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    Published on: March 30, 2005

    C-store chain 7-Eleven is opening what it is calling a Combined Distribution Center in Seattle, Washington, a facility that will give numerous local food providers a central facility to which they can deliver fresh and prepared products that can then be distributed to more than 300 7-Eleven units in the Pacific Northwest.

    The goal, according to the retailer, is to give it the ability “to offer fresh-made-daily and delivered-fresh-daily pastries, gourmet sandwiches, wraps, entrees, as well as other ready-to-eat and perishable foods.”

    In addition to serving as a kind of clearing house for local businesses, the distribution center will also be a central point from which 7-Eleven can distribute its own proprietary items that have been “developed by a team of master bakers, gourmet chefs, nutritionists or culinary experts, and are made fresh daily in a state of the art commissary kitchen in quantities based on each store's specific order.”

    According to the company, “To meet the challenge of delivering a daily selection of fresh foods, 7- Eleven has completely upgraded its infrastructure, from new store displays to a proprietary network of a bakery, commissary, and state-of-the-art distribution center with a 22-truck fleet. A store can place an order, have the items prepared fresh and on its store shelves, all in less than 24 hours.”
    KC's View:
    That strange feeling that supermarkets may be experiencing is 7-Eleven breathing down their necks.

    It may take time for 7-Eleven to convince consumers that its stores can be a source of quality foods – or what our friend Eamonn Quinn of Superquinn calls “no compromise convenience.” But it appears that the company is dedicated to that proposition, and is likely to have the patience to make this program work because it is convinced that this is where its future is.

    Which means that supermarket retailers everywhere need to sit up and take notice…and then do something about it.

    Published on: March 30, 2005

    The Minneapolis Star Tribune reports that the United Food and Commercial Workers (UFCW) is “quietly laying the groundwork for a major organizing campaign” that will take place at a SuperTarget store in West St. Paul – which, if the union successful, would then be the first unionized Target store in the nation.

    Target spokeswoman Paula Thornton-Greear told the paper that the company offers a wage and benefit package that is "among the best in the retail industry" and that workers don't need a union. "We don't believe that a union or any third-party representative would improve anything, not for our team members, guests or the company," she said.

    The UFCW has largely been focusing on Wal-Mart as a target for unionization, claiming that the Arkansas-based retailer not only is anti-union but is willing to engage in intimidation in order to stop organized labor from gaining a beachhead in its stores. Until this point, Target has flown underneath the UFCW’s radar…but that may be changing.

    "The only difference between Target and Wal-Mart is that Wal-Mart is six times their size," UFCW organizer Bernie Hesse told the paper. "Target was once the darling of the state, but now they've adopted Wal-Mart's business model and are in a race to the bottom as far as wages and benefits."
    KC's View:
    One of the reasons that Wal-Mart keeps winning these confrontations with the unions is that it is willing to play hardball. It’ll be interesting to see if Target has the same kind of resolve…what our grandmother used to call “gumption.”

    We suspect not. But we’re willing to be surprised.

    Published on: March 30, 2005

    • Targeting an ever-expanding audience, Wal-Mart plans to launch next month its first-ever Chinese language advertising campaign in the US.

      "At Wal-Mart, we understand that our customers come from communities with diverse languages, cultures and beliefs. We also know that a large segment of our Asian American customers prefer to receive information about our company in their own languages," said Bob Connolly, executive vice president of marketing and consumer communications for Wal-Mart Stores, Inc. "Communicating in the languages and culture familiar to Asian Americans reflects Wal-Mart's deep commitment to diversity and our respect for all of our customers."

    • Wal-Mart’s sponsorship of a regular segment on ABC-TV’s “Good Morning, America” has been attacked by 21 Congressional Democrats, who say that the series of pieces, entitled “Only in America,” gives a false impression of the company’s politics.

      "To try to allow Wal-Mart to continue to wrap itself in the American flag when it has been a company that has been hostile to so many American values is troubling," said Rep. Anthony Weiner (D-NY), who also happens to be running for mayor of New York City this year. "More and more Americans are asking about the price that we have to pay when Wal-Mart comes into a community, treats workers poorly, violates immigration laws and squashes small businesses."

      ABC responded to the letter by saying there is no overlap between Wal-Mart’s advertising and the editorial efforts of the news division, and executives noted that their reporters and producers have actually been aggressive in their coverage of Wal-Mart.

    • Interesting piece in the Denver Post about the forced resignation of former Wal-Mart vice chairman Tom Coughlin from the company’s board of directors, noting that three years ago, Coughlin told a newspaper interviewer that "Anyone who is taking money from associates and shareholders ought to be shot. That greed will catch up to you."

      Now, Coughlin wasn’t talking about himself and Wal-Mart; he was talking about Enron. But the words may come back to haunt him as rumors and speculation abound about the circumstances surrounding his departure from the company, which reportedly was related to between $100,000 and $500,000 worth of corporate gift cards and expense report claims.

      The matter has been referred to the U.S. Attorney's Office in Fort Smith, Ark.

      The Post writes, “According to SEC documents, Coughlin made more than $6 million in compensation and was granted stock options valued at nearly $4.7 million in Wal-Mart's 2004 fiscal year. Over the years, he amassed stock worth more than $50 million.

      “Does it make any sense to put a career like this at risk for a few hundred thousand dollars' worth of dubious expense-report claims?”

      USA Today reports this morning that Wal-Mart CEO Lee Scott, in a five-minute video message to 1.2 million company employees yesterday, said that “it is a mark of our strength that when we uncover issues, we deal with them, do the right thing and are a stronger company as a result.”

    KC's View:
    Of course, speculation and rumor about the specifics leading up to Coughlin’s departure are rife, and our phones and email have been burning up with various scenarios – some of which seem reasonable, others of which seem outrageous. (Of course, it’ll probably be the outrageous ones that end up being true…) There are allegations of behavior that was downright seedy, which would, quite honestly, surprise us.

    Wal-Mart may believe that it can get away without the details of Coughlin’s offenses becoming public, but nothing could be further from the truth. Every detail – salacious and otherwise - will get out into the public domain. It is inevitable. And at least part of the reason is that people believe the offenses are related to either money or sex…and maybe both. And nothing turns on the public more than stories about money and/or sex.

    Published on: March 30, 2005

    The Newark Star Ledger reports that having acquired 9.2 percent of Wild Oats and 40 percent of Pathmark, Ron Burkle’s Yucaipa Cos. is likely to be looking for other grocery chains in which to invest.

    "In the past, we've always looked at acquisitions," Burkle said in a conference call with analysts. "Hopefully, we'll find things here as well."

    Among the possible targets: Kings Super Markets, currently owned by Marks & Spencer, and Pennsylvania-based Weis Markets.
    KC's View:
    We can tell you that the rumor mill already is churning at both chains, especially Kings.

    Published on: March 30, 2005

    A new OmniTel Retail Study of Hispanic Americans reveals that Wal-Mart is that community’s favorite store, with 36 percent of survey respondents saying they prefer to shop at Wal-Mart.

    Tied for second place at a distant four percent each are JC Penney, Sears, and Target.

    According to the study, Hispanic Americans rated the following criteria as important when choosing a store:

      • Low prices – 77 percent
      • Convenient location – 72 percent
      • Wide range of merchandise – 71 percent
      • Employees who speak Spanish – 54 percent
      • Products relevant to Hispanic consumers – 52 percent
      • Wide range of payment options – 47 percent
      • Spanish signage – 47 percent
      • Product packaging and labels in Spanish – 43 percent
      • Owner is a member of the local community – 34 percent
    KC's View:

    Published on: March 30, 2005

    Blockbuster Inc. has settled a case with 47 states and the District of Columbia that charged the retailer with deceiving the public with its new “no late fees” policy.

    The states charged that while Blockbuster said it had eliminated late fees from its rental policy, if customers kept rented videos or games for more than seven days after their due dates, their credit cards would be charged between $8 and $20 and the assumption would be made that the customer was buying the video or game. The charge could be reversed if the item was returned within 30 days, but then a $1.25 restocking fee would be charged.

    Blockbuster has agreed to make these details more public in its advertising and promotional efforts, and to pay a total of $630,000 to compensate the states for their legal and investigative costs.

    However, Blockbuster did not admit any wrongdoing.
    KC's View:
    Here’s what we’re tired of.

    Companies that make financial settlements in these legal cases, but are allowed by the government to get away without admitting any wrongdoing.

    It’s absurd.

    In this case (and we know a lot of you disagree with us on this), Blockbuster tried to hoodwink the public. It got caught. It has to make things right.

    But it did the wrong thing, and it ought to be forced to admit it.

    Published on: March 30, 2005

    The Conference Board reports that its index of consumer confidence dropped from February’s 104.4 to 102.4 in March, slightly lower than the 102.5 that had been expected by economists.

    "Consumers are still quite confident despite recent increases in unemployment claims and rising prices at the gap pump," said Conference Board economist Lynn Franco in a prepared statement.

    The Conference Board also said that those who believe that business conditions are "good" rose to 25.8 percent from February's 24.6 percent; at the same time, people who saw business conditions as "bad" in March grew to 16.0 percent, from 15.7 percent in February.
    KC's View:

    Published on: March 30, 2005

    • Canada’s Loblaw Cos. announced that it will close six warehouses and lay off 1,400 people over the next three years in an effort to cut costs and compete to compete with rivals such as Wal-Mart.

    • A federal study, the Behavioral Risk Factor Surveillance System, suggests that 23.7 percent of Virginia residents qualify as obese – up from 9.9 percent just 15 years ago, and marking Virginia as the state with the fastest growing waistline.

      The state government reportedly is looking to create initiatives that can address the problem, especially in the public schools.

    KC's View:

    Published on: March 30, 2005

    • Ahold reported that its fourth quarter earnings reached the equivalent of $114 million (US), up from $15.5 million (US) during the same period a year ago. Sales for the quarter were down three percent to $15.98 billion.

      For the full year, Ahold reported a loss of $550 million, compared to a loss of $1.3 million during its last fiscal year. Full-year sales were off 7.3 percent to $67.3 billion.

    KC's View:

    Published on: March 30, 2005

    We had some fun yesterday at the expense of fast feeder Burger King, which announced the introduction of a new breakfast item – the Enormous Omelet Sandwich, which is made up of two omelet eggs, sausage, three strips of bacon, and two slices of melted American cheese on a specialty bun, and designed, according to the company, “to satisfy the heartiest of breakfast appetites.”

    Our comment: One can only imagine the cross-promotional ideas that can be applied to this new product introduction.

    For example, Burger King could figure out some way to partner with a law firm, requiring customers to sign a document promising not to sue it when they gain weight from eating a sandwich that is only slightly smaller than a Volkswagen.

    Or, it could strike a deal with Pfizer to hand out special OTC samples of Lipitor to sandwich consumers.

    Or maybe it could just garnish the sandwich with hemlock. Because the result, inevitably, will be the same.

    Didn’t these guys get the obesity memo?

    MNB user Jeannie McCarville wrote:

    KC, LOL you are killing me with the sandwich jokes. Thanks for making me smile! 😉

    MNB user Steve Lutz wrote:

    Go ahead, admit it. You had a lot of fun with this story!

    MNB user Lisa Malmarowski wrote:

    You crack me up. We spent the day here in our offices forwarding that story on the BK enormous sandwich. Our nutritionist summed it up best,
    "Hey, it's job security for me!".

    Thanks for the chuckle.

    MNB user Denise Kaplan wrote:

    It's good to know that you just don't have something against McDonalds - you spread it around to cover BK as well. Nobody can say you aren't a fair guy! HA!

    Have a great day and thanks for putting a smile on my face - some days I can really use them.....

    You’ve discovered our deep, dark secret. When you read MNB every day, we want you to be informed and enlightened. But we desperately want you to chuckle. Or guffaw. Or laugh out loud.

    Of course, not everyone finds us to be funny. We actually referred to the new BK sandwich several times yesterday, which led MNB user John Tatum to write:

    Not one, but four comments on Burger Kings’ new entrée is way over the top. I know you like to be controversial and this is fine, but you clearly lost your creative juices over the long weekend. I, for one, normally have a banana for breakfast, as it is high in potassium and uniquely wrapped for the morning commute. But, on those few days, were I want to indulge myself with a breakfast treat, the Burger King ‘Enormous’ sandwich sounds like a great alternative. People need choices and need to be held responsible for the choices they make!

    And another MNB user chimed in:

    I, along with most of your readers, would agree with you about obesity and the need for healthy eating. However, I doubt that the target audience (young adult male is my guess) for this particular breakfast item don't really care about either issue at this time in their life.

    MNB user Denise Remark-Lundell wrote:

    I haven't been in a Burger King since, well, ever, so I don't know what its clientele looks like. Perhaps we should take a look at some typical BK consumers. How is their weight? Are they overweight & obese? If so, & they are representative of BK consumers, I would argue that BK is simply addressing their consumers demands by presenting this heart-attack-on-a-plate concoction. We don't even have to make a trip to BK to know that lots of consumers haven't received the obese memo either.

    And another MNB user wrote:

    I’m playing devils advocate here. As retailers who want to stay in business, we are told to provide the customer with what they want and hopefully do so in a way that makes the customer happy. MNB stresses the importance of this very thing for all of the retailers who battle WM. Burger King is simply doing that---- providing what their customer wants and setting themselves apart from the crowd. No one is forcing the customer to buy. That will not stop litigation but Burger King is giving America what it wants. (In a Super Sized portion)

    We believe in hard-hitting, investigative journalism…so we went out to the local Burger King at seven this morning to buy one of these Enormous Omelet Sandwiches. Actually, we bought two, figuring that Mrs. Content Guy and the two Content Kids who live at home might want to try some.

    Nobody liked it. Not the parents, not the teenagers.

    First of all, the best thing you can say about it is that it isn’t all that big…though the idea that such a small sandwich packs in so many calories and so much fat is truly frightening. This is one of the most tasteless, mediocre lumps of food that we’ve ever eaten – and if we’re indeed raising a generation of people who think this is acceptable, then we have failed as a culture. (We were proud of our kids for hating it.)

    We ate one third of the damned thing about an hour ago. And as much as we hated it as we were chewing on it, we hate it even more now, because it is sitting in our stomach as a reminder of just how crappy fast food can be.

    Is that serious enough for you?
    KC's View: