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    Published on: April 26, 2005

    GNX and the WorldWide Retail Exchange (WWRE) are scheduled to announce this morning that they will merge their two businesses, combining “their technology solutions into a single platform that connects retailers, manufacturers, and their business trading partners to more efficiently and effectively share information and manage work processes. The new company will leverage the greater scale economies to reduce unit costs and drive adoption of industry standards, and will operate the definitive forum for retail best practices sharing” – and will, if things go as planned, help its retailers to compete more effectively with the supply chain efficiencies of Wal-Mart.

    The merger has been approved by the boards of each company. The name of the merged organization is still to be determined. Christopher Sellers, the current CEO of WWRE, will serve as Executive Chairman, and Joe Laughlin, current CEO of GNX, will be CEO of the new company.

    According to a statement released by the company, “the combined entity is backed by the world’s largest retailers and suppliers, including: Aeon, Ahold, Albertsons, Auchan, Best Buy, Carrefour, Casino, Coles Myer, CVS, Delhaize, El Corte Ingles, Federated, KarstadtQuelle, Kingfisher, Kroger, Lotte, Metro, PPR Group, Safeway, Sainsbury’s, SCA Hygiene, Sears Holdings, Tesco and Walgreens. With more than 8,000 retailer and manufacturer users to date between GNX and WWRE, the new company will bring together a critical mass of the world’s largest retailers on a single platform. The resulting trading partner overlap is expected to accelerate adoption of best practices in trading partner collaboration and relationship management for the entire retail industry.”
    KC's View:
    Since GNX and WWRE were founded more than five years ago, the likelihood of a merger has long been speculated about…so much so that a lot of people will read this story and say, “What took ‘em so long?”

    Still, it seems like an idea both effective and efficient.

    Published on: April 26, 2005

    Another in a series of previews of the 2005 Food Marketing Institute (FMI) Show…

    It is an oft-repeated truism that new products are the lifeblood of the food industry – but new products alone cannot drive sales and profits. Rather, it is how these new products connect to the needs and desires of an ever-evolving consumer…which is exactly what a Super Session at the upcoming Food Marketing Institute (FMI) Show will endeavor to track and illustrate.

    The discussion – scheduled to take place on Monday, May 2, during the 8:15-11 a.m. Super Session block – will feature Valerie Skala Walker of Information Resources Inc., Lyn Dornblazer of Mintel, and Joan Holleran of Stagnito New Products Magazine, and will be hosted by Kevin Coupe, MorningNewsBeat.com’s Content Guy.

    To get a preview of the session – the products that are hot, the consumers that are driving demand, and prognostications about the future, we turned to IRI’s Valerie Skala Walker for an exclusive e-interview.

    MNB: You say that in 2004, the most successful product introductions were connected to the desire to take small steps toward healthier eating. Give us a sense of some of these successful intros...and why you think they worked. It also sounds, though, like consumers were not willing to give up taste and convenience...and that they would not sacrifice these two components to eat healthier. True? Where did this trend seem evident?

    Valerie Skala Walker: . . . the continued growth in diet soda, with flavor innovations like Diet Coke with Lime. . . the continued growth in bottled water sales, with products like Propel and other low-calorie flavored and vitamin-enhanced waters. . . sales growth in categories like nuts and cheese, while categories like salty snacks and cookies are flat or down (at least in the FDMx outlets) . . . innovative brands include Emerald Nuts and Kraft Twist'Ums and String'Ums cheese sticks. . . Quaker oatmeal breakfast squares. . . Breyers CarbSmart ice cream and a variety of frozen novelties with reduced fat/sugar/calories. . . continued growth in natural and organic products . . . Thomas' hearty grain muffins

    Notice how the above products are all familiar, convenient, and portable.

    MNB: We’re starting to see a flood of new product intros in the soft drink category – new formulations, new sweeteners, new names. At what point does this become too much for the consumer to absorb?

    Valerie Skala Walker: Over the past 10 years, in response to the proliferation of product offerings and new types of retail outlets, consumers have had to develop a shopping expertise that enables them to work their way past 25,000 to 50,000 items and still complete a grocery shopping trip in under an hour. Unfortunately, the same expertise that enables consumers to quickly zero in on their desired item also means they aren't scanning the shelf and discovering new items as readily.

    MNB: What are you seeing in terms of retailers and manufacturers being willing to give products time to build loyalty and interest, as opposed to demanding immediate big time acceptance?

    Valerie Skala Walker: Honestly, I don't see retailers consistently reacting as quickly and strongly as you might think, to drop slow-moving items and make way for better performers. I still see shelves where the top selling item is out of stock while a slow-moving brand has 5 flavors collecting dust.

    I think there might be an opportunity for retailers to re-consider the way they set their shelves, setting aside a specific amount of space for their top sellers where they make sure each SKU has enough facings to avoid out-of stocks, and setting aside a separate piece of shelf space where new items can be moved in and out with greater ease.

    MNB: How about in the HBC area? What are you seeing?

    Valerie Skala Walker: Products promising to keep us looking and feeling young and energetic continue to be a high-growth area. This includes moisturizers and hair-care products for the 40+ age group. But like everything, we don't have a lot of time and energy to devote to learning and using these products, so they have to fit easily into our existing routines.

    Another growth area involves products that allow consumers to do for ourselves what we can't afford to pay for in high-end salons and doctor's offices. Dental whitening, wrinkle reduction, microdermabrasion, even freezing our own warts off. The average American is not experiencing real income growth, and any luxury we indulge in means we're cutting back somewhere else. But who doesn't want the beautifully decorated house and pretty face and white teeth that we see on TV? So manufacturers are seeking out opportunities to "downshift" high-end products and services to the mass market, and most of these products have been highly successful.

    MNB: Finally, there is another speaker at FMI who is going to be talking about the “tyranny of choice.” Regardless of what the research says, is there any suggestion that there will be any major change in how and how frequently new products are introduced in this industry?

    Valerie Skala Walker: A few manufacturers are realizing that they are doing so many new introductions each year that they can't support any of= them sufficiently to turn them into long-term successes; they're just churning items in and out without achieving real sales and profit growth. In addition to the shopper expertise I mentioned earlier, Americans are just too busy, overworked and under-rested. We just aren't going to take the time to process most of those introductions. A reasonable number of "limited editions" can be an effective way to create short-term incremental sales for a brand without sacrificing the base brand's shelf space and marketing support, but if you do too many of those limited editions, consumers will start tuning those out as well.

    One smart thing manufacturers are doing in response to the increasing clutter in the marketplace (clutter of retail outlets, products, advertising messages, cars on the road, everything) is to create mega-brands that deliver a consistent promise across multiple categories. The Dove brand is a good example of this, delivering cleanliness + moisturizing benefits for your whole body, face, underarms, and hair. This is a good alternative to creating completely new brand names for every new product introduction.
    KC's View:
    As always, we’re looking forward to this year’s FMI as a great opportunity to connect with old and new friends in the MNB community, and hope you’ll stop by our Super Session and say hello.

    As we’ve mentioned before, we’ll also be repeating something that we did last year to a good deal of success.

    On Sunday, May 1, we will be hanging out at the bar at one of our favorite Chicago bistros, Bin 36, from 6-7:30 p.m. And we thought that if any members of the MNB community would like to stop by, say hello, and chat for a bit…well, the first couple of bottles of wine will be on us.

    It’ll be a great opportunity for all of us to put faces and voices with the names and words that appear on MNB plus an excuse to drink good wine. (Not that we need an excuse…)

    (Bin 36 is located at 339 N Dearborn on the west side of Marina City, between the river and Kinzie.)

    We’ll see you in Chicago.

    Published on: April 26, 2005

    The New York Times has an interesting piece about the area just north of Greenwich Village in Manhattan, which is proving to be a draw for interesting food experiences. Trader Joe’s reportedly is close to signing a deal to come to the neighborhood, following on the heels of a new unit opened by Whole Foods, and a soon-to-reopen Balducci’s (a legendary name in the neighborhood that closed down in 2003).

