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    Published on: August 22, 2005

    Minnesota retailer Lund Food Holdings, which operates both Lunds and Byerly’s units in the Twin Cities, announced that it will begin selling genetic assessment kits in its stores, offering consumers the ability to use their individual DNA to get diet and lifestyle advice, as well as learn about any genetic predispositions they may have.

    Individuals can collect a sample of their DNA using a simple cheek swab and complete a diet and lifestyle questionnaire at home. After doing so, they can receive a personalized and confidential nutrition and health assessment based on their genetic profile that they can review with their pharmacist or other qualified healthcare practitioner in the pharmacy. The five individual kits include: Antioxidant/Detoxification Assessment; Bone Health Assessment; Heart Health Assessment; Inflammation Assessment; and Insulin Resistance Assessment.

    The kit, said to be the first of its kind to be sold directly to consumers, is made by Sciona, Inc.
    KC's View:
    This is the wave of the future. We fully expect that retailers will be able to take the results of these kinds of genetic tests and develop menu and dietary programs that fill in any holes that might exist, and eliminate foods that might be harmful because of a person’s genetic makeup.

    This is exciting stuff. A little scary, but exciting – and an enormous opportunity for retailers to play an intimate role in their shoppers’ lives (assuming, of course, that their shoppers want them to).

    Published on: August 22, 2005

    Jupiter Research has conducted a new study saying that while less than a quarter of all online retailers in the US currently have some sort of loyalty program, another 43 percent of them plan to create some sort of reward-based program during the coming year.

    These new loyalty programs are expected to use points, cash-back, or some other sort of value-driven scheme.
    KC's View:
    While we can understand why all these online retailers would look to some sort of loyalty scheme to build sales and regular traffic, one of the problems is that they all may be trying to do the same thing using the same kind of vehicle.

    Which isn’t a great recipe for differentiation.

    We would also suggest to these online retailers that they shouldn’t make the mistake of so many brick-and-mortar retailers with loyalty programs that have used them as electronic discount schemes and nothing more.

    A good loyalty program is one that proves to the customers every day that the retailer is loyalty to him or her.

    We think that is a perfect example of a retailer that does this – through targeted recommendations that are keyed to our previous purchases, it helps us identify products that we’re going to like. Sure, the prices are sharp, the shipping often free – but that’s not why we started using Amazon back on March 16, 1997, and not why we have placed more than a hundred orders with the retailer since then.

    Published on: August 22, 2005

    Interesting piece on about Target Stores’ decision to buy every ad in the current edition of The New Yorker.

    The goal, as reported here on MNB last week, is to clearly differentiate Target from the competition – especially Wal-Mart – by allying itself with the upscale and sophisticated New Yorker and its longtime mascot, Eustace Tilly (Target doesn’t have a store in Manhattan, but does have stores in other boroughs such as Brooklyn.)

    But, as Slate notes, the best laid plans…

    “Like a lot of new-money arrivistes, Target can make grand gestures, but it gets the details wrong. If Tilly were to have searched the magazine rack of (Target’s) Brooklyn store on Monday, he would have found People, Time, and New York magazine. And not a single copy of The New Yorker.”
    KC's View:
    We subscribe to The New Yorker and have since about 1980…so we have a sense of the magazine. (We also worked in public relations for the magazine for a few years back in the early eighties.)

    The new issue with all the Target ads…it struck us as an interesting experiment that was ultimately meaningless for the magazine and the retailer.

    Well, maybe not completely meaningless. It was good for The New Yorker because an 80-year-old magazine was filled with ads.

    But as for Target…we can’t figure out exactly what it is selling, other than attitude.

    Trust us on this one. Attitude will only take you so far. There has to be some content. And the ads in The New Yorker didn’t make it clear exactly what else Target has to sell.

    That’s a potentially dangerous approach for a company in the retail biz.

    Published on: August 22, 2005

    ClickZ News reports that Kraft is going to start making more than 100 recipes available to be downloaded onto the iPod. The recipes will be created in a graphical format that will allow iPod users to scroll through them using the device’s “Notes” feature, which will take up less than a megabyte of space on the iPod.

    If consumers use the iPod in the way that Kraft hopes, they will be able to scroll through recipe and menu ideas while strolling through the store, identify ingredients, and then buy them.
    KC's View:
    To be honest, we’ve never used our iPod’s “Notes” feature…but now we’re intrigued. This is a great idea, and one that savvy retailers ought to adopt – using this burgeoning technology to develop new ways to communicate with their shoppers.

    Published on: August 22, 2005

    • The New York Times reports that New York continues to present obstacles as it tries to “scale the fortress walls” of the city – one of the few places in the country where it does not operate stores.

      “In the past month, Wal-Mart has greatly stepped up its efforts to make New Yorkers warm up to it, running radio spots as well as ads in 70 community newspapers,” the NYT writes. “But even in a city that generally takes pride in welcoming outsiders, Wal-Mart is facing a formidable not-in-my-backyard problem. Whenever there are rumors that the company is contemplating this neighborhood or that, residents begin sounding off that they do not want a super-busy, colossal Wal-Mart near them, with all the expected traffic and pollution.”

      Wal-Mart was rebuffed - thanks to a combination of community, labor and political opposition – from opening a store in the borough of Queens, and reportedly is trying to get a store built on Staten Island. It recently ran an advertisement in the Staten Island Advance saying, "On Staten Island, you can start the Marathon, take a ride on the Ferry, spend a day at Historic Richmond Town, and do just about anything. The only thing missing is every day low prices." However, despite the fact that Wal-Mart says that many Staten Islanders are traveling out of the city to shop at one of its stores, it refuses to confirm that it is shopping for real estate on Staten Island, lest the opposition find time to marshal its forces.

    • The Los Angeles Daily News reports that Wal-Mart is about to open its first supercenter in LA County – a 205,000 square foot store in Palmdale.

      While numerous communities in California have expressed opposition to Wal-Mart’s stated plan to open more than 20 supercenters in the state over the next five years, there was no such resistance in Palmdale – the store is eight miles from the first Wal-Mart ever built in the state, and replaces another Wal-Mart discount store about a mile away.

    • Country singer Garth Brooks announced last week that his albums will only be sold at Wal-Mart, Sam’s Club, and their websites.

      No time frame or financial terms of the deal were announced.

      The deal isn’t quite as dramatic as it sounds. Brooks retired from recording new music in 2001 and has sworn that he won’t tour or record a new album until his youngest daughter graduates from high school in about a decade. However, his catalog of previous albums sells at the rate of about 300,00 a year. (At ten bucks an album, which is about what many of Brooks’ albums sell for on, that’s about $3 million in volume – not bad revenue coming from a guy in retirement.)

      In addition, any retailer currently carrying Garth Brooks albums will be able to sell them off. They just won’t be able to get any more.

    KC's View:
    Brooks once sang, “Burning bridges one by one, What I'm doin' can't be undone.”

    We suspect that when it comes to this deal, he’s wrong about that. If he decides to make a new album (and we have to admit that it won’t be taking up any space on our iPod) and decides to sell in places other than Wal-Mart, other retailers will welcome him back. Money talks.

    (By the way, we checked. Garth Brooks isn’t available on iMusic. That speaks volumes.)

    Published on: August 22, 2005

    The NPD Group has released a study saying that this year, US consumers expect to spend $372 per child on back-to-school items – including supplies and clothing – up from the $367 per child spent a year ago.
    KC's View:
    We think they’re likely to spend that extra five dollars on the gallon of gasoline needed to get them to the store and back.

    Published on: August 22, 2005

    • Published reports say that California’s Stater Bros. has acquired 15 of its in-store pharmacies that until now have been run as Super Rx drug stores. Terms of the deal were not disclosed. Stater already owned three Super Rx pharmacies in three of its newest units.

    • As expected, Whole Foods announced its first London flagship store – a 75,000 square foot unit that will be located in Central London on Kensington High Street. The store is scheduled to open in early 2007.

    KC's View:

    Published on: August 22, 2005

    • Fresh Brands Inc., which owns and franchises the Piggly Wiggly and Dick's supermarket chains, reported second quarter earnings of $195,000, compared with a loss of $2.2 million during the same period a year ago.

      Q2 sales were up less than 1 percent to $164.2 million from $163.2 million.

    KC's View:

    Published on: August 22, 2005

    • Metro, the Canada company that recently an acquisition of A&P’s operations there, announced that Alain Brisebois, a Metro senior vice-president, will be the new chief of A&P Canada.

    • Wal-Mart named Mike Huffaker to be the new COO of Wal-Mart Canada. He succeeds David Cheesewright, who returned to the UK last month to run Wal-Mart’s Asda Group there.

    KC's View:

    Published on: August 22, 2005

    We often comment that homogenization, not competition, is the industry’s biggest problem – which led one MNB user to make the following observation:

    Bored people operate boring stores. Until there is a return of the passion for retailing, not just retail profits, we will continue to be served by boring stores. Nationalization of stores, TV, radio, print, etc. leads to homogenization of the offerings. When everyman becomes no-man, i.e. unidentifiable because he is a compilation of statistics, we sell him products that have no definition. Read the local rag, turn off your TV, eat local food, buy from local shops. Become a part of your community.

    Excellent point. Too many companies decide that their store managers should be managers, not leaders, and that they’re chief talent should be for efficiency, not effectiveness.

    That’s a mistake, especially in markets where the competition is tough and practically any form of differentiation is a positive.

    We got a great email over the weekend from MNB user Deb Cardenas:

    Hi Kevin, I am a big fan of your newsletter. I recently retired from my position with a drug wholesaler to travel the country with my retired husband. We bought an airstream, a suburban to pull it, and left San Francisco with our dog for the road. I hope you don't mind, but I couldn't let go of your publication as I love retail and your articles and feedback are timely and interesting.

    We have been at it for 90 days now and I have been in Wal-Mart more in these 90 days than my entire life. I am a Target girl, but I have to tell you... WM gets a lot right. I love that they have take away cards in their produce section. Being a major foodie and cook, it always bothered me when a grocer offered exotic produce but didn't give me ideas to cook it.

    Also, - in the 18 states I have been in so far - the WM employees have always been friendly and courteous. I'm sorry, but no one can hide being brow beaten forever - so are they?

    Lastly, my husband is a grocery store fanatic. We live close to the wharf in SF and the big grocer is Safeway. The stores are very disappointing. What we did find out in our travels is that these stores are not typical. Some very nice Safeways out of California.

    Lastly, our new favorite is Shoppers. We discovered them in Va. Here's what we like: great meat/fish/produce sections. Big ethnic sections. Lots of new and interesting choices. No discount cards. It was a real close tie to Wegmans, but I think the 'no discount cards' tipped the scale for him.

    Anyway, I'm in the NE now and loving America!

    Thanks for the email…your comments – an enthusiasm – are music to our ears.

    We hope while you’re here in the NE you’ll stop by and see the great Stew Leonard’s in CT…the wonderful Shaw’s store in downtown Boston…and also the excellent Hannaford and Price Chopper stores being operated in upstate New York and in New England.

    We envy you your trip…if not the exorbitant prices you must be paying to stay on the road…

    We wrote last Friday about market dualities, how the same people might look for bargains at dollar stores and then spend extra money on gourmet food. Which led MNB user Jan Owens to write:

    The key principle is perceived value, in whatever is an affordable range for your customer group. Because consumers are much more well-informed about their product and buying options, they will pay for what they see as real points of differentiation that are important to them. This is why some consumers will buy T-shirts at the dollar store, and others will pay $100+ at Neiman Marcus (doing very well, thank you!) This is why customers who don't see a lot of difference between brands of mustard will shop the dollar store for reasonable quality, and others go out of their way to get a favorite brand.

    MNB user Kelly St. Laurent wrote:

    I think is shows some real thought and brains on the consumer’s part. Consumers are realizing that in order to afford the luxuries of gourmet food (in this instance) they need to be a bit frugal in other areas. They are spending less money on the items they are not really passionate about yet know they may need for their home (household cleaners, paper products, etc.) By going cheap on those items (which can now be expensive at most stores) they can afford their gourmet foods.

    Jumping in to the ongoing debate about Wal-Mart and censorship, one MNB user wrote:

    I wish you would stop equating not selling a product to censorship. Censorship happens when an item is not available anywhere, when it is banned by the government or when all retailers choose not to carry it and there is no outlet for making something available to the public.

    Refusing to sell something that the majority of your clients find offensive is smart, not censorship. I am fairly conservative that despises pornography but support the ACLU on their position of censorship because I do not want anyone telling me I can’t read the books that I want or listen to music that I want. As long as I can find what I want and it is available somewhere, I am fine with that.

    We must not be making ourselves clear. We equate the sanitizing of products with censorship. We have no problem with Wal-Mart not selling what it doesn’t want to sell...though we think some of its decisions are, to be honest, silly.

    But let us pose another question to you. If Wal-Mart doesn’t carry a book/CD/magazine/DVD because it objects to the product’s worldview, and then manages to put every other retailer in a community out of business – does that create de facto censorship? (Internet sales probably make this a moot point, but what interests us about Wal-Mart’s growth as much as anything are the cultural implications down the road of having one big company control so much of the marketplace.)

    Just curious.

    Responding to our Balance Sheet piece of last Friday about sales gains at Unified Western Grocers, one MNB user wrote:

    Your report regarding a 56% YTD gain in profits at Unified may have missed or omitted a key issue. Unified changed back to a Variable Category markup system last year and the profit results does not include patronage payments to be paid back to the members. Having worked at co-ops and traditional cost plus wholesalers I do not understand the lure of a system that overcharges me every day just to receive a larger check at the end of the year... It's like overpaying the taxes on your wages just to get a 'refund' back from the government next year. NO THANK YOU! ...

    On the subject of Wal-Mart’s lawsuit against its former vice chairman, Tom Coughlin, trying to end retirement benefits to the man it accuses of financial fraud, MNB user David Livingston wrote:

    I don't think Wal-Mart really cares if they win or lose this case. They just want to be seen as taking action. It reminds me when my son was a little boy and he did something naughty. His mom told me to take him in his room and spank him. So behind closed doors I would clap my hands and my son would simultaneously yell ouch. As far as I was concerned he didn't do anything so bad. But we had to satisfy mom.

    Wal-Mart needs to get this Coughlin situation settled. It makes life at work uncomfortable at work because I'm sure Mr. Coughlin still has lots of loyal friends working at Wal-Mart. They need to have everybody on the same team and not taking sides.

    This email makes us ask just one question.

    You still married?

    MNB had a story last week about how US Department of Agriculture (USDA) inspectors identified 1,036 violations of rules aimed at preventing mad cow disease from reaching humans, though no contaminated meat actually got into the food chain.

    “The truth is that these very low numbers ... demonstrate a remarkable level of compliance with federal regulations exceeding 99.9 percent," Jim Hodges, president of the American Meat Institute Foundation, told the Washington Post.

    To which MNB user Pat Weidman responded:

    Just, exactly, how do you think Mr. Hodges would feel if it were he (or any member of his family) who consumed the meat (cut and sold to the public) from the "more than 1,000 violations..."?

    It is exactly this kind of blatant lack of concern for the poor individual(s) who may be trusting enough to "swallow" this bunk of Mr. Hodges (...not to mention the meat from the over 1,000 violations) that has caused me to no longer purchase any beef at all, period.

    Another MNB user had a similar reaction:

    I suggest that the folks from the USDA and the American Meat Institute offer to serve their families from the .1% of the cattle that may contain the disease if they are so confident the risk is so small.

    You are dead on about building trust with the public...the more of these shenanigans these folks engage in, the less likely they are to get cooperation from the public when a real crisis arises...

    We just don’t get it.

    It is sort of like watching as government and industry alike treat oil as if it is an infinite – rather than finite – resource. The attitude flies in the face of both reality and common sense.

    Acting as if there is no problem doesn’t mean that there isn’t a problem.

    Or, to quote once again from the great “Three Days Of the Condor,” it is like the person “who thinks that not getting caught in a lie is the same thing as telling the truth.”

    We wrote last week about the trend toward using “real women” in advertisements by companies such as Dove and Nike.

    MNB user Stuart Silverman responded:

    I have a little problem with the "fat ladies in underwear" billboards all over NYC. It really caught my eye when they came out (which is good, I guess) but I could not figure out what they were advertising (which is not good) - I thought it was for underwear. Once I figured out it was for a Dove product, I then couldn't remember it was a Dove product and I still don't get what the product does (maybe its just not a guy thing).

    But what bothers me is the ubiquity of all these smiling ladies in underwear all over the city. Clothing serves a purpose - for protection and warmth - and to make us look good. Lets face it, not all of us look too good without our clothes on. Which, I think, is the attraction of using scantily clad models. I don't think that I'm a prude. And I don't want to advocate for more billboards with bikini-clad models advertising cars and sunglasses. But I sure hope that advertising fat people in underwear does not become a fad. Because for the most part, its not a pretty picture.

    We had the opposite reaction. Not only do we like the Dove ads – and have known from the first moment we saw the ads exactly what company was behind them – we actually find the women extremely attractive.

    One MNB user wrote:

    Lets be real. Nobody, including "all" women, wants to look up to image of a woman who is 25-30lbs. overweight and think it is attractive! "I buy Dove beauty products so I am ok with being overweight." Please! Dove (P&G) should be promoting their products while encouraging weight loss. Women buy beauty products to look better and to attract men. This is a fact - men don't want a fat chick!

    You must be looking at a different ad than we are.

    Of course (and we say this at the risk of divulging our own tastes more than we probably should), the first thing we noticed wasn’t their thighs or rear ends. It was their smiles – they just all seemed to be having a real good time.

    We like that it a woman.

    MNB user Georganne Bender wrote:

    Gee, Kevin, do you think that this trend will make its way to women's clothing stores? They all seem to think that the average woman is 8' tall and weighs 100 pounds.

    The celebration of "big butts, thunder thighs and tomboy knees" however, is just a little insulting, especially when they are comparing an "average woman" to the average model we currently see in ads. The so called average woman wears a size 12 -- and the size 12 women that I know can hardly be described as having big butts, thunder thighs, or tomboy knees -- whatever that's supposed to mean.

    MNB user Chuck Kilgore wrote:

    Your sense of humor continues to amazes me.

    Last statement from your comment about "Real Woman":

    "In a broader sense, though, we think that this shift should give food retailers some impetus to start developing campaigns around “real customers” – showing how these stores are serving their needs and desires in a very real sense."

    Actually, we’re sort of amazed with what we get away with on a day-to-day basis…

    We wrote last week about “management from conflict,” addressing the emphasis that many companies and managers put on stifling debate – when much progress comes from the honest and candid airing of different points of view, and then the creation of consensus that everybody can get behind (even when not everyone agrees with the decision).

    To which one MNB user responded:

    Having worked for many large companies, upward mobility was based on your ability to lead larger and larger groups to accomplish given objectives.

    Questions and conflict from your group was considered a black mark against your leadership ability and would inhibit your upward movement so most managers I had would consider those people as troublemakers and get them transferred or fired. Because of that approach, I spent too much time implementing programs that had no chance of success.

    It's unfortunate and I don't have the answer beyond changing mindsets to accept that senior management is not expected to know everything and that it is the employees' obligation to speak up if they know that the company is heading down the wrong road. I have managed over the years with the approach that I expected everyone to start the day by questioning everything we do and the value that it adds. I believe that if you do that, you will either find better ways of doing things or feel comfortable that you are doing everything you can to the best of your ability. I have also rewarded people for taking tough stands on an issue whether we took their direction or not.

    Of course, we have a dog in this hunt. As Philip Marlowe said in Raymond Chandler’s “The Big Sleep,” “I test high on insubordination.” (Just ask some of our former employers.)

    Another MNB user took a different perspective:

    You say that it’s a shame when leaders that grew up challenging authority evolve into decision makers that do not want their decisions or rationales challenged. I agree, but only to a point. It’s also a shame when people in positions of leadership (a key distinction – not all leadership positions are held by true leaders) cannot make a decision, and instead depend solely on the consensus of a group. I’ve been in too many instances where group dynamics delivered a watered down, compromised-to-death decision.

    The leader that is unwilling or unable to listen to the input of others is making a mistake, but so is the leader that won’t make a stand.

    We think one of the keys to effective leadership is being able to get even people who disagree with you to follow.

    Getting believers to follow is like preaching to the choir.
    KC's View: