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    Published on: January 12, 2006

    Some independent espresso shop owners are accusing Starbucks of “stealing customers,” not creating new ones. But MNB Content Guy Kevin Coupe argues that not only is this inaccurate, but it isn’t even possible…and that this is a lesson that all retailers have to keep in mind.

    To hear his reasoning, go now to this week’s new MNB Radio entry by clicking on the icon at the left hand side of this page, or go to:

    http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las
    KC's View:

    Published on: January 12, 2006

    The Tampa Bay Business Journal has a complimentary piece about Shelley Broader, COO of Delhaize’s Sweetbay/Kash n’ Karry chain in western Florida.

    Broader, as has been well documented, moved from a senior business strategy role at Hannaford Bros. to the Florida gig in June 2003, and worked in concert with the leadership team there to figure out what to do with Kash n’ Karry, which was getting beaten up by the likes of Publix and Wal-Mart. The decision was made to retire the name, and convert the entire chain to the Sweetbay brand.

    The Business Journal notes that there are now 25 Sweetbay markets open in the Tampa Bay area, with 50 more to be opened in western Florida by the end of 2006, and then 30 more stores to be done in 2007. Sweetbay stores also are slated for some inner city areas, Broader tells the paper. “That's one of the cool parts of our brand. It's elastic, and we can be in an affluent area of Naples and midtown St. Pete, or focus on Mexican migrant communities in stores in Arcadia and Wachula.”

    Furthermore, the Business Journal notes that Broader distances herself from a lot of senior supermarket executives by being upfront and public about her plans.

    “What's more dangerous?” she says. “My competition knowing my plan or my 10,000 employees not knowing my plan?”
    KC's View:
    In two decades of writing about retailing, that may be one of the smartest comments we’ve ever heard from a senior retailing executive. No surprise that it came from Shelley Broader, about whom we’ve waxed rhapsodic numerous times in this space.

    One of the things that distinguishes Broader in this business, it seems to us, is that she is equally at ease talking to customers, store associates, headquarters personnel, manufacturers and even the media. (We’re particularly thrilled about the last one.) That she brings seemingly equal enthusiasm to all these tasks tends to make her energy and optimism contagious.

    What Delhaize is trying to do in Florida is not easy, and is happening under tough competitive circumstances. We’re reminded of what Bill Gates once said about converting Microsoft’s products to the Windows operating system – it was like changing the oil in a car while it was moving at 75 miles an hour down the highway. You’ve got to change the oil or you can’t keep going, but you also can’t stop moving or you’ll lose.

    Think of all the chains out there that have decided to either not change the oil or pull over to the side of the road. Think of the chains where the people behind the wheel have limited driving skills and no map or talent for navigation.

    It explains a lot of retailing car wrecks.

    And it gives you profound respect for what Broader and her excellent team is doing in western Florida.

    Published on: January 12, 2006

    Philadelphia Inquirer columnist Jeff Weinstein writes about the evolution of the supermarket industry over the past few years, and comes to the conclusion that Whole Foods may be the company that best reflects where the food retailing experience is going.

    “The best way to measure a trend is to see what works in the marketplace, and Whole Foods is the market that's working for us now,” he writes. “By consolidating three seemingly different needs, this international chain has managed both to pique and perpetuate the appetite it is made to satisfy.”

    Weinstein identifies these three elements as 1) catering to the health and well-being of the customer; 2) creating a shopping experience that is convenient, and 3) forming an approach to food shopping that celebrates cooking and eating.

    And, he says, the best Whole Foods stores become something else: community meccas that become “known in singles circles, both straight and gay, as one of the hottest pickup spots in the city - adding a little something extra to the idea of ‘takeout’.”
    KC's View:
    Weinstein gets it absolutely right.

    While he doesn’t hammer home another point, we will. He writes that Whole Foods “has managed both to pique and perpetuate the appetite it is made to satisfy.”

    Appetite. What a terrific word to apply to what a food store is supposed to do. Create appetites. Satisfy appetites. Expand appetites.

    Perfect.

    Think about the food stores that do this, and the ones that do not.

    Think about the food stores where, the moment you walk in the door, you get hungry – it may be the smell of fresh bread, or the look of glistening produce, or the sizzle of something cooking on a grill somewhere. Or maybe it is just packaged goods laid out in such a way that it says to the consumer, “This is new, this is fun, this is exciting.”

    As opposed to, ”This is cheap, this is easy.”

    Sure, there’s a role for cheap and easy. But increasingly, that role will be played by just a few chains because of advantages of size and logistics. Which leaves the other roles in this unfolding drama – and there are many of them – to be played in other ways and in other styles that will create and satisfy different consumer appetites.

    Appetite.

    What a great word.

    Published on: January 12, 2006

    Logistics Today has a very interesting piece about the efforts Wal-Mart is expending in China to be successful and dominant in that enormous and expanding marketplace.

    Especially impressive is the training programs being developed for the company’s Chinese employees, developing computer-based training programs and even starting its own Master of Business Administration program there – moves that it knows it needs to make in order to have a strong in-store employee base.

    Wal-Mart also reportedly is putting a real emphasis on both fresh food and fast food, understanding that this one-two punch will get people into the store and give it an accepted role in local communities. These aren’t necessarily approaches that have worked in other markets, but Wal-Mart seems to understand that success in China will require both a specific vision and a willingness to reinvent itself where necessary.

    Business Week reports that “a judge approved a class-action lawsuit against Wal-Mart Stores Inc. by employees in Pennsylvania who say the company pressured them to work off the clock, claims that mirror those in suits filed around the country.

    “A California jury last month awarded Wal-Mart workers $172 million for illegally denied lunch breaks, while Wal-Mart settled a similar Colorado case for $50 million.”

    As many as 150,000 past or current employees could be included in the class action.

    Wal-Mart is considering an appeal of the class action decision.
    KC's View:

    Published on: January 12, 2006

    The Food Marketing Institute (FMI) and the National Restaurant Association/National Restaurant Association Educational Foundation, announced yesterday that they will launch what they called “a one of-a-kind, multi-faceted food safety education and food policy event later this year in Washington, DC.”

    The event is scheduled to take place in Washington, DC, from October 11-13. According to the joint press release, “It will focus on key perishable commodities — poultry, meat, seafood, produce, deli, dairy, bakery and prepared foods — and will connect manufacturers, suppliers, distributors, service providers, regulators and food industry organizations with their retail and foodservice business partners. The conference will offer a broad overview of essential food safety issues, address real-world implementation, provide relevant case studies and emphasize the integration of safety, quality and security.”
    KC's View:
    Important subject, and deserving of the attention.

    FYI…CIES has its International Food Safety Conference coming up in just a few weeks – it will take place in Paris, France, on February 1-3, and will also feature a comprehensive look at the food safety issue from a variety of perspectives.

    We’re thrilled to have a role at this year’s event – CIES asked us to produce a video looking at US food safety attitudes from a number of angles, and it will be featured at the conference’s closing general session. We have video interviews and profiles of Wal-Mart, Hannaford Bros. and Sheetz (the latter a convenience store chain that grappled with a salmonella problem and has real world experience in this area), as well as interviews with government officials and consumer experts.

    In addition to having speaking role, MNB also will be covering the entirety of the CIES International Food Safety Conference…bringing reports to the MNB community on a daily basis. And we plan on being in DC to cover the FMI/NRA confab later this year as well.

    As we said, an important subject…and deserving of the attention.

    Published on: January 12, 2006

    • Published reports say that PepsiCo’s Frito-Lay division has big plans to rejuvenate the Doritos brand this year, concerned about sales that dropped off by almost two percent last year.

    The response will be a new label, new flavors, and a bilingual advertising campaign.

    USA Today reports that Unilever is spending some $2.4 million on a 30-second Super Bowl ad for its Dove brand – part of its “real beauty” campaign focusing on inspiring greater self-esteem in women. According to the paper, an “estimated 90 million viewers who'll tune in to ABC's Feb. 5 broadcast will notice the multiethnic ad as an interesting change of pace from monkeys, celebrities and flatulent horses. The risk is that the effect is akin to the proverbial jerked needle on the record putting a screeching halt to the party mood of Super Sunday.

    • According to this morning’s USA Today, all the major fast food chains – McDonald’s, Wendy’s, Burger King – have begun the new year with a new emphasis on value meals. “This is more than a winter response to slow sales,” the paper writes. “It's also about their customers' economic stress.”

    • Published reports say that Pathmark will close two stores – one in New Jersey, the other in Pennsylvania – calling them “underperforming locations.”
    KC's View:

    Published on: January 12, 2006

    • Ahold reports Q4 sales up 0.6 percent to the equivalent of $13.4 billion (US). The company said that quarterly sales were up 2.3 percent in its Stop & Shop/Giant division, with same-store sales up 0.5 percent at Stop & Shop and down one percent at Giant. Same-store sales were up 2.9 percent at Giant of Carlisle, but were down 8.3 percent in its Tops division.

    • France-based retailer Carrefour announced fourth quarter revenue that was the equivalent of $28.1 billion, up seven percent from a year ago. Sales for the period were up 6.1 percent to $101 billion.

    KC's View:

    Published on: January 12, 2006

    MNB user Ted File had some thoughts in response to the release this week of the Fortune list of best places to work:

    Isn't it sad that so few companies that began as privately held companies have been on the losing end in recent years? Yes, some continue---like HEB, Ukrops, Schnucks, Publix and Hy Vee. Yet others such as Winn-Dixie (the Davis family) Marsh family, and even Albertsons have failed to meet the expectations and support from consumers as well as failed to understand how to stay on the leading edge (not necessarily technology) in differentiation tactics to stay at the top in their marketing areas.

    Wegmans is a champion in so many areas of operation--and they treat their associates as champions as well. How can they lose? The family knows how to share their "pride" within and without the family. All one has to do is visit any of their stores and you will find what we have all found....PRIDE.

    Here in Utah (home of the Jazz) there are a couple of companies whose founders imbedded years ago the Service philosophy that still exists (although the original owners have retired) and I am speaking specifically of Macey's and Dan's. Talk about service and they have it.

    People talk to people throughout and are always asking, "can I help you find anything? Please let us know as we'll get it." Wow, what a nice change.





    MNB user Fernando Muñoz had an opinion about Supervalu’s new Hispanic-themed format:

    Unfortunately “El Primero Mercado” doesn’t make sense in Spanish (It should be “Primer Mercado”, and it still doesn’t sound right.)

    You’d think it would be common sense to run ads, slogans and (especially) names through a Spanish speaking person before releasing them…





    We’ve been pretty dismissive of Winn-Dixie’s prospects, but MNB user Glenn Cantor thinks we’re being too pessimistic:

    We should applaud (CEO) Peter Lynch's simple, yet effective, grass roots incentive to improve Winn Dixie. Even though it is easy to point out everything that this retailer has done wrong over the past years, Mr. Lynch seems to recognize that one way to improve it is from the inside, out. There is no better place to start that with the store management team. If he can get them excited and proud about their work, then he will create an infectious optimism that will eventually spread to their customers.

    Sure, we can "write-off" Winn Dixie. But Peter Lynch is obviously serious and innovative about trying to re-invent and maintain his company.


    We suspect you’d get some debate about your use of the word “innovative.” But you’re right…maybe we should be less caustic about the company’s chances.

    Maybe.




    One MNB user wrote in about the claims that Wal-Mart is making about its job creation statistics for 2005:

    It's real easy to gloat about marginal increases in your full-time rate, but when that represents probably 20% - 30% of their workforce. It is obvious they are not sharing the whole story. How do their part-time rates compare? How does the total average hourly rate compare? You look at this, and you will see why other retailers find it hard to compete on the wage line. It's almost like those who look to work for Wal-Mart have the expectation of being paid less.

    But another piece of is, that over time, many times Wal-Mart becomes the only game in town - having wiped out the independent grocery, the mom and pop hardware store, etc.


    And another MNB user wrote:

    It’s nice Wal-Mart pays their full-timers $10-$12 per hour. But they forgot to mention that full time at Wal-Mart is something like 28 hours a week. Normally I am Wal-Mart's pal, but those wage figures are misleading unless you also include hours worked.




    We got several emails regarding our story about how Marian Burros of the New York Times wrote about the so-called healthy cereals that are coming on the market, noting that “nearly all of the current ones are organic or ‘natural,’ and their labels crow about specific benefits like helping the environment, managing weight and promoting peace. Their ingredient lists include green tea, omega-3 fatty acids, hemp, cardamom, flaxseed, gobs of antioxidants and evaporated cane juice. They claim to be low-fat, high-protein, low cholesterol, wheat-free, vegan. Just as prominently displayed is what they don't contain: artificial colors, flavors and preservatives, refined sugar, hydrogenated and tropical oils, trans fatty acids, not to mention sulfites and monosodium glutamate.”

    However, there is one thing that Burros says most of the cereals don’t have: good taste.

    Our reaction was to say that natural and organic foods are only going to have real success if they taste good. And, we wrote: “We only want to eat things that taste good. We daresay that most consumers feel the same way.

    Which makes you wonder why there is so much food in the world that tastes like crap.”

    MNB user Sally King wrote:

    While I very much respect Marian Burros' research, work, and taste, it would have been interesting to have other tasters comment on the same cereals. Some people hate Brussels sprouts and beets while others love them....you get the point.

    Yes, we do. Sally obviously has a very good memory, and is making a not-so-oblique reference to the fact that we wrote in this space some time ago that we hate both Brussels sprouts and beets. (She forgot egg salad.)

    Good point.

    MNB user Rob Rice wrote:

    I’m not so sure I agree that we must infuse taste in everything we eat for it to be attractive to consumers. It seems to me that more taste means adding more of the bad ingredients we’re trying to avoid. For example the best mashed potatoes I’ve ever tasted were laden with butter, sour cream and cheese (all the bad fat). People can learn to appreciate the natural tastes of food if they haven’t eaten that way for a while. Not many try to enjoy the natural taste of steamed broccoli these days. The most compelling reasons to try natural foods are health benefits; not taste. I suggest to try your favorite natural cereal with a flavored soy milk (i.e. vanilla), which adds all the taste you need, plus avoids the fatty milk. It seems to me that eating natural cereal with fatty milk is like drinking green tea with your Twinkie.

    Are you calling Mrs. Content Guy a “twinkie”?

    Sorry. Just kidding. Couldn’t resist.




    Responding to the story the other day about how McDonald’s apparently feels that new mad cow-oriented regulations don’t go far enough to safeguard the nation’s meat supply, one MNB user wrote:

    McD’s and everyone should be concerned about mad cow and about the FDA’s head burying ostrich imitation when it comes to testing. Why would we not want to test every cow?

    What if the food industry demanded that the beef industry test every cow? What if the food industry sent the word out to the beef industry that they would only purchase product that had been tested and could be verified through documentation that testing had been successfully performed? We already have a tracking system for grinds and seafood. Why not mad cow testing? Isn’t there a beef company out there that has the vision to see an opportunity to differentiate itself and offer this as a service? Why should we depend on an inept federal agency to actually do their job when it comes to our food safety?

    The food industry itself could further this process simply by setting the standard and then sticking together to make it happen. Maybe we should just wait until Wal-Mart or McD’s decide to make this decision for us.


    If we remember correctly, the government won’t allow private testing and BSE-related claims on meat packaging.

    Which we think is nuts.




    We were actually sort of surprised by the level of email we got responding to yesterday’s analysis of a Wall Street Journal piece saying that that Coca-Cola imported from Mexico “is a big business, fueled by the Hispanic population, the fastest growing minority group in the U.S., and soda connoisseurs drawn to its taste and the old-time look of the iconic bottle. Fans insist the Mexican cola, made with cane sugar, has a better ‘mouth feel’ than the U.S. formula. U.S. bottlers switched from cane sugar to high-fructose corn syrup in the 1980s to cut costs.”

    The problem is that Coke’s management calls the imports “the work of bootleggers,” and is annoyed by the underground importation of the Mexican product. While it investigates cases of US stores selling Mexican Coke, the company also “quietly started a limited test program to allow the authorized distribution of a small amount of Mexican Coke through one of its U.S. bottlers.”

    We wondered why not give these customers what they want, especially in a market where Coca-Cola is trying to recapture some old magic.

    MNB user Bill Knudsen wrote:

    Two points about your Mexican Coke article. First, producing that quality product here would be a great opportunity and if the majors don’t do it we will probably see that sort of formula produced as private labels for Costco, Wal-Mart, etc. Second, this highlights the point that we could all have better quality soft drinks if US policy didn’t force an artificially high cost of cane sugar in this country.

    MNB user Bob Peterson wrote:

    In the same manner that switching from Coke to reformulated Coke was a disaster, Coke needs to recognize that the original formulation including cane sugar was a far superior product. We live where we can get to bodegas / taquerias fairly easily that sell “bootleg” Mexican Coke. The first time I had cane sugar Coke with home made tacos was a real eye opener. Returning to or offering a cane sugar version would certainly increase sales more than all the silly segmentations they are currently doing (One, Lime, Lemon etc.).

    MNB user Jim Farina noted:

    Not to mention, that if consumers believe that it tastes better, Coke might want to re-think the decision to switch to corn syrup. Cheaper is seldom better.

    If you remember the great Pepsi Challenge and the subsequent New Coke fiasco, the preference most expressed by random tasters was that Pepsi was sweeter and therefore tasted better.


    One MNB user clued us in on something we’d never heard before:

    There's a little secret that probably isn't much known outside the Orthodox Jewish community. Coke makes an all cane sugar version of its Coke for U.S. distribution around the Jewish Passover Holiday. Jewish law prohibits eating corn during Passover, so Coke quietly makes 2-liter bottles of all cane sugar Coke available around that time. It's only available in limited distribution, so its great if you live in heavily Jewish cities like N.Y., L.A. or Miami, but you're not likely to see much of it in Topeka. If you like it, stock up when you're in the big city in the Spring (they put a different color cap on the bottle to differentiate it from the regular Coke).

    P.S. The stuff does taste noticeably different - and better, than the regular formula.


    Another MNB user wrote:

    Right you are, Kevin. It’s strictly business. H-E-B Central Market, with its focus on unique packaged foods that complement the chain’s core fresh fare/meal solutions positioning, isn’t really interested in stocking standard Coke. It is, however, willing to sell “Mexican Coke,” which has strong appeal among the banner’s Mexican shoppers and certainly classifies as a “unique” product. Coke has been supplying Central Market for at least a few years now. (Of course, the proximity of stores to the Mexican border probably helps Coke makes this particular decision.)

    And still another MNB user chimed in:

    My first recollection of seeing Coca-Cola from Mexico was in the aisles of HEB's Central Market. It was selling well.

    It would be fun to sit in the meeting between CCUSA executives and HEB to hear how they would tell HEB the product is no longer available. HEB serves a diverse geography and broad ethnic customer base. Having a product that is strong in Mexico would be a good idea for HEB and many other retail outlets.

    And my friends in the soft drink business tell me that you really can taste the difference between soft drinks made with cane sugar versus HFCS (high fructose corn syrup).


    MNB user Gary Hudman wrote that this may be a tempest in a teapot:

    The real bottom line is that many, if not all, of the consumers seeking Mexican Coke are misinformed. Mexican Coke was once made exclusively with cane sugar, but several years ago, the Mexican bottlers gradually began changing to less expensive HFCS. I have a bottle of Mexican Coke on my desk with an attached paper label that clearly states "High Fructose Corn Syrup and/or Sucrose," the exact wording on the U.S. Coke bottle. Perception is Everything!

    Same bottle? Or same formula? Just curious.

    There’s one thing for sure about this debate. It has probably gotten MNB and the Content Guy on the FBI’s and DEA’s “watch list.”

    Because we got roughly 50 emails on this subject in the last 24 hours, and almost all of them had the exact same subject line:

    “Mexican Coke.”
    KC's View: