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 15, 2006

    As the Washington State legislature considers bills that would require businesses with 5,000 or more employees in the state to spend at least 9 percent of their payroll costs on employee health care, or pay the difference into the state's health care fund, Safeway reportedly has weighed in support of such a mandate – which is perceived generally as being anti-Wal-Mart.

    The Seattle Times reports that the president of Safeway’s Seattle division, Greg Sparks, has written a letter complaining about having to compete with companies that do not provide health care, and calling for “immediate action” to deal with health care inequities.

    While the Times notes that Sparks did not explicitly endorse the legislative proposal, “he raised several of the same arguments supporters have made.

    “He pointed out that ‘responsible employers’ and taxpayers are facing an ‘increased burden’ to cover health-care costs for the uninsured.”

    And, he wrote, "We share your concern with the impact on the health-care delivery system of the cost-shifting by the uninsured, as well as the unfair competitive advantage that employers who do not provide health benefits to their workers have over those of us who do.”

    The state of Maryland and the county of Suffolk, NY, have both adopted similar laws, and some 30 other states reportedly are considering the same action.

    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.
    KC's View:
    As you’ll see from many of the emails posted below in “Your Views,” there seems to be preponderance of opinion against state mandated health care expenditures by retailers – mostly on the premise that these decisions need to be made by retailers, not government. This is an approach to which we are sympathetic.

    But where it gets dicey, and where we still find ourselves conflicted on this issue, is when they start calculating how much public money is being used to cover the folks who are unable to afford health insurance coverage provided by their employers. This is troubling….and we can understand why other companies might object as well.

    Published on: February 15, 2006

    Brandweek has an interesting story about a new demographic group christened “MyTHs” – Mommies with Traveling Husbands.

    Because of pressures created by demanding jobs, Brandweek writes, “a growing number of moms are stepping in to cover for displaced dads, whether business consultants only home on weekends, contract workers on location for six months or military mates serving overseas.” And while this ratchets up the demands on these mothers, “they accept their role for a variety of reasons, such as wanting to support a husband's career aspirations, maintaining a higher standard of living or remaining home with their children.”

    This isn’t just a demographic group created by some statistical analyst with nothing else to do. It is, in fact, a group that changes its buying habits during the time that its members are functioning as de facto single parents. “The difference is that this new generation of empowered, educated and often income-earning moms is more maverick than martyr,” Brandweek writes. “MyTHs, left alone with the kids for several days a week, a month or even a year while husbands pursue careers, will mind the home front but they expect help. And they are ready to pay for it.”

    This means offering more pickup and delivery options, and sometimes even at off hours, since it sometimes can be nine or ten o’clock at night when they realize there’s no milk in the refrigerator. And, it means that savvy retailers can cement their relationship with these moms by providing a portal to other services that might ordinarily be handled by a spouse, like snow shoveling or basic chores that moms are perfectly capable of doing, but just don’t want to or don’t have time to do.

    Brandweek writes: “Seduce them with options: A Girls' Night Out at the local mall; discounted movie nights; a reading group at the book store; a private group cooking class at a kitchen store; a free yoga lesson to entice them into more. Jubilant over their freedom, MyTHs are likely to spend on themselves, their lonely spouse-on-the-road or their delightful children at home.

    “As workplace options grow more diverse, the number of MyTHs will surely grow. They will continue to search for ways to keep life in balance while their traveling counterparts juggle their own challenges in distant cities or countries. Marketers recognizing this potentially profitable niche will create dedicated users that remain brand loyal even when dad returns home and MyTHs become just plain ole' mom again.”
    KC's View:
    Well, we learn something every day.

    The thing is, this is a trend that we are intimately familiar with, since we spend about 25-30 percent of the year on the road, giving presentations, attending conferences, looking at stores and producing videos. And while Mrs. Content Guy appreciates the revenue, she also has to deal with the fact that this means she’s for all practical purposes a single mother for maybe 100 days a year.

    During our most recent business trip, you should have heard the long phone calls when the at-home wireless Internet service went down, and she had to spend hours on the phone with the cable company and Apple Computer to figure out what went wrong. “Welcome to my life,” was our response…and in retrospect, that probably was the wrong thing to say. (Utter phrases like that, and suddenly absence doesn’t make the heart grow finder…)

    It certainly seems like a trend worth paying attention to, and that retailers ought to be doing their level best to figure out if they have a lot of these kinds of shoppers and how they might serve them better. It means drilling down further than they are used to, it means asking different questions that they ordinarily would, and it means being willing to do something with the responses if it suddenly appears that there is a heretofore unrecognized opportunity.

    Published on: February 15, 2006

    Lund Food Holdings announced that it will team with electronics retailer Best Buy to open a 360 square foot Geek Squad location inside a Byerly's supermarket in Chanhassen, Minnesota.

    According to a statement issued by Lund, “Similar to its offerings in Best Buy stores and stand-alone locations, the Geek Squad service center at Byerly's will be staffed with Geek Squad Agents who provide computer-related services such as virus removal, repair of damaged or corrupt operating systems, diagnostic evaluations, new software installation and back up of existing programs and files.

    “As part of the agreement, Lund Food Holdings will be the only grocery retailer in the Twin Cities metro area to offer on-premises Geek Squad services. The addition of the new service center at Byerly's in Chanhassen will bring the total number of Geek Squad locations in the Twin Cities metro area to 16.”
    KC's View:
    Well, we would have preferred an Apple Computer genius Bar, but that’s just us.

    This is an intriguing idea, since as far as we know it is unusual for Best Buy to put one of its Geek Squad facilities in remote locations. But it makes a kind of sense for both companies. After all, it expands the breadth of services that Byerly’s is offering its community of users, gives Best Buy a neighborhood presence not dictated by one of its big box stores, and people can do their food shopping while their computers are being fixed.

    It will be interesting to see how this experiment develops.

    Published on: February 15, 2006

    In this week’s Consumer Pulse, the Hartman Group offers the five dimensions of a compelling shopping experience.

    One of them:

    Relevance: Retailers should always remember to ask themselves the important question: Is this action, experience or promotion going to provide something of meaning and/or value for my customer? That which can be construed as entertaining is not necessarily relevant. Entertainment should enhance, complement or support the shopping experience.

    To read the other four, and much more, click on the “Consumer Pulse” tile ad on the right hand side of the page, or go to:

    KC's View:

    Published on: February 15, 2006

    The Massachusetts state pharmacy board has ordered Wal-Mart to stock emergency contraception pills – better known as “morning after pills” in its stores that have pharmacies in the state. Three women had sued the company, saying that Wal-Mart was in violation of state regulations by not carrying the medication.

    The company, which to this point only has sold the pills in Illinois because that state forced it to, says that it will comply with the Massachusetts order and is rethinking its nationwide policy.

    “Clearly women's health is a high priority for Wal-Mart," spokesman Dan Fogleman said. "We are actively thinking through the issue."

    To this point, the company has refused to carry the pill in 49 states without explaining why, saying only that it was for “business reasons.”

    Women who take the morning-after pill receive a high dose of hormones that for up to five days after sexual activity can prevent pregnancy.
    KC's View:

    Published on: February 15, 2006

    Former President Bill Clinton announced that his foundation, in partnership with the Robert Wood Johnson Foundation, will spend $8 million on the pilot phase of an anti-childhood obesity program. Almost 300 schools in 13 states have been identified to participate in the pilot, which will include improving the nutritional quality of food served in school, increasing physical education classes, and promoting wellness consciousness for both students and staffers.

    "What we want to do is to create a national recognition program shining a spotlight on schools that have done a good job, with concrete, innovative steps to create healthier learning environments for children and healthier work environments for staff," Clinton said.

    The former president, who has struggled with a weight problem since childhood and has had heart bypass surgery, has been working with the American Heart Association in developing anti-obesity programs. Also involved is Arkansas Gov. Mike Huckabee, a Republican, who serves as co-chairman for what has been called the Alliance for a Healthier Generation. Like Clinton, Huckabee also had a serious weight problem and lost more than 100 pounds after being diagnosed with Type II diabetes.
    KC's View:

    Published on: February 15, 2006

    The Chicago Sun-Times reports on the efforts by cereal makers to improve the nutritional quality of their products:

    “In fall 2004, General Mills, the nation's No. 2 cereal maker, announced that all of its cereals would be made from whole-grain flour, which is healthier than the wheat flour or refined corn meal used in most cereals,” the Sun-Times writes.

    “Earlier that year, General Mills and Kellogg started using less sugar in some of their children's cereals.

    “Last December, Kellogg announced that in 2006, it will use oil made from genetically modified soybeans in place of the partially hydrogenated oil and saturated fats found in some of its crackers and snacks. The soybean oil may also be used in some frozen foods.”

    In addition, “With the first baby boomers turning 60 this year, Kellogg is developing products for older, health-conscious consumers aimed at strengthening bones and even improving memory.”
    KC's View:
    We have to think that the cereal manufacturers will have better luck when these marketing efforts are aimed at adults and not kids.

    The other day, Mrs. Content Guy accidentally brought home Cinnamon Toast Crunch cereal with 75 percent less sugar…and all the kids have done is complain that it doesn’t taste the same. We probably could have gotten it by them if the “75 percent less sugar” wasn't plastered all over the front of the box – it was like a red flag for the kids, announcing that somehow this might be better for them than what they usually eat.

    We believe in truth in advertising and labeling, but there ought to be a way to hide it from the kids.

    Published on: February 15, 2006

    Fifty independent bottlers have filed a lawsuit against the Coca-Cola Co. over the soft drink company’s plan to direct store deliver (DSD) Powerade directly to retailers.

    As previously reported by MNB, Wal-Mart has persuaded the Coca-Cola to deliver PowerAde directly to Wal-Mart warehouses, and then distributed to the retailer’s individual stores by the retailer’s trucks. Now that the program apparently is rolling out beyond Wal-Mart, the independent bottlers are rebelling.

    For the record, GatorAde – which dominates the category and is made by Coke’s arch rival Pepsi – already is delivered to Wal-Mart’s warehouses instead of through the DSD system.
    KC's View:

    Published on: February 15, 2006

    • Published reports in Canada say that a new, reusable grocery bag that was introduced two weeks ago has been an unqualified success, with more than a half million sold by Metro, Metro Plus and Super C stores. The bag is 100 percent recycled plastic, is machine washable, and apparently is big enough two or three conventional bags.

    KC's View:

    Published on: February 15, 2006

    • Schnuck Markets announced that Rick Frede, Jr., the company’s group vice president of Grocery, Dairy & Frozen Foods, has been promoted to SVP of Logistics & Manufacturing.

    Lori A. Caster, formerly Schnucks’ vice president and controller, has been named to lead the company's grocery division.

    And, Mark G. Zimmerman, vice president of IT, also will have responsibility for the systems development and retail systems areas.
    KC's View:

    Published on: February 15, 2006

    • Smart & Final Inc. reported fourth quarter sales of $456.8 million, down from $471.2 million during the same period a year ago, with same-store sales up 2.9 percent. Q4 income was $9.4 million, an increase of $4.8 million over the fourth quarter of 2004.

    For the just-completed fiscal year, sales rose 2.4 percent to $2 billion, with income down 30 percent to $22 million. Same-store sales for the year were up 2.6 percent.
    KC's View:

    Published on: February 15, 2006

    On the subject of legislation that would mandate health care expenditures by companies, one MNB user wrote:

    I am no fan of Wal-Mart, but any rational person should see that these health care spending mandates are just a get Wal-Mart tactic. I would love to analyze the statistics that are used in the debate, but they probably never asked the probing questions to reveal the entire picture. How many people were on state insurance when they started at Wal-Mart? How long was it before they were removed from state insurance? Why are these people still on state insurance if Wal-Mart says it offers insurance? Anyone who has used statistics knows that they can be manipulated to say just about anything, especially if you are trying hard to support your hypothesis or bias.

    Health care insurance is important, but when did it become a right? Health care coverage is part of the overall benefits package offered by employers to attract and retain employees. These decisions are made by companies based upon their core values, the marketplace and what they can afford. Some employers offer employee purchase discounts (of varying rates) - others do not. Some offer stock purchase plans - others do not. Some offer child care - others do not. Some have 401Ks - others do not, etc., etc.. Growing up, I was taught that I should go to college and get a good education. That way I would have a bigger choice of employment opportunities and could look for employers that offered the benefits that were most attractive to me. Should we just let the government mandate the whole benefit package?

    I think the changes in pay and benefits that the union is agreeing to will only hurt the grocery industry in the long run. In a service industry, employees are the most valuable asset. In today's market, entry level employees can make more money at a fast food restaurant than at a grocery store plus they get free meals. Grocers should look at different menu plans for benefits. For example, offer a higher wage in exchange for not providing health care to students covered on their parent's plan. Offer a different wage that includes a free meal. By doing a mix and match, employees are empowered to tell you what they think is important in deciding to work for your company.

    Will the supercenter make today's grocery store obsolete? Unless grocery stores find ways to add higher margin items to their mix, I can only see the picture getting more difficult. From what I have read and heard from older relatives, people were concerned that A&P was going to monopolize the grocery industry some 30+ years ago much as is the conversation with Wal-Mart today. Look at where A&P is today. Changes in customers and market places require retailers to adapt to the changing needs of their customers. Let the market dictate what happens - not the government.

    As we lose non-service jobs overseas, our government sits on its hands. The way to reverse the trend is to get the government out of business, so business can react to these changes. There are too many regulations on the books that increase business costs without any clear benefit and impede business growth and hiring. Until we find a way to change this all-powerful government thinking, good high-paying jobs will be harder and harder to find. Business owners don't forget - press the government to put Wal-Mart in its place, guess who could be the next one in their sights.

    MNB user Steve Cavender wrote:

    Being a resident of the Socialist Republic of Washington, it doesn't surprise me that Washington State Legislature would follow the lead of Maryland concerning mandatory minimum contributions to health care. The first two laws passed by our new Governor, Christine Gregoire and the state Legislature were:

    1) To impose the highest gasoline tax in the nation (when the cost of fuel was already at an all time high).
    2) To pass the highest Inheritance / Death Tax in the nation.

    All this under the guise of, "Improving the future of all Washingtonians". Seems to me that these new taxes come directly from the pockets of the residents of our great state - not a positive effect on my future, not to mention my children's future. And, without any fiscal accountability, we can pretty well guess where the money is going.

    MNB user Bill Justin chimed in:

    These states are crossing a line that will cost their states jobs and growth. Quite contrary to the result they desire. If they require 9%, make it apply to all businesses as a tax at least that is equal. Any tax in my mind seems regressive.

    And MNB user Bob McMath wrote:

    When government, including the individual states, starts to dictate the portion of income that must be spent on this or that program, the citizens better watch out. I can understand what the concern is about health coverage, but there is a lot more to this than immediately comes to mind. For example, what about the spouse of our people in the military service? They are covered by government insurance as active duty (as well as retirees) and have no need or desire for coverage by the spouse’s employer. So to be covered by Wal-Mart for example, would be duplication. Or if not spent on those people who don't need it, becomes a tax to the government body.

    We already have the minimum wage legislation with a real push to raise the minimum wage. In California, the Governor has proposed to raise the wage by a $1.00 amount. In the end, who pays for this -- us, the consumers. Talk about inflation.........

    We also got a number of emails responding to yesterday’s piece about McDonald’s admitting that it uses wheat and dairy products to season its French fries.

    MNB user Peter Rinck wrote:

    As parents of a 4 year old daughter with Type 1 Diabetes and Celiac (gluten allergy), (we believe) McDonalds has actually been poisoning her KNOWINGