers who are getting younger and younger.

    But this is a great opportunity for supermarkets. After all, people used to have their moms around to tell them about how to make this or do that. But mom may now live halfway around the world or be busy with the intricacies of her life; the old back fence, across which much information was communicated, no longer exists (though there is the virtual version on the Internet). But older folks who could help these younger shoppers understand how to prepare certain kinds of food and how to feed their families responsibly – those goes a long way toward making the store more of a resource of information as opposed to just a source of product.

    Published on: March 23, 2005

    Forbes reports that a series of studies in the UK seem to have proven that growing genetically modified crops is more harmful to birds, flowers and insects than the non-GM equivalents, and that “the ultra-powerful weedkillers that the crops are engineered to tolerate would bring about further damage to a countryside already devastated by intensive farming.”

    The testing results, according to the magazine, make it likely that continued opposition among the British public to biotechnology will make it very difficult for biotech firms to get a foothold there.

    It is said that Prime Minister Tony Blair has been supportive of the biotech industry, even though the government, according to Forbes, officially has been to be neutral and open to scientific advice. However, these new results may make support for genetically modified foods politically untenable in a country where there was already far greater hostility to the technology than, say, in the US.
    KC's View:
    We’ve long been agnostic on the subject of biotechnology and genetically modified foods. But we have to admit that this Forbes made us look a second time.

    It seems unlikely that there will be any sort of major shift of opinion here in the US, though. We think that in areas such as this, it takes utter catastrophe to move the needle on public opinion.

    Published on: March 23, 2005

    Consumer packaged goods giant Unilever has filed a lawsuit against Ahold’s Albert Heijn division in the Netherlands, saying that the retailer has illegally copied its packaging for private label items such as iced tea and margarine.

    "Albert Heijn is one of our biggest customers, so we don't do this lightly. They have crossed the line," said Unilever spokesman Richard van der Eijk said. "These are copies of our products, but the quality is not the same."

    Ahold spokesman Hans Koeleman said Unilever's suit was baseless, and said that the manufacturer is simply concerned about private label items eroding the market share of national brands.

    A court date is scheduled for April 12.
    KC's View:
    Why do we have a feeling that there might be a little bit of truth on both sides of this argument?

    Sure, Ahold would like its private label to as closely resemble national brands as possible, albeit at a lower cost. And there’s no doubt that Unilever is concerned that own label products are taking money out of its pockets.

    The question is where the line gets drawn, and what constitutes “theft” vs. “reasonable facsimile.”

    Look for a settlement.

    Published on: March 23, 2005

    The Boston Globe reports that Massachusetts Secretary of State William F. Galvin believes that Gillette may be worth as much as $72 billion, far more than the $57 billion that Procter & Gamble agreed to pay for the company earlier this year.

    In addition, Galvin is saying that a study he commissioned suggested that the combination of the two companies ought to be able to realize far greater synergies than they have proposed – as much as $28 billion, compared to between $14 billion and $16 million – which would mean that Gillette ought to be worth more to P&G than it is actually paying.

    The Globe writes, “Galvin also said the new numbers raise further questions about the motives of Gillette chairman and chief executive James M. Kilts, whom he said received an ‘unusual’ $11 million payment from P&G as part of a total compensation package that an executive compensation firm has said could be worth $173 million.”

    The Globe also is reporting that the US Federal Trade Commission (FTC) has requested additional information in connection with its review of P&G’s acquisition of Gillette.

    Both companies are cooperating with the FTC, though they maintain the terms of their deal are entirely appropriate.
    KC's View:
    The sad reality, created by the travails at Enron and WorldCom, is that many people assume that CEOs are more interested in their own bank accounts than those of their investors and employees. Like it or not, in the court of public opinion, that may be the standard of proof that Gillette and Kilts may have to meet – that this was the best possible deal for everyone, not just for Kilts and P&G.

    Published on: March 23, 2005

    The Wall Street Journal reports that a number of banks, no longer believing that a toaster is enough to attract customers, are allowing coffee chains to set up shop inside their facilities.

    “Last spring Bank of America Corp. opened two branches in California containing Starbucks coffee shops and Citizens Financial Group Inc.'s Charter One opened five branches with Starbucks last year, bringing its total number to seven,” the WSJ writes. “North Fork Bancorp's North Fork Bank opened three branches with Starbucks in New York last year and plans to open four more in New York and New Jersey this year, bringing its total number of coffee-shop branches to eight.”

    Starbucks Corp. estimates that it has at least 18 locations that are part of bank branches or adjacent to banks, according to the paper, and the Caribou Coffee Co. – as well as a number of small, local coffee retailers - reportedly also are preparing to test the concept.

    The WSJ says that the moves reflect banks’ re-emphasis on branches.
    KC's View:
    Maybe shorter lines would be a good thing. Or shorter time for checks to clear. Or maybe less usurious interest rates.

    The WSJ is right. This trend does mean that banks are paying more attention to their branches.

    Just not their customers.

    Published on: March 23, 2005

    USA Today reports that the nation’s airports, long a bastion for overpriced and mediocre food, are changing their approach, demanding that the vendors that populate their concourses offer higher quality food at reasonable prices.

    It isn’t altruism at work. Because of security concerns, travelers are spending more time than ever in airports, and are demanding fresher ingredients and healthier fare that costs less than, say, a ticket on Jet Blue.
    KC's View:
    It was just a week or so ago that we reported that airlines were actually scaling back even the food they were selling on their planes, preferring to give away bags of chips and stay out of the foodservice business altogether. At that time, we suggested that this trend offered some retailers a great opportunity to sell plane-ready meals and snacks to shoppers.

    This new story suggests another possibility – that certain retailers could actually open outlets inside airports, bringing their wares to consumers instead of waiting for consumers to come to them. We can imagine a number of retailers that would be perfectly capable of offering a selection of fresh fruits, prepared meals and beverages from inside an airport terminal.

    Our personal preference, by the way – sushi, which is the perfect airline food.

    Published on: March 23, 2005

    The Boston Globe notes that while there has been a lot of publicity for the notion that chocolate contains compounds that may be able to reduce the risk of heart disease and can “reduce blood pressure, improve blood vessel function, keep blood platelets from aggregating and forming clots, and even lower blood cholesterol,” in this case the buzz has gotten ahead of the science.

    “It's an intriguing area of scientific inquiry,” Frank Sacks, a Harvard heart disease researcher, tells the Globe, but ''consumers should not say, ‘I should eat some chocolate because it might be good for my heart.'”
    KC's View:
    But we can dream.

    Published on: March 23, 2005

    The US Supreme Court has refused to hear an appeal of a ruling that would have prevented the use of the word “Napa” or any region within the Napa Valley on wine bottles that do not contain at least 75 percent grapes for that specific area.

    The suit originally was brought by the Bronco Wine Co. – maker of “Two Buck Chuck” – on behalf of its Napa Ridge, Napa Creek and Rutherford Vintners labels. Bronco said that the Napa naming rights law violated freedom of speech and interferes with interstate commerce.
    KC's View:
    Of course, Bronco apparently doesn’t give a damn about truth in advertising.

    Published on: March 23, 2005

    Apparently believing that traditional modes of advertising just don’t cut it anymore, Cadbury Adams is paying a Brooklyn man to walk around New York City and shout the name of its Halls Fruit Breezers product every 15 minutes.

    The concept is called “voicevertising,” and is said to be the verbal version of creative marketing efforts that have had product names plastered on foreheads and pregnant stomachs.

    Cadbury Adams reportedly found the man, Floyd Hayes, on eBay.
    KC's View:
    What’s the over-under on how long it takes for this guy to get mugged?

    Published on: March 23, 2005

    Forbes reports that the French parliament is considering a change in longtime national rules limiting people to a 35-hour work week, legislation originally intended to create more jobs. The effect instead, according to the magazine, was to limit salaries and depress the national standard of living.

    While France is rated as being less competitive than many other countries, with a population that works less than most industrialized nations, Forbes notes that it has a highly productive population – ahead of Britain, Germany, the United States and Japan.

    If the legislation passes as expected, French people now will be able to work 39 hours a week, and will be able to get overtime pay.
    KC's View:
    Which presumably will make them more productive and competitive without diminishing by too much the amount of time they have to sip espresso and red wine.

    Thirty-nine hours? Heck, we’d pass that by Wednesday…

    Published on: March 23, 2005

    Published reports say that Winn-0Dixie has asked the US Bankruptcy Court to extend by 150 days the April 22 deadline by which time it was to have decided which of its stores would be closed or kept open.

    The company also has asked for permission to sell its corporate jet, which it said should generate revenue of more than $15 million.
    KC's View:

    Published on: March 23, 2005

    Dow Jones reports that the UK Office of Fair Trading (OFT) has ruled that there is “little evidence that UK supermarkets were breaching its rules on supplier relationships, but gave suppliers one more chance to provide hard evidence of abuse by the major grocers.”
    KC's View:

    Published on: March 23, 2005

    Advertising Age reports this morning that next week, Martha Stewart Omnimedia will launch Body & Soul, a “new and improved” version of a magazine that it acquired when it bought New Age Publishing last August.

    The magazine is said to have 60 advertising pages and a circulation of 275,000, and has been completely redesigned in the Martha Stewart mode – tasteful and stylish while adhering to the holistic, new age-style content that distinguished it.
    KC's View:

    Published on: March 23, 2005

    • General Mills reported that its third quarter net income dropped 5.2% to $230 million, from $242 million during the same period a year earlier. Sales during the period rose 2.6% to $2.77 billion.

      The company said that the volume of cereal it sold dropped nine percent during the quarter, and that these is evidence that shoppers are replacing its brands with less expensive private label offerings.

    • Family Dollar Stores posted second quarter sales of $1.6 billion, up 13 percent over year-ago sales of $1.4 billion. Net income was $80.1 million, or 0.4% below net income of $80.4 million for the second quarter of the prior fiscal year.

      In the year-to-date period, sales were approximately $2.967 billion, or 12.0% above sales of approximately $2.648 billion for the first half ended February 28, 2004. Net income for the first half of 2005 was $134.5 million, or 6.5% below net income of $143.9 million for the first half of 2004.

      Same-store sales for the quarter were up 4.5 percent, while for the half they were up 3.6 percent.

    KC's View:

    Published on: March 23, 2005

    Two goofs in yesterday’s MNB

    In our piece about Coke’s new diet soda, we had a typo that said that coke was putting using “Spanda” as a sweetener. Of course, we meant “Splenda.”

    One MNB user, by the way, noted that "Spanda is a Sanskrit term for the subtle creative pulse of the universe as it manifests into the dynamism of living form,” and wondered if the soft drink company was considering some sort of Mystic Coke.

    Which, when you think about it, isn’t a bad idea.

    We also wrote yesterday that “Marie-Josée Lemieux, who was president of the United Food and Commercial Workers Union for the Eastern Quebec region and a thorn in Wal-Mart’s side, died of a heart attack over the weekend. He was 40.”

    Which was right, except that “he” was a “she.” And a different report said she was 39 when she died, not 40.

    But aside from that, the brief was completely accurate.

    KC's View:

    Published on: March 23, 2005

    We got a number of emails responding to yesterday’s interview with Art Turock, in which he spoke about how retailers can marginalize their competition.

    MNB user David A. McDougall wrote:

    Great interview with Art Turlock. He is correct in his concept of strategic vs. tactics. In the past 20 years, most companies in this country, have focused on the process instead of the sale. In the grocery industry, efficiencies instead of effectiveness. Now we have a lot of companies that are very efficient, but not very effective. Someone forgot that our customers are not efficient in their wants, needs and desires.

    It is interesting to note the demise of the "Senior Management Team," replaced with consultants that bring theoretical concepts that are focused on improving the bottom line of the company. Too often, this approach absolves or alienates the Senior Management Team from actively managing the business and reduces their abilities to impact the strategic plan of the company. One of my favorite, and more interesting questions of executives is, "What is the goal or purpose of the company?" You can determine quite a bit about a company's direction in determining at what level this goal or purpose is understood and communicated. If the guy in the mailroom can state what the goal or purpose of the company is, you have a well-run company.

    There is an evolution occurring in the industry and it will be exciting to see what concepts win in the long run. Thanks for the good work in bringing great articles and thoughts on a daily basis!

    Our pleasure.

    Another MNB user wrote:

    I used to work for an independent. When we hit hard times, our wholesaler sent in consultants. The most important thing they said was this "If you are the little guy and find yourself in a battle with the big guy...then you are doing something wrong. The big guy will always have the deeper pockets, but you are faster, more flexible and should be more in touch with your something with relevant and do it now."

    We didn't. We kept fighting the low price war...we lost. Being locally owned is not compelling enough for today's consumers. Independents have to give them something better that they are the only one to provide.

    MNB user Greg Smith wrote:

    Strategy vs. tactics. It is a whole lot easier to out think your competitor. Innovation, and change, are essential to survival and success. As Hispanic/Ethnic consultant to the Grocery Industry I see the great opportunity to being customer relevant, unique from competitors, and making your self hard to copy. Grocers can forgo an increase of 15%+ in business because of a fear of loosing 2%. Often the biggest problem is the fear of change.

    Let me translate an often-heard phrase. “We have always done it that way” This means I don’t want to change, and am comfortable just like I am. Another pitfall is “Well we will do some of the things you recommend in some areas, and when the business comes in we will finish up.” We can’t succeed by getting better; we have to achieve the sharp differentiation that Art talks about. To garner the Hispanic/Ethnic trade you can’t get better or even get as good as your competition and expect to win you have to be noticeable better. If you make the commitment the results can be spectacular.

    Responding to yesterday’s story about rental car companies setting up shop in some of the nation’s largest retailers, MNB user Randall L. Meyer wrote:

    This is a great concept to offer more flexibility to potential customers looking to rent a car. People typically associate rental cars with airports thus creating a negative connotation. This may open up an untapped market as it offers additional opportunities for renting vehicles. Also has the potential to increase the exposure of the rental companies without spending advertising dollars.

    On the subject of trying to stop employees from talking to each other instead of to customers, one MNB user wrote:

    Bingo. This hits the spot, Kevin. This is so widespread across the food industry: food service and retail stores. It reminds me of the first days when some of us went into Eastern Europe to consult re "service". We were astounded at what seemed to be the total tune-out of employees in stores and shops. In the West, we explained carefully, these businesses are privately owned and thus employees/partners/associates motivated to be customer sensitive and deliver superior service.
    KC's View: