retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: February 8, 2006

    In a front page story this morning, the New York Times reports that a $425 million federal study - the largest study ever done into whether a low fat diet can help prevent heart disease – concludes that, in fact, it has no impact. Studying almost 50,000 women, the study found that “those assigned to a low-fat diet had the same rates of breast cancer, colon cancer, heart attacks and strokes as those who ate whatever they pleased.

    "These studies are revolutionary," Dr. Jules Hirsch, physician in chief emeritus at Rockefeller University in New York City, tells the Times. "They should put a stop to this era of thinking that we have all the information we need to change the whole national diet and make everybody healthy."

    The NYT writes that the results “do not justify recommending low-fat diets to the public to reduce their heart disease and cancer risk. Given the lack of benefit found in the study, many medical researchers said that the best dietary advice, for now, was to follow federal guidelines for healthy eating, with less saturated and trans fats, more grains, and more fruits and vegetables.

    “Not everyone was convinced. Some, like Dr. Dean Ornish, a longtime promoter of low-fat diets and president of the Preventive Medicine Research Institute in Sausalito, Calif., said that the women did not reduce their fat to low enough levels or eat enough fruits and vegetables, and that the study, even at eight years, did not give the diets enough time.

    “Others said that diet could still make a difference, at least with heart disease, if people were to eat the so-called Mediterranean diet, low in saturated fats like butter and high in oils like olive oil. The women in the study reduced all kinds of fat.”

    In fact, for people who want to reduce the potential cancer, the best advice seems to have nothing to do with food – they should stop smoking.
    KC's View:
    Well, this is a fine kettle of fish…

    These results are going to create an enormous amount of debate and discussion, and not just because of the medical implications. There are a lot of people who are making a good living by preaching the benefits of a low-fat diet, and they won’t be eager to get off this particular train.

    It seems, in the end, that the best advice is what the best advice always is. Eat intelligently from a lot of food groups. Be moderate in all things. Don’t smoke. Get plenty of exercise. Get eight hours of sleep.

    Go figure.

    Published on: February 8, 2006

    The Retail Industry Leaders Association (RILA) has filed a pair of lawsuits to challenge laws that would require retailers of a certain size – in most cases, Wal-Mart - to spend a specific amount of money on health care for employees or face fines.

    The suits challenge existing laws covering the state of Maryland and in Suffolk, County, New York.

    The Maryland law, which became law over the veto of the governor and despite enormous lobbying on the part of Wal-Mart, says that companies with more than 10,000 employees in the state must spend the at least eight percent of their total payroll cost on health care. If they don’t meet that threshold, they are then fined an equivalent amount, which is put into the state Medicaid fund.

    The Suffolk County law is similar to the Maryland statute.

    The reasoning behind the law is that employees not provided with ample and affordable health insurance by their employers are then forced to seek medical assistance at the public trough, and that in essence, taxpayers are underwriting health coverage for Wal-Mart employees.

    Wal-Mart has consistently debated that interpretation of its health care policies. Now, with these lawsuits, it has the backing of a major trade association.

    "We all agree that access to health care is vital, but these spending mandates will drive away business and discourage job creation," Bradbury H. Anderson, chairman of the association and chief executive of Best Buy, said in a statement.
    KC's View:
    We are sort of conflicted on this one. We hate the idea of these kinds of government mandates, even though for it to have any kind of impact on us we’d have to either move to Maryland or Long Island and hire 9,999 employees – which probably isn’t happening anytime soon.

    On the other hand, if our tax dollars are being used to help cover medical care for people with jobs who simply cannot afford to get insurance through their company, then we have a problem.

    Published on: February 8, 2006

    Ukrop’s Super Markets has announced the launch of what it calls “a major new pricing initiative called the Consistent Low Price (CLP) program,” which it says it both simpler and reduces prices on more than 8,000 SKUs.

    “Our new Consistent Low Price program is another example of Ukrop's fresh thinking and desire to make shopping easier while providing superior value,” said Scott Aronson, vice president of Marketing and Analysis. “While the initial round of price reductions is now complete, the Consistent Low Price program will grow to include thousands of additional items in the coming weeks.”

    Ukrop's said that it “is making the transition as easy as possible for customers by designating CLP items with special black and white shelf tags that highlight both ‘was’ and ‘now’ prices. An item’s regular retail price must be reduced for a minimum of 13 weeks in order to qualify as a Consistent Low Price item, although Ukrop's expects most price reductions to last significantly longer.” The company will still take manufacturer coupons for CLP items.

    “We’re excited to provide our customers with an opportunity to save time and money when shopping at Ukrop’s,” added Aronson. “Offering consistent low prices will be a welcome change for many of our customers, allowing them to buy what they want, when they want at a great price.”

    Ukrop’s also said that it will support the change by redesigning and shortening weekly newspaper ads to provide quicker reads on specials, and that it will launch a new, in-store monthly newsletter called Go To Market that will highlight the CLP items as well as other company programs.
    KC's View:
    It has always struck us that Ukrop’s has always been pretty aggressive on pricing, especially considering its preeminent position in terms of fresh foods, health and nutrition, and service. This is an interesting approach because it focuses on something that we think consumers prize – consistency. At a time when Wal-Mart, for example, has been accused in a lawsuit of not always charging the same price at checkout that it posts in ads and on store shelves, consistency can be a very powerful word…especially when supported by words such as “innovative” and “vibrant,” both of which aptly describe the Ukrop’s shopping experience.

    Published on: February 8, 2006

    Gladson Interactive’s Reset Analyzer enables CPG retailers and manufacturers to pinpoint the specific benefits and costs of tactical shelf resets. Using the Reset Analyzer software developed by Willard Bishop, Gladson can help customers understand the costs in labor and material for cutting in new products, resetting a section, or resetting an entire store. Customers simply supply the current and intended planograms and Gladson will give them an evaluation of the time, cost and benefits of that change. The system can be further enhanced by the Gladson QuickSet Image Reset Strips and Back Tags, which cut reset time by 60%, while assuring schematic integrity during the set. Another Gladson innovation!

    For more information please email:
    KC's View:

    Published on: February 8, 2006

    Good piece in Advertising Age by columnist Marti Barletta about how to market wine to women – and one way is not to emphasize how they are rated by the various “experts.” Rather, she argues, it is about “context.”

    Barletta writes that according to Leslie Sbrocco, author of ‘Wine for Women,’ “women tend to be less focused than men on wine ratings, vintage charts and the acquisition process and more interested in personal recommendations and who will be sharing the wine with her. She’s on the lookout for the perfect bottle to commemorate a milestone or compliment a special meal. Men tend to buy wine to impress, and will make decisions based on costs and ratings – and then often will hoard it in a wine cellar or some less expensive facsimile, while for women it is more a matter of who they are sharing the wine with and why.”

    “Marketers who recognize these tendencies and incorporate them into advertising and point-of-purchase materials are going to see results,” Barletta writes.
    KC's View:
    Dontcha’ love it when all or most men are characterized as being crass and craven, driven not by sentiment or real feelings but rather by shallow instincts.

    Not that there’s anything wrong with that.

    And actually, after the week we’ve had, we’d be the last to complain about mischaracterizations or exaggerations. Rather, we embrace our inner caveman…

    Published on: February 8, 2006

    The city of West Hollywood, California, is considering legislation that would require a grocery store purchasing another grocery store to retain the employees of the old store for 90 days. If not all the employees are needed by the new owner, a list must be maintained of the previous employees and all new hires must first come from that list. The ordinance only applies to stores 15,000 square feet or larger.

    The law is strikingly similar to one passed by the City of Los Angeles late last year, though unlike in Los Angeles, the West Hollywood City Council is considering applying its worker retention ordinance to all retailers, not just the grocery industry.

    The California Grocers Association (CGA) has announced its opposition to the bill. “It is imperative retailers throughout California assist CGA by actively engaging in defeating this very dangerous ordinance,” said CGA President Peter Larkin “If left unchecked, cities throughout California will adopt similar ordinances. This is only the tip of the iceberg.”

    CGA says that it opposes the ordinance for numerous reasons. Larkin says, “The ordinance discourages supermarkets from locating within city limits. Store owners will be more likely to sell to a non-grocery retailer instead of another supermarket in order to avoid the onerous provisions of the ordinance.”

    CGA has made repealing the L.A. ordinance its No. 1 priority. “We are considering our options for a legal challenge and have enlisted allied associations both here and in Washington, DC in our fight,” said Larkin. “And because this issue stands to impact all retail, we will muster support from similar industries -restaurant, hotel/motel, etc. – as they stand to be next in the city’s cross hairs.

    “This ordinance would be bad for the residents of West Hollywood and bad for business in general. Today it’s the grocery industry, what business will the city attempt to regulate in this manner tomorrow?”
    KC's View:
    While we understand the impetus behind the legislation, it seems to us that this is an area in which market forces take care of things all by themselves. A company buying a store or a group of stores will naturally want to keep the good employees who bolster the unit’s brand identity, and get rid of those who don’t. To force a company that is investing money in a business to keep deadwood is like asking them to put a match to their own future.

    Now, that said, it should be acknowledged that there will be cases where a retailer will want to get rid of the experienced and more highly paid people in favor of younger and lower-paid personnel. We have no legal education, but it strikes us that maybe there is other, anti-bias legislation that might take care of this.

    Besides, if a company wants to rid itself of seasoning and experience in a favor of low wages, no matter what the impact on its service and performance levels, should government be protecting that company from itself?

    Published on: February 8, 2006

    While many marketers are scrambling to de-code the mystery behind shopping behavior, other marketers are busy building elements of mystery into the shopping experience. Think treasure hunt or thrill of the deal. Still others have a cult-like following of outrageously loyal fans. Why do some seem to "have it" while others don't seem to "get it"?

    This edition of the Hartman Group’s “Consumer Pulse” looks at “The Myth of One Stop Shopping,” “Costco vs. Wal-Mart,” and “Cracking The Code At Trader Joe’s.”

    To read more, click on the Hartman Group “Consumer Pulse” tile ad on the right hand side of the page, or go to:

    KC's View:

    Published on: February 8, 2006

    The Wall Street Journal reports this morning that in a move to cater to more upscale customers, Wal-Mart plans to remodel 1,800 of its stores with “buffed concrete flooring in its aisles; mock hardwood in departments such as apparel and accessories; lower gondolas, or rows of shelves, to allow shoppers to see into adjacent aisles of merchandise; and wider aisles separating racks of merchandise.” The makeover campaign should take about 18 months to complete.

    Over the next two years, Wal-Mart plans to open a total of 1,500 new stores, increasing the size of the company by almost 50 percent.

    While he would not reveal the cost of the program, John Menzer, Wal-Mart's vice chairman of U.S. stores, characterized it as a "very minor capital expenditure for a very high productivity gain."

    The WSJ writes, “The remodeling program is part of Wal-Mart's effort to appeal to a broader range of shoppers. The retailer intends to retain its base of cost-conscious shoppers while also enticing higher-income, selective shoppers to buy more merchandise. Much of that effort entails providing a more relaxed, aesthetically pleasing environment to lure those shoppers from Wal-Mart's grocery aisles into its general-merchandise sections, where they might make higher-margin purchases.”]

    Interestingly, in a different part of the paper, WSJ columnist Alan Murray asks whether, in fact, Wal-Mart is trying to serve too many masters – especially as it goes upscale in some areas and tries to address its public relations problems while keeping costs down wherever possible and pleasing the investment community.

    “The problem created by all of this, of course, is one of focus,” Murray writes. “As Wal-Mart tries to be all things to all people, how well can it continue to do the one thing that made it great?”
    KC's View:
    We have trouble believing that Wal-Mart will lose its relentless focus on price as it tries to address other institutional and cultural issues.

    We think that its bigger problem is trying to do everything it needs to do while keeping the stock market happy. That’s problematic, because a bunch of investors and analysts who don’t know a thing about retailing start making demands and suggestions that don’t help the company in the long run. (Take a look at how they’re always complaining about Costco CEO Jim Sinegal because he keeps prices too low and pays his people too much…)

    There doesn’t seem to be any danger that Wal-Mart is going to start opening Greenpeace or ACLU branch offices in its stores.

    Published on: February 8, 2006

    The Toledo Blade reports on how Kroger has managed to earn a 54 percent market share in the Toledo market, up from 45 percent six months ago and 47 percent a year ago. Meanwhile, the same newspaper said that Meijer’s market share dropped to a 19 percent share from 22 percent a year ago.

    The report suggests that Kroger has benefited from the closing of A&P’s Farmer Jack and Food Basics stores last year.

    However, it seems likely that this kind of dominance by Kroger could be challenged with the opening by Wal-Mart of at least and maybe two new supercenters in the area – which at the very least may seem attractive to Food Basics shoppers.
    KC's View:
    It seems to us that every retailer – from the biggest chain to the one-store independent – has to proceed from the premise that every customer is in play. Every day. That means both their customers and the other guy’s.

    Provide a compelling shopping experience that is relevant to the customer, and people will shop there. But if you don’t bring your A-game every day, people will go elsewhere.

    The kind of shifts in consumer patterns taking place in Toledo are a reflection of just how transient customers can be. And there will be more to come, not fewer.

    Published on: February 8, 2006

    Fast feeder Wendy’s International has announced that it wants to attract more younger consumers between the ages of 16 and 28, and will do so by introducing a new breakfast menu next year, as well as offering a number of new salads and sandwiches and a new frosty milkshake/dessert flavor (vanilla).

    These changes will be keyed to an efficiency program designed to cut up to $60 million from the company’s annual costs.

    The company is working to recover from a fiscal year in which same-store sales were off by almost four percent, the first time it has seen such a decline in 18 years.
    KC's View:
    Call us crazy, but we worry about any company that is even slightly pinning its hopes on anything vanilla.

    Published on: February 8, 2006

    The Guardian reports that even as there are complaints about Tesco’s overwhelming dominance in the UK filed by, of all companies, Wal-Mart’s Asda Group, there may be some evidence that consumers are getting a little disillusioned as well.

    “A study of consumer attitudes to the top nine UK supermarkets and food retail chains, carried out by brand market research consultancy Millward Brown, found that while Tesco remains the most popular brand in its sector, it is not keeping customers loyal,” the Guardian writes. It is perceived by analysts that this could be a backlash against the company’s ever-increasing market share, which some may believe gives it too much power.

    "The whole issue of about being dominant and taking over corner shops and being a one-stop-shop is slowly getting into people's conscience,” Peter Walshe, global brand director of Millward Brown, tells the paper. “They have got to be confident and humble at the same time if they can possibly do that.”

    By contrast, both Sainsbury and Waitrose seem to be gaining brand equity in the marketplace.
    KC's View:

    Published on: February 8, 2006

    • Toys R Us yesterday named Gerald Storch to be its new chairman/CEO, replacing John Eyler, who left the company about seven months ago when it went public. The role had been taken on an interim basis by Rick Markee, who remains as vice chairman and president of its Babies R Us division.

    Toys R Us has been struggling in recent years as it competed with Wal-Mart on price in the highly competitive toy category. Storch will bring a different perspective to the battle as well as significant experience in competing with Wal-Mart – he is a former senior executive at Target who was at one point in charge of that company’s supercenter development.
    KC's View:

    Published on: February 8, 2006

    Published reports say that McDonald’s rolled out its new nutritional information program yesterday, demonstrating how, according to the Chicago Tribune, “food boxes and wrappers will carry icons and numbers (but no written words) showing calories, protein, fat, carbs and salt content.

    “It helps if you are able to read hieroglyphics.”

    Ironically, the program was unveiled in Turin, Italy, site of the upcoming Winter Olympics, where IOC president Jacques Rogge spoke about the virtues of "sound nutrition" and corporate sponsorship.

    The Tribune suggests that the wrapping information is at best hard to figure out, and at worse, actually misleading in certain cases.

    KC's View:
    Rogge may want to talk about sound nutrition, but we suspect he’s a lot more interested in the health of the IOC’s bank account. It seems counter-intuitive to even suggest that world-class athletes are regular McDonald’s users.

    Published on: February 8, 2006

    • Stater Bros. reported first quarter net income of $3.3 million, even with the same period a year ago. Total sales for the period were up just over three percent to $867 million, with same-store sales up 0.28 percent.

    • The Coca-Cola Co. reported that its fourth quarter net income fell 28 percent to $864 million, from $1.2 billion during the same period a year earlier, a drop that it attributed to a tax charge. . Revenue for Q4, however, was up 6.7 percent to $5.55 billion from a year earlier.
    KC's View:

    Published on: February 8, 2006

    It seems like an isolated incident, but it has gotten a lot of local press so it seems worth mentioning. A New Jersey woman reportedly dropped off several rolls of film at her local Wal-Mart to be developed and put on a photo CD, but when she picked up the CD and showed it to relatives, they were a little aghast that what they were watching was pornography.

    The Wal-Mart manager, who conceded that a mistake had been made, offered her a $100 gift card as compensation. But the woman turned it down and declared that from now on she was bringing her film to Target.
    KC's View:
    A word of advice to the New Jersey woman. Switch to digital.

    Published on: February 8, 2006

    …will return. But just not yet.

    (Thanks for all the “get well” emails, by the way…we’re feeling a little better, even though we haven’t had any solid food since the second quarter of Sunday’s Super Bowl…)
    KC's View: