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    Published on: April 25, 2005

    The Cincinnati Business Courier reports that the American Family Association (AFA) of Tupelo, Miss., described as “a conservative, Christian-values group,” has announced that it has lifted its boycott of consumer packaged goods company Procter & Gamble.

    The boycott was announced because the group was offended by P&G’s sponsorship of gay-themed television programs such as “Will & Grace” and “Queer Eye for the Straight Guy.” The organization said that more than 400,000 people had signed a petition pledging to boycott P&G products.

    P&G would not say whether it actually changed its sponsorship decisions, but said it was glad that the AFA had decided to lift its boycott.

    The Courier notes that any sponsorship changes made by P&G could be more connected to ratings than boycotts, since the programs cited by AFA have been declining in the ratings.
    KC's View:
    People have a right to buy or not buy any product they choose, and groups certainly have a right to organize boycotts based on whatever criteria they like.

    And we certainly understand why P&G doesn’t want to rile up either side of the political aisle or cultural divide. After all, it isn’t good for business.

    That said, we sort of wish that P&G – which has endured other boycott threats from irrational types charging that it funnels profits to Satanists – had been a little more dismissive of AFA. Would it have been so terrible for P&G to say, “we market to everybody, because everybody buys toothpaste/laundry detergent/whatever, and we’re not interested in knuckling under to the illegitimate demands of any fringe group, whether liberal or conservative.”

    Published on: April 25, 2005

    • There was a report over the weekend that scientists in The Netherlands have reported that the nation has identified its first case of variant Creutzfeldt-Jakob disease (vCJD), the human form of bovine spongiform encephalopathy (BSE), better known as mad cow disease.

      A probe is ongoing to find out if anyone else has been infected.

      Published reports say that here have been more than 70 cases of mad cow disease in the Netherlands since 1997, but the government continues to say that Dutch beef is safe because all cattle were tested for BSE.

    • The New York Times reports that six months after the Bush administration thought it had a deal with the Japanese government that would have once again allowed meat from the US to be exported to Japan, no agreement has yet been completed, and the borders remain closed.

      Japan decided to close its borders to US beef after a single case of mad cow disease was found in the Pacific Northwest in December 2003. Japan has largely objected that its testing standards are stricter than those used in the US.

      Now, the US Congress is getting involved in negotiations, and the new American Ambassador to Japan, J. Thomas Schaeffer, is issuing threats, noting that Congress doesn’t "want this issue to boil over into the larger relationship," and saying that “300 million Americans are eating that beef every day, and there are no health concerns in the United States.”

      The Bush administration is sending yet another delegation to Japan to try and convince the government to change its policy. That may be easier said than done; the NYT notes that polls in Japan suggest that consumers there are in no hurry to eat American beef because of concerns about safety issues.

    KC's View:
    Interesting, isn’t it, that the US doesn’t test all its beef and has identified only one case of mad cow disease, and that in the Netherlands, where they test every cow, they’ve found some 70 cases in eight years.

    We didn’t do well in the study of statistics and probability, but somehow this just doesn’t sit right.

    Published on: April 25, 2005

    The New York Times offered an interview over the weekend with Susan Lyne, the former president of ABC Entertainment and the new CEO/president of Martha Stewart Omnimedia, charged with leading the company in the months and years following the founder’s imprisonment on charges of lying to federal officials about a stock trade.

    Asked what her goal for the company is, especially now that it is developing new TV shows and even a satellite radio network, Lyne says:

      “…We are trying to create great how-to information that makes people’s lives more rewarding, richer, more beautiful and more effective. So, it is all about living well. But that said, I think we have an opportunity to expand the audience for what we do. And some of these brand extensions are a wonderful way to do that.

      “You need, at this moment in time, to be able to go out to people where they are. We lead busy lives and one of the things that I think is appealing about the new radio network is that we will be able to reach women in their cars while they’re driving their kids around, they’re commuting to and from work, while they’re getting up in the morning – being available and accessible to women wherever they are whenever they are is important for us going forward.

      “We thought a lot about the new format of the new television show, about how to make it feel more inclusive and more relevant to a wider swath of women. Being able to tape in front of a live audience and being able to fill that audience with people who mirror this diverse world we live in I think will signal to people that this stuff may be for them, too.”
    KC's View:
    Smart stuff from a very smart person. Pay attention to this notion of reaching out to people in new places with new products…it is the only way to survive in 2005 and beyond.

    We actually met Susan Lyne once in another life, and found her to be one of the most impressive executives we’ve ever encountered. Keep in mind that she is the person who scheduled “Desperate Housewives” on ABC, and that she clearly has a unique take on the cultural zeitgeist.

    Published on: April 25, 2005

    The Wall Street Journal reports that Gap Inc. plans to launch a new brand, Forth & Towne, when it opens five stores under that name this fall.

    The stores will target baby boomer women aged 35 and older, the WSJ writes, “women who want to dress appropriately without being swathed in yards of fabric, and who need outfits that can go from the office to the school soccer field to dinner” and designed “to encourage shoppers to spend time there.”
    KC's View:
    When we read this story, we were reminded of years ago when Mrs. Content Guy complained that she couldn’t shop at Gap anymore because the company had changed. Which left it to us to make the delicate point that maybe it wasn’t Gap that had changed, but she who had gotten older. (Not the smartest point to make to a wife, but we’ve never gotten big points for brains…)

    But we were right. And we think that this is a smart thing for Gap to do, reaching out to customers that it may have lost because tastes change.

    Too many food retailers don’t acknowledge that consumers change, and that they made need different kinds of stores that offer a different selection of products. It is one of the great anachronisms of the food business – major retailers who fall back on old strategies and traditional strategies (“better perishables, better customer service, one-stop shopping”) instead of really, really reinventing themselves.

    Published on: April 25, 2005

    • The Wall Street Journal reports that Coca-Cola Co. has agreed to buy out Groupe Danone SA's 49 percent stake in a North American bottled-water joint venture, taking full ownership of five spring water bottling plants. Coke also agreed to spend 20 percent more over the next five years marketing Danone’s Evian brand of water. Terms of the deal were not disclosed.

      The intent of the deal is said to be aimed at making Coke more competitive with PepsiCo in the bottled water segment.

    • Delhaize America reportedly has entered into a new $500 million five-year unsecured revolving credit facility, replacing an expiring facility and providing backup for seasonal working capital needs and general corporate purposes.

    • Published reports say that The Container Store, one of the most lauded retailing formats in the country, has received an investment from billionaire financier Robert Bass and two other investors, who bought 10 percent of the company. Executives at The Container Store said that the investment will allow them to keep the company private.

    KC's View:
    One of the things about The Container Store is that the folks there seem very clear on the fact that the folks who walk through the front door are the customers, not the stock traders who throw their weight around and have far too much sway over how companies operate.

    Published on: April 25, 2005

    • The Newark Star Ledger reports that Thomas Infusino, 83, chairman and chief executive of Wakefern Food, the cooperative that supplies ShopRite stores, will resign from that job after nearly 35 years.

      Infusino will remain as president and owner of ShopRite of Nutley, N.J., and also will remain on Wakefern’s board of directors. He will be succeeded in the chairman’s job by Joseph Colalillo, vice chairman of Wakefern and president of ShopRite of Hunterdon County.

    • Published reports say that Wal-Mart has named Ashwin Rangan to be the new chief information officer for, responsible for the design and development of the website as well as integrating its operations with the company’s brick and mortar units. Rangan was most recently senior vice president and chief information officer for California-based Conexant Systems.

    • Randy Ransom, a senior vice president at Coca-Cola who was in charge of North American marketing for all full-calorie Coca-Cola products, reportedly is leaving the company to "pursue other interests."

    KC's View:

    Published on: April 25, 2005

    MNB user Glen Terbeek had some thoughts about all the charges and counter-charges about so-called “Wal-Mart bashing”:

    If there is any bashing going on, it is Wal-Mart that is doing the bashing.

    They started with only 20-30 stores in 1970, hardly any buying or logistics power compared to the retail giants of the time; like Kroger, Safeway, A & P, Kmart, and many regional chains that were much bigger and established in their markets. I can still remember that several leading manufacturers didn't even want to sell to WM early on in fear that it would hurt their relationship with the supermarket trade. And WM for sure didn't have the frequent shopper traffic that these retailers had. How easy is it to forget that Wal-Mart didn't start with 3000+ stores, they got to be that size because they earned it. They took it away from the established retailers.

    How did they earn it? They made shopping for mass market items simple and easy through every day low prices, and one stop shopping, with a unique business model that executes that strategy very well. They used low prices in the high volume, supermarket core categories to divert traffic their stores, and then to their general merchandise and higher margins. They perfected this concept through Retail Link, technology that measures performance of items, categories, stores and shares it with the suppliers. They perfected "lowest common denominator" mass market retailing. It wasn't until late 1980's that the supermarket industry even started to considered Wal-Mart as one of the "alternative retail" threats. It then spent the 1990's trying to emulate WM, remember ECR, while WM continued to grow at great speed.

    Wal-Mart's success is because they are great marketers. It's probably because Sam's roots were non-food retailing, where you run the business from the shoppers view, not the supplier’s. Wal-Mart knows the market they are after, and they market to it. (Incidentally, they also did a great job of marketing to their employees and to Wall Street.) Their logistics skills that everyone envies today, developed with size, as a support to their marketing focus, not the other way around.

    When it comes to bashing, currently Wal-Mart is the "Basher" and the supermarket industry is the "Bashee". The supermarket industry has abdicated the lowest common denominated mass market items/categories to Wal-Mart as a result. This has served WM very well.

    With that as a given, the key question is, how does the supermarket industry become the Basher? There is great opportunity to attack WM's size and business model, just like they did to the supermarket industry. History has shown that the dominant retailer has a hard time sustaining the lead position. The first step is to focus on marketing productivity, store by store.

    Unfortunately, this can not be done with the current organizations, measurements and business model. It's time to start from scratch, just like WM did in 1960.

    If there’s one thing that we’ve learned in this business, it is that you can’t go wrong assuming that Glen Terbeek is right.

    MNB user Scott Simon had a thought about charges that Wal-Mart is driving down wages and forcing costs onto public infrastructure:

    Wal-Mart is a legitimate business. Illegal immigration has a larger effect on our public infrastructure (schools, hospital emergency rooms and income taxes then Wal-Mart. It would be interesting to know the depth of undocumented people working for the Wal-Mart impacted retailers.

    Another MNB user wrote:

    If one doesn't like working at Wal-Mart, doesn't like the pay, and doesn't like benefits, then quit. Find somewhere else to work with your amount of experience and education, but stop complaining.

    We made a reference last week to “industries that view workers as costs as opposed to assets,” which led one MNB user to write:

    Don't you think, on second thought, that the view of retail workers by most management as being more a cost, than an asset, began with the advent of mass merchants, and is spreading today as other merchants view their fiscal success?

    I don't believe the Wal-Mart, Costco, Targets, on down to any of the super market grocery chains, who really aren't mass merchants, view employees as much more than a cost. They are there to perform a job of replenishing the merchandise in a store, and, by-the-way, show some courtesy to customers and answer their question(s) should they speak to you, but continue with the job you've been given, if at all possible. If necessary, stop what you're doing and help the customer, but under no circumstances fail to complete that job.

    There are a separate breed of businessmen running these businesses and the bottom line is their holy grail.

    Regarding speculation about shortages of Splenda, which we wrote about because of the announcement that Diet & Up will be reformulated with the artificial sweetener, one MNB user wrote:

    Shortages are not just rumor. We are on allocation for our baked goods, and expect that allocation to continue next year (we've gotten indication that 2006 purchases will not be allowed to exceed 2005 purchases). Now we know where 7 Up's Splenda is coming from...

    One MNB user had a thought about possible changes to the Family Medical Leave Act that could result is less freedom to take time off:

    Ironic that President Bush is considering the revision, given his track record for taking time off, especially in his first 9 months on the job.

    No, the writer of this email was not Michael Moore.
    KC's View:

    Published on: April 25, 2005

    Wal-Mart has confirmed that it is the subject of a grand jury probe into allegations by the company’s former vice chairman, Tom Coughlin, that it spent as much as a half-million dollars on anti-union activity.

    "We're aware that there's an investigation," Wal-Mart spokesman Marty Heires said last Friday, though he would not comment on whether company employees or documents had been subpoenaed.

    The investigation stems from Coughlin’s recent resignation from the company’s board of directors, which followed his retirement from his vice chairmanship. Wal-Mart said that Coughlin left the company because of an internal investigation about personal reimbursements, payment of third-party invoices and the use of company gift cards. Coughlin denied the charges, and said that the money he was paid was reimbursement for funds he had spent paying employees for information about unionization initiatives.

    Wal-Mart has denied any financial improprieties, and has said that it has taken away Coughlin’s retirement and medical benefits.

    Both the union and Coughlin’s attorneys have demanded to see Wal-Mart’s internal documents that may be related to any anti-union efforts, but so far have been denied access.

    The New York Times reports that the turn of events has been particularly stressful for Wal-Mart because Coughlin was a close friend and hunting companion of company founder Sam Walton. Coughlin also was something of an icon in Bentonville, Arkansas: “A library was named after him, and a celebration took place only a short time before the company uncovered what executives call a pattern of financial abuses.”

    The NYT writes that “executives at Wal-Mart said they referred the matter to a federal prosecutor in Arkansas after deciding ‘we couldn't treat him any differently than any lower-ranking employee.’”
    KC's View:
    It is hard to comment in this story because it has such a “he said, he said” quality.

    That said, almost nothing would surprise us these days. And in this business, not being surprised is like a spectator sport.

    Published on: April 25, 2005

    British celebrity chef Jamie Oliver is being spotlighted in a number of UK newspapers and magazines because of a school meals project that he runs there, teaching cafeteria workers to make healthier food and actually spending time in cafeterias himself, dishing out food and trying to educate students about the value of a healthier diet.

    Oliver has even turned his efforts into a BBC television series that highlights why it is important to replace what the International Herald Tribune calls “the fatty, salty, greasy, sugary food in Britain's schools with freshly cooked, nutritious meals.”

    He has blasted the educational bureaucracy for helping to create “some of the most unhealthy children in Europe,” and told the Herald Tribune, "Five and a half million kids a day, and you realize that 98 percent of those are eating (expletive deleted) on a regular basis.”

    While he has faced some challenges from the establishment because of long-term contracts that have prevented him from making changes in a number of locations, in the places where Oliver has worked his culinary magic there has been an impact. The Herald Tribune writes, “Gradually, he won the children over and got them to try, and even like, his food. Parents reported that their children were behaving better at home. At school, the teachers could see improvements in concentration and in academic performance.”
    KC's View:
    These are the kinds of initiatives that the US supermarket industry ought to get behind…creating a population of young people who know how and why to eat better will only help business…and it would put supermarkets on the side of the angels.

    Published on: April 25, 2005

    The Arizona Republic reports that numerous natural foods retailers are competing in the Phoenix/Tempe/Scottsdale region – Whole Foods, Sunflower Markets (run by former Wild Oats CEO Mike Gilliland), Henry’s Farmers Market (owned by Wild Oats), Sprouts Farmers Market, and Gentle Strength Cooperative.

    “I think there is room for all of us,” Gilliland tells the paper. “The opportunity is not to beat each other up, but, hopefully, to take some market share from the conventionals.”
    KC's View:
    Makes sense, especially in a marketplace where there are a lot of folks concerned about extending their lifespans.

    Besides, you look at the double-digit growth being generated by Whole Foods, and of course there’s competition.