    The NYT also notes that Manhattan could soon have a visitor from the suburbs – Connecticut-based Stew Leonard’s reportedly is looking for space in the West Village or Chelsea area.
    KC's View:
    The NYT speculates that stores like Trader Joe’s and Stew Leonard’s will have to adjust their strategies if they are to make it in Manhattan. That’s an interesting thought, though we’re not sure how much we believe it.

    Would Stew Leonard’s have to offer fewer kitsch and audio-animatronic figures in a Manhattan location…or would such an adjustment mean that it woudn’t be Stew Leonard’s anymore? Would Trader Joe’s have to adjust its product offering somehow for a Manhattan audience, or would such a shift make it less Trader Joe’s?

    It is a particularly interesting business question because both Trader Joe’s and Stew Leonard’s are, essentially, limited assortment stores, carrying far fewer SKUs than traditional supermarkets. They are highly specific, strategic as well as tactical, and engender unusual loyalty among their shoppers. (We happen to be lucky enough to have both near us, and do virtually all of our food shopping at each of these retailers, as well as at Costco…so we have a sense of how these operations work.)

    Not that they’re asking…but if the folks at Trader Joe’s and/or Stew Leonard’s asked us, we’d probably suggest that they simply be careful not to do anything that diminishes the broader brand equity…

    Published on: April 26, 2005

    The New York Times reports on a Nickelodeon special focusing on the 10 things kids hate about school.

    Number three: the food they serve there.

    (Number one is “boring classes.”)

    Interestingly, what kids told Nickelodeon’s Linda Ellerbee is that what they hate about school food is that it isn’t good and isn’t good for them.
    KC's View:
    As we’ve said before, the whole issue about what kids eat in school ought to be one with which supermarkets get involved. It seems to make good business sense, and could have long-term implications for business.

    What’s fascinating about this story is that it contradicts the notion that kids just want to eat junk and fried food. Maybe we’ve underestimated the little devils.

    Published on: April 26, 2005


    • The North Bay Business Journal, which covers much of the Northern California wine country, reports on an issue that preoccupies much of its constituency – an expected ruling from the US Supreme Court on whether wineries should be able to ship directly to consumers in states where, up until now, such shipments are banned.

      The actual case being decided has to do with bans on direct shipping that are the law in Michigan and New York, though people who favor an end to such bans believe that such a ruling would immediately spread to other states with direct shipping prohibitions. The Supreme Court essentially has to decide what has priority – a state’s right to prohibit such shipments, or the constitutional guarantee of freedom of commerce.

      “A favorable decision to end discrimination promoted by wholesalers would be good for wine consumers, regulators, and tax collectors in states that pass legalized direct shipping and a win for America's small family wineries,” Robert Koch, president and CEO of the Wine Institute, tells the paper.

    KC's View:
    We are hopeful that the Supreme Court rules in favor of allowing direct shipments; we think it will be healthy for the wine industry as a whole because it will encourage diversity of styles and vintages.

    People we’ve spoken to in the industry, though, caution that even if the Supreme Court strikes down direct shipment bans, the world won’t change overnight. States and wineries will have to create mechanisms through which direct shipments can take place.

    But it’ll be a trip worth taking.

    Published on: April 26, 2005


    • The CBC reports that the American Farm Bureau has decided to support the US Department of Agriculture (USDA) appeal of a judge’s decision to keep the US border closed to Canadian cattle because of concerns about mad cow disease.

      The Montana judge issued the temporary injunction last month just days before the border was to be opened to Canadian cows. The US stopped allowing the import of Canadian cows in 2003 when a case of mad cow was detected north of the border.

      No date has been set for the USDA appeal to be heard.

    KC's View:

    Published on: April 26, 2005


    • Market research firm NOP World has published a new study saying that more than a third of Hispanic Americans – 36 percent, to be precise – say that their favorite store is Wal-Mart.

      JC Penney, Sears and Target tied for second place – with a whopping four percent each.

      Asked to rate the various factors that affect their decisions where to shop, 77 percent of Hispanic Americans said price, 72 percent said convenient location, and 71 percent said “a wide range of merchandise.” Interestingly, just 54 percent said it was important to have employees who speak Spanish, 52 percent said “products relevant to Hispanic consumers,” 47 percent said Spanish signage, 43 percent said product packaging and labels in Spanish, and 34 percent said it was important that the owner be a member of the local community.


    • There are published reports in the UK that Wal-Mart’s Asda Group there is interested in launching a bid to buy Somerfield, which already is the object of acquisition interest from several consortia.

      The reports suggest that Asda could team up with one of the other interested parties, or could make a move on its own.

      Wal-Mart is not commenting on the speculation.


    • Wal-Mart’s Sam's Club division has released a report saying that only 45 percent of small business owners surveyed said they were confident or very confident about the economy being strong in the next six months, a number that was down about seven points from a year earlier.

      Fifty-nine percent of those surveyed said they thought layoffs would remain consistent over the next six months, while about a quarter of respondents said they believed there would be a higher rate of layoffs. The small business owners ranked their most important expenses as, in order, health insurance, broadband Internet access, phone service, fuel, and advertising.

    KC's View:

    Published on: April 26, 2005


    • Wal-Mart, Albertsons and Longs Drug Stores announced yesterday that they will each restrict the sale of products containing pseudoephedrine because of concerns that they could be used to produce illegal methamphetamine. The products will be moved behind the pharmacy counter despite their OTC status.


    • Two former Keebler executives, John Tree and Michelle Healy, reportedly plan to reintroduce Metrecal, a 40-year-old diet drink, and will repackage it as a healthy drink for baby boomers.

    KC's View:

    Published on: April 26, 2005


    • Albertsons announced that Sue Klug has been named senior vice president, sales and merchandising for its California food division, effective May 23.

      Klug most recently was chief development officer for Catalina Marketing Corporation.

    KC's View:

    Published on: April 26, 2005

    We often write that we think one of the big problems with this industry is that companies often treat their employees like liabilities, not assets. One MNB user disagreed:

    Are employees assets or liabilities? Ask your accountant. Employee salaries show on the ledger as a liability. Our expectation is that the employee will do something of value for the company. Our hope is that the employee's actions will create permanent value for the company.

    To refer to an employee as an asset is actually to diminish the employee to chattel. We have laws against that.


    We believe in the honest exchange of ideas and that we should respect each other, even when we disagree.

    But that said, we have to say that this is the biggest load of hooey we’ve ever heard. (But we respect the hooey and your right to express it.)

    Employees perform better when they believe that they have value, and they are seen as an asset. That doesn’t make them slaves…it makes them partners in a very real sense.

    This kind of obfuscation and rationalization is what hurts the food industry most.

    Not that we feel strongly about this.




    We wrote yesterday about Gap Inc.’s plans to launch a new brand, Forth & Towne, which will target baby boomer women aged 35 and older, who want stylish age-appropriate clothing and a less frenetic shopping experience.

    In our commentary, we noted that 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…)

    To which MNB user Philip Herr responded:

    I'm with Mrs. Content Guy on this one. A few years ago Gap totally lost its way, alienating so many people (like our wives) who had built their business during the mid to late 90's. Gap chose to go after a younger target, bumping up against Old Navy and leaving their traditional shopper disillusioned. In the last couple of years they have come back and reinstated the basics that made them so attractive before.

    Oh, sure. She already outranks us, and now she has support in the MNB community.

    Wonderful.




    We wrote yesterday about celebrity chef Jamie Oliver’s attempts to bring better, healthier food to British public schools, and said that “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.”

    Not everyone agreed.

    MNB user Susan L. Gadd wrote:

    This is crazy. Why do we, the General public, insistent on blaming everyone but ourselves for the obesity in children? Kids eat 1 or 2 meals at school. The rest of the time they are home. Parents and children need to be responsible for what they put in their mouth. You make a choice every time you eat something. It is all things in moderation.

    I grew up in Southeastern Ohio on a farm. There were a total of 6 in my family. My mom cooked 3 times a day and we went to McDonalds, Burger King, KFC and Burger Chef. We had meat, potatoes, vegetables, cakes, pies, and cookies. It was glorious food!!!! No diet, low fat or Low carbs foods. None of us were fat, more on the thin side and none of us are today. We worked, rode our bikes, played badminton, softball, kickball in our yard. Walked the quarter of mile to the barn. We did something all the time.

    Too many kids are sedentary. Sitting…playing video games…hanging out. Yes, we can be better educated on what to eat and how to fix it. I commend this guy in England. But the bottom line is you, and only you, are responsible for what your hand takes, puts in your mouth and how much of it.


    We don’t disagree with most of what you wrote.

    But the fact is that there are more obese kids out there today than ever before. We can keep saying that these kids and their parents need to be responsible, but somehow the right information and the importance of using it seems to be slipping through the cracks.

    The school is a great place to do some consciousness-raising, and maybe turn some kids around, and maybe even create customers for life.

    By the way, kids and their parents ought to have the responsibility for making sure the kids read “The Great Gatsby” instead of Marvel comics…but we’d be annoyed if schools didn’t teach what is perhaps the greatest American novel ever written. Mental health and physical health are connected…it is all part of helping kids become educated, fully rounded individuals.

    (By the way, we try and read “Gatsby” once a year…just because it reminds us of what artistry and great writing really is. If you haven’t read it since high school, we recommend going back and giving it another look…because reading “Gatsby” as an adult because you want to, not because it is homework…is an entirely different experience.)

    One MNB user thought that our notion of getting supermarkets involved with initiatives like better food in schools was a pretty good idea:

    You’re so right about this. And from a financial perspective, it makes sense, too, if only the supermarket companies would take a moment to realize it. What I’ve learned from my years in the business is that the dollars are in the perishables, and the perishables like fresh meat and produce tend to be the healthiest choices. Wouldn’t it seem to make sense for members of the food-retailing community to band together to push these healthier choices in schools? If not for the public-good, then at least for the bottom line? (And they could always pretend to have our best interests at heart, true or not.)



    We wrote yesterday that the American Family Association (AFA) has announced that it has lifted its boycott of consumer packaged goods company Procter & Gamble, a boycott that 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.

    Our commentary:

    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.”


    MNB user Lisa Malmarowski wrote:

    No, KC - it would not have been terrible to say, " We market to everyone, because everyone buys our products". What it would have been was risky and innovative, and dare I say, bold... Qualities sadly lacking in many large companies. And gee, maybe by standing up to special interest fringe groups, they would have actually appealed to the majority of consumers!

    Another MNB user responded:

    Money talks. There was a time when it was not necessary for consumers to use the power of money to speak to advertisers using things not suitable for family viewing to advertise their products because advertisements used to be rated G.

    Sadly, that is not the case any more. Advertisements are often distasteful. Companies quietly support things that are distressing to the majority when they come into the light. Letting the company know that there are other ways to advertise is now necessary. Speaking out against things companies quietly support, that are not supported by the majority should be done.

    Large, powerful companies recognize the voices of those speaking when it affects the bottom line. The company then can decide if it wishes to continue on its current path with less customers or alter its current course of action.

    Few people take the time to write letters to corporations. It is easier for many to vote by reaching for a different product in the grocery story. I agree that some things are unfounded, like the Satanist rumors about P & G.

    It is important for those starting such a boycott to verify the truth before garnering support. When the truth is verified, as in this most recent P & G issue, customers have spoken. Sure, there are people who do not care what kind of advertising a company does or what issues it supports. There are also many people who do care about that kind of thing and those people should let their concerns be known.

    There are many issues today that if they came to a vote, would be defeated.

    Yet these issues are being forced upon the majority by a minority group using behind the scenes tactics to make them come to pass. Our country was founded on the principles of democracy where the majority rules. In a situation where that is not the case, those on the side of the majority must not be silent.

    If it takes voting by boycott, so be it.


    We support the notion of democracy, and even the right to boycott…even in the face of filibuster.

    What we don’t understand is that P&G didn’t tell the AFA that it didn’t knuckle under to irrational threats.

    You write about distasteful advertising. Maybe we’re having a senior moment, but we can’t ever remember P&G producing a tasteless commercial. The AFA wasn’t objecting to ads, just to their being run on programs that they object to.

    We just think it is problematic for P&G – or any other company – to give these guys any sort of credibility…especially when all P&G wanted to do was sell soap to people who happen to be gay.
    KC's View: