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    Published on: January 16, 2006

    Dr. Kjell Nordström is known globally for his unorthodox approach to business and his belief that traditional technologies and institutions are being subverted and overturned…and that it only is people who embrace these changes, and create visionary and flexible business models, who will thrive in the new century.

    To get a sense of what Dr. Nordstrom will tell attendees at the annual Food Marketing Institute (FMI) Marketechnics conference in San Diego, scheduled for January 30-February 1, MNB engaged him in an exclusive e-interview.

    MNB: In reading about you and the description of your presentation, a recurring theme is the need to abandon copycat, imitative thinking in order to succeed in a 21st century environment. In speaking to a supermarket conference, you are addressing an industry that has, over the years, thrived on being mainstream and traditional. Can so-called “mass marketing” adopt a “free your mind” approach and still have mass appeal?

    Kjell Nordström: Mass anything is today in most industries NOT the way forward. Personalisation and individualisation is the new normal. For business it is becoming a must. The automobile industry show the way forward: A personalised mass approach.

    MNB: In many ways, unconventional marketing often is viewed within the supermarket industry as necessarily being upscale; that imagination in mid-market or down-market retailing is suspect. How does the industry get past this misconception (assuming, of course, you think it is a misconception)?

    Kjell Nordström: The move away from this misconception we just have to look at the world of today. We live in the age of abnormality. Abnormal is the new normal. It is a double economy, a binomial society, a polarised world of wealth and poverty, opportunity and misery, luxury and low cost. All at the same time!! Changes in technologies, institutions and values are pushing us into a world of Karaoke Capitalism where variations and innovations are the alternatives on offer - capital and competence versus chance, opportunities versus responsibilities, liberty versus duty, individual splendor versus loneliness. It is the anti-thesis of mass!!

    MNB: Some retailers (and, I suppose, other businesses) tend to mistake technology for innovation, confusing tactics with strategy. Is this a common mistake, and how do you get businesses to change their approach?

    Kjell Nordström: Technology - Any technology is necessary but NOT sufficient for success. It is a little bit like restrooms (toilets), you have to have them... but it is rarely a competitive advantage.

    MNB: Is bottom-line-driven management consistent with "creating capitalism with character"? How do you approach this from a management and cultural perspective?

    Kjell Nordström: Capitalism with character per definition requires something IN ADDITION to the bottom-line logic. A strong defined owner with equally strong ideas helps!!

    MNB: Where do you shop for food, and why do you choose that location?

    Kjell Nordström: I shop the bulky basic stuff at any of the low price/low cost outlets. The things that makes the real difference in life - good wine, fresh fish, French cheese et I shop at a nearby high price/high quality top service kind of outlet. The shopping is in a way an integrated part of the meal!

    Kjell Nordström is scheduled to speak at FMI’s Marketechnics conference on Tuesday, January 31, from 8-9 a.m.
    KC's View:

    Published on: January 16, 2006

    The Washington Post reports that in the wake of last week’s vote by Maryland legislators to require large employers – specifically Wal-Mart – to spend an amount equal to at least eight percent of their payroll on health care benefits, or pay a penalty to the state’s health insurance program, organized labor is laying out plans to get other states to enact similar laws.

    “Washington and New Hampshire are among the states labor activists view as most likely to follow in Maryland's footsteps,” the Post writes. “Similar measures also have been introduced recently in states including Colorado, Connecticut, Rhode Island and Wisconsin.”

    Union advocates seem to believe that they may have finally found a weakness in Wal-Mart’s well-developed defenses. By using statistics to bolster their case – arguing in Maryland, for example, that Wal-Mart was the only company in the state with more than 10,000 workers that did not spend eight percent of its payroll costs on health benefits – and then saying that this means people without coverage are being covered by taxpayers, they think they have a case that will resonate with consumers and lawmakers.

    The Post also reports that there are a number of different responses being considered by Wal-Mart, including 1) suing to overturn the law, and 2) moving a planned distribution center across the border to Delaware in retribution.

    While one estimate is that the Maryland legislation could cost Wal-Mart roughly $3 million for each percentage point below the eight percent line, the general feeling is that Wal-Mart isn’t as worried about the money as it is about the precedent…and that it needs to do everything it can to make sure this law doesn’t capture the popular imagination.

    The New York Times this morning reports that while there are legislators in some 30 states who have either indicated interest in similar legislation or have introduced similar bills, “it is doubtful that the campaign will steamroll across the country, policy analysts say. Because the other states' bills are written much more broadly, they are likely to draw more opposition from companies that watched the Maryland debate from the sidelines.”
    KC's View:
    We have to admit to feeling conflicted about the Maryland developments. We hate the idea of government creating these kinds of mandates, but we also think that the problem of people without health insurance creates enormous problems in this country.

    The reality that every retail business will have to cope with is that the whole notion of pay-and-benefits is becoming the kind of grass- roots moral issue that could influence elections and the shape of government. And we suspect that there will be a lot of people as conflicted as we are – against government intervention, but somehow vaguely feeling that the current system isn’t working.

    Published on: January 16, 2006

    The Wall Street Journal reports that stock market analysts may be losing some of their enthusiasm for Whole Foods, concerned that it cannot maintain its high growth rate and eventually will be hurt by competitive forces.

    “Over the years,” the WSJ writes, “the company has found a critical mass of consumers willing to pay more for chicken without hormones, fresher produce, prepared meals, and a cheese department that offers a dozen varieties of cheddar.”

    While the company has grown its earnings at an annual rate of almost 20 percent since it went public in 1992, the Journal writes that “Whole Foods' price/earnings ratio has analysts worried because they see possible banana peels. Other grocers are beginning to copy the Whole Foods approach and could undercut the company. Despite store openings in Canada and the United Kingdom, the company eventually will run out of consumers willing to shop at high-end stores that some jokingly call ‘Whole Paycheck,’ the bears argue.”

    Whole Foods’ management argues that it has managed to keep the company performing at a rate far beyond the average supermarket chain despite the competition, and that there’s no reason to believe it cannot continue to do so. And while the Journal concedes that point, it also notes that “some new formats could pose fresh risks. Safeway -- which currently has about 1,800 stores -- is staking a turnaround on building so-called lifestyle stores that emulate many Whole Foods elements, with fresher prepared foods, higher-end produce and a holistic marketing campaign aimed at branding the shopping experience.

    “New competitors may be able to lure shoppers with less costly offerings. Supervalu, an Eden Prairie, Minn., food retailer and wholesaler, has opened in Indianapolis its first Sunflower Market, which will sell natural and organic foods at lower prices than Whole Foods and mainstream retailers charge.”
    KC's View:
    This is analyst talk.

    Only analysts believe that because a company has 20 percent annual revenue growth for a period of years, it always has to have it.

    It is this same sort of analyst-speak that complains that Costco doesn’t have large enough margins and pays its people too much money.

    Most of these analysts simply don’t know hoe retail works, and don’t understand the difference between a Whole Foods and a Safeway or a Sunflower Market. Not to diminish the chances of the competition, but While Foods is a concept that inspires its customers to become fans and advocates, not just shoppers.

    Published on: January 16, 2006

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    An all-new presentation by Kevin Coupe of MorningNewsBeat.com, and based on proprietary qualitative and quantitative research by The Hartman Group, looks at what shoppers really want and really need…both today and tomorrow. You’ll hear from real shoppers about real issues…and their words will help you create and navigate a relevant consumer roadmap.

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    Where Big Ideas Mean Business
    KC's View:

    Published on: January 16, 2006

    The Boston Globe reports on how an expanding number of retailers have “introduced invitation-only shopping events as a way to promote their products with offers of free food, discounts, and exclusivity. It's a way to build loyalty when stores can't compete with the convenience of the Internet or low prices at discount stores. Retail analysts say they expect stores to adopt more aggressive strategies such as hosting exclusive events to boost sales, especially after a sluggish holiday season.”

    The stores taking this approach range from Armani to Gap, and they are formulating their guest lists through the use of frequent shopper data that tells them who their best customers are, how much they spend, how often they are in the store, and what products they are buying.

    KC's View:
    It is amazing to us that food retailers, who have more of this kind of data than almost anyone, don’t do these kinds of things.

    It speaks to the fact that too many retailers simply don’t view themselves in these kinds of aggressive marketing terms. Which is why they find the competitive waters so rough.

    Published on: January 16, 2006

    This month’s edition of Facts, Figures & The Future looks at September 25, 2006, which will launch a new holiday “that just might become the most interesting of the year for the food industry.” From this year on, February 25 is “Family Day – a day to eat dinner with your children.”

    FMI’s Michael Sansolo writes: “For many of us, that might seem like a non-event, but for a growing portion of American families it is anything but. The time pressures of modern living have taken a massive toll on America's eating habits over the past few decades. The supermarket industry knows all too well how this has played out as we've seen an increasing share of meals and food spending move annually to fast food, quick serve and other restaurants.

    “And increasingly, that move is being questioned. While this could mean an enormous marketing opportunity for the industry, it also presents the possibility of partnering with and helping shoppers on some of their most important family issues.”

    Family Day is the creation of the National Center on Addiction and Substance Abuse at Columbia University, which has found that kids to eat dinner with their families “have lower incidence of smoking, drinking and drug abuse. Other studies find that family meal time can be a direct link to better performance in school, better manners and better eating habits.”

    Other F3 stories this month look at:

    • The current state of consumer-centric marketing and where it goes from here.

    • How Super Bowl beer sales also can drive sales in other, related categories.

    • The power of antioxidants in driving sales.

    • An update on the growth of the Hispanic marketplace in the US.

    • The rapidly expanding baby nutrition category, which is growing despite a slowing birth rate in the US.

    To get your copy, go to:

    http://www.factsfiguresfuture.com/

    F3 is a joint production of the Food Marketing Institute (FMI), ACNielsen, and Phil Lempert.

    (Full disclosure: MNB Content Guy Kevin Coupe is a contributor to F3.)
    KC's View:

    Published on: January 16, 2006

    Good piece in the Wall Street Journal about how the nation’s pizza makers are looking to change their product’s image in the marketplace. “Thanks to Atkins-style diets, gourmet chefs whose toppings extend as far as sashimi and heavy discounting by the big chains, the independent establishments that account for the majority of pizzerias have been getting squeezed for years,” the WSJ writes. “In response, many new places are dedicating themselves to the basics. Instead of stuffed crusts and Thai seasonings, the idea is to focus on pure ingredients: the dough, the cheese, the sauce.
    “The aim is to get people to put down those panini sandwiches and fast-food burgers and start thinking about crispy crusts and mozzarella.”

    For many, the move is away from the upscale and nontraditional toppings that were all the rage for the past few years and towards purer, simpler ingredients. Often, this coincides with the trend toward healthier foods that are either natural or organic – some pizza makers believe that this is a trend with which it is worth hitching a ride.
    KC's View:
    Simplicity almost always works when it comes to good food. However, we have to admit that we’re still intrigued by unusual pizza toppings – duck, for example. But quality often has nothing to do with complexity.

    Published on: January 16, 2006

    • The Buffalo News reports that three convicted sex offenders who were hired by Wal-Mart are now complaining to the New York State Division of Human Rights that they were unfairly fired because of their criminal records.

    The men – including one who played Santa Claus at a Wal-Mart store during the Christmas season – say that they disclosed their convictions on their job applications.

    Wal-Mart has asked that the complaints be dismissed, saying that the state’s Human Rights laws do not prevent it from discriminating against people who have criminal records.

    • The Miami Herald reports that while Wal-Mart may be a magnet for controversy in the US, the company’s Mexican subsidiary, often referred to as Walmex, “is growing at lightning speed, outpacing its Mexican competitors and outperforming its parent company” becoming Mexico’s largest private employer.

    Analyst Burt Flickinger III, managing director of the Strategic Resource Group, tells the Herald that ''Mexico and Latin America are going to be critical to Wal-Mart's international and total corporate results because Wal-Mart is literally hitting the proverbial wall in the United States -- with the possible exception of Florida and the Gulf Coast states.”

    And Neil Stern, a partner with McMillan Doolittle, tells that paper that Wal-Mart’s Mexican ventures have been “spectacularly successful.”

    One professor tells the Herald that Wal-Mart’s expansion and low prices have done more than just give consumers a new option. “The company's genuine commitment to lower prices . . . gave Mexico a shot of `consumer democracy,’” says Julio E. Moreno, a professor at the University of San Francisco.
    KC's View:

    Published on: January 16, 2006

    • The Chicago Tribune reports on the rapid expansion o self-checkout in America’s supermarkets, taking note of a study by IHL Consulting last year that said 90 percent of consumers had used a self-checkout lane in the previous 12 months.

    Albertsons-owned Jewel-Osco stores in the Chicago area say that 30 percent of its customers scan and bag their own groceries on a regular basis, while Safeway-owned Dominicks is described as an “anomaly” because it does not have such systems installed.

    KC's View:

    Published on: January 16, 2006

    • Ahold announced that its fourth quarter same-store sales at Stop & Shop rose 1.3 percent compared to the same period a year ago, not 1.8 percent, and that same-store sales at Giant of Landover fell 0.7 percent, not 0.4 percent as reported last week.

    "The discrepancies occurred as a result of a manual calculation error," Ahold said.
    KC's View:
    There’s an unconfirmed rumor that Ahold has fired the only nine-fingered accountant on staff. MNB is checking it out.

    Published on: January 16, 2006

    • UK retailer Somerfield announced that it has hired Paul Mason, formerly of Wal-Mart’s Asda Group and most recently European president of Levi Strauss, as the company’s new CEO. He replaced Steve Back, who resigned from the position.
    KC's View:

    Published on: January 16, 2006

    Today, the US celebrates the life and work of Dr. Martin Luther King, Jr., who to this day symbolizes the civil rights movement in this country. It is day to think about how far we’ve come, and how far we have yet to go.

    And to remember a man who said, “I have a dream that one day this nation will rise up and live out the true meaning of its creed: ‘We hold these truths to be self-evident: that all men are created equal…

    “When we let freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual, ‘Free at last! free at last! thank God Almighty, we are free at last!’”

    KC's View:

    Published on: January 16, 2006

    Lots of email about the Maryland bill requiring Wal-Mart to spend an amount equal to at least eight percent of their payroll on health care benefits, or pay a penalty to the state’s health insurance program.

    One MNB user wrote:

    While I agree with your comments on the Wal-Mart healthcare bill in Maryland and your thoughts on how Wal-Mart might react, I think the bigger issue is "do we really want this type of help from the government"? Where does it stop...should we legislate that Wegmans use thicker plastic cups in its Maryland store delis to "protect" our constituents from spills? Should we legislate in CA that all employees must have business attire allowances? Again, where does it stop? I have more faith in free enterprise and capitalism when it comes to regulating business practices than I do in the bozos in Washington...no matter which party is in control. The former is driven by the employee and consumer, the latter is driven by the need for soundbites (Example: the Alito hearings where the committee spent more time talking than asking questions), egos, and the quest for votes...often from the vocal minority at the expense of the silent majority.

    It is a sad day in Maryland!


    MNB user Andy Casey wrote:

    But the truth here is that WM really is right when it says legislation like this doesn't address the problem of healthcare for the uninsured. (Everyone please note, I didn't say WM's healthcare policies are right). There are numerous problems that make this approach terrible public policy, including:
    - What is magical about 8% and 10,000 employees, and more specifically does anybody really think if the legislature is able to make this stick it won't be 10% and 5,000 employees in a few years? They will consider it "found money" for sure.

    - Are they really saying to all the uninsured out there that if you don't have health insurance "just go get a job"? I bet most people in that situation have already thought of that. But not just any job, get one at a large employer because if they aren't big enough we don't care whether they provide insurance or not (and a lot of them don't).

    There is a real crisis with healthcare in this country, and we need to demand our legislators work for real solutions rather than pretending they are working on it by passing the ball back and forth with private industry like a hot potato.


    Another MNB user wrote:

    Funniest thing I heard about this Maryland health care law was this morning on the radio when a WMT spokesperson patiently explained to the radio interviewer that the reason WMT spent less money on health care for its workers was that they were “younger and healthier” than other large groups of employees. I bet it’s news to the actuarial folks that being an hourly employee at WMT makes you less of a health risk.

    Links up nicely with the flap some time ago over them trying to drive out employees who were less young, less healthy, or just less willing to work for less money.

    I don’t “hate” Wal-Mart – but they have to learn to become better at how they project their power and the perception of that power – as it is, they have pioneered Everyday Low Public Image – EDLPi.


    MNB user David J. Livingston wrote:

    I really doubt that some low wage unskilled worker at Wal-Mart will wake up tomorrow with a complete healthcare package. Most likely Wal-Mart will react aggressively. I don't see them closing stores but rather just firing about 8,000 employees and hiring them back through temporary staffing agencies. These people will no longer be Wal-Mart employees but employees of a staffing firm.

    This should buy them some time until the next election giving Wal-Mart time to hand pick the next group of legislators and finance their campaigns.


    And another MNB user wrote:

    Hard to imagine that government is now legislating how a business will do business. Government should be focused on revamping our totally dysfunctional health care system-- one that simply needs to change.

    One thing some folks fail to understand--- if you impact profitability of a business (or businesses), that alone will be more detrimental to employee's prosperity.

    And-- I don't even want to get started on the lack of confidence I have in how the money would be used for those companies that would pay into a general fund. Yeah, right.


    And yet another MNB user wrote:

    The article states “There are 786,000 uninsured people in the state of Maryland and less the ∏ of one percent work for Wal-Mart” as if this is a good thing. Simple math shows that to mean approximately 3,900 people employed by Wal-Mart in Maryland don’t have insurance. I think that’s shameful.




    We had a story on Friday about how Albertsons management seemed to be willing to restart the process of selling the company, which led one MNB user (and Albertsons employee) to write:

    Why just last week we heard they ( upper moorans…management) said that they were “committed” to revitalizing the company… At this point being an employee I wish “someone” up there knew if we were coming or going???!!! They make WAY too much to be so wishy washy!!!



    On the subject of the future of foods, one MNB user had some thoughts:

    I am actively involved in nearly every part of these trends. On a business level, I am the buyer for Organic Produce for a major retailer in the Southeast and can see the changes in our customers in just the past year regarding Organic purchases. I can agree with this insight. On a personal level, I have joined Weight Watchers for the first time in my life and am committed to losing the excess baggage. In doing this, I have become very conscious about what goes in the mouth and what kinds of foods I like to eat. I count calories, dietary fiber, and grams of fat. So far, this has been rather easy for me and I am proud to say that I have dropped 13 pounds in the first 13 days on the program. Part of my dietary program includes a more focused eye on eating whole grain foods, specifically multi-grain lite breads with meals.

    If I can be considered as part of a greater movement, my own observations would easily agree to all of the "likely" food trends.





    We had a piece last year about how Starbucks has a new marketing agreement with Lionsgate Films to promote a film in-store and also sell DVDs and soundtracks. This led one MNB user to write:

    So, Starbucks is looking to invest in the film industry... Does this mean they want to be featured in the films (their stores or coffee that is), or that they want to get some return for their investment? Just like any other investor in any other project.

    Personally, I hope they do well.

    Not because I'm a huge fan of Starbucks. In fact, I refuse to drink their over-roasted, burnt coffee.

    I do think the opportunity is there to capitalize on all the exposure they could bring to a film. They could be putting posters up, or even putting sound bytes in the stores through speakers.

    It could have a negative impact on the coffee sales if it's not done right. If that's the case,... then they just paid for exposure in the film. Just like buying advertising space on a bus. Not everyone sees it, but those that do may be prompted to go buy a cup of coffee.

    I can't find fault in anyone that is looking for ways to maximize their potential.


    And another MNB user wrote:

    Maybe Starbucks should purchase Blockbuster. I'm guessing they are a better deal with each passing day. If you were to combine the two then you would have a compelling reason to visit a Blockbuster, and Starbucks could save some money on building new stores. Otherwise, I'm not sure there is one now.

    We disagree. Blockbuster is a perfect example of as 20th century company…and Starbucks is a 21st century organization.

    Anyone should be afraid of investing in Blockbuster. Very afraid.




    We wrote the other day about how New Yorkers are less overweight than the national average, which prompted MNB user Kathie Fusting to write:

    It's no surprise that only 53% of New Yorkers are overweight compared to the national average of 65%. New Yorkers walk everywhere. It isn't just what we eat, but how active we are that determines our weight. We could eat McDonalds every day and not gain a pound as long as we burn the calories through physical activity.

    Speaking of which…




    We had a story on Friday about how McDonald’s is working to modernize its store designs, changing uniforms and improving menu boards as well as adding comfortable seating fabrics, zoned Wi-Fi areas and dimmer lighting” in an effort to be more like hipper competitors like Starbucks and the Panera Bread Company. McDonald’s reportedly wants to make the stores more appealing to adults as well as kids. It will create zones in its units that will make some sections more attractive to people in a hurry, and some more appropriate to people looking to linger.

    We commented: “They’d have to dim the lights real, real low if they want to get us to linger. We find it difficult to believe that there is anything cultural going on here. It is just an effort to put on a new face.”

    MNB user Gary Cohen agreed with us:

    They’d have to REALLY dim the lights at McDonalds so you couldn’t see what you were eating….of course, once you taste the food, you would know where you are.

    But we got a lot more email from people who thought we were being a little harsh.

    One MNB user responded:

    McDonald's have had one of these stores here in Australia for about 12 months (near Gosford, NSW), and early last year started rolling these out across the country. They would have to be the most "hip" chain of restaurants anywhere. And KC -- I hate saying this -- but they would have to have the best coffee too. Consistent from Restaurant to Restaurant, no burnt flavoured beans, always delivered with a smile, and within budget. What's even better is now the parents and the kids can go to one place, and both walk away happy. This has probably been a 15 year journey for McDonald's Australia, and was certainly noticed by McDonald's worldwide when they appointed (the late) Mr Bell. If they can pull off what they have done here elsewhere in the world, they will certainly become the chain to mimic again.

    MNB user Sam Civiello wrote:

    My dad and his pals hang there all the time. They’re retired professionals from various fields and anyplace would be happy to have them. I’ve asked why they go there and never get an answer!

    When I’m on the road I go to Panera Bread for a good, quick lunch and FREE high speed wireless.


    And an occasional MNB user who signed herself “Mrs. Content Guy” wrote:

    Your comments seem a little harsh about McDonald’s trying to improve its ambiance.

    Even fast food restaurants deserve a chance to improve their décor and make it somewhat appealing to eat there. I’ve been to one of the new McDonald’s and I appreciate their efforts to improve...although I have to say...we didn’t linger.


    She’s always been a more charitable soul than we are.

    This also explains why the kids are happy when we go out of town. Because we don’t take them to McDonald’s…and she does.
    KC's View:

    Published on: January 16, 2006

    In National Football League Division Playoff games…

    Pittsburgh Steelers 21
    Indianapolis Colts 18

    Carolina Panthers 29
    Chicago Bears 21

    Washington Redskins 10
    Seattle Seahawks 20

    New England Patriots 13
    Denver Broncos 27
    KC's View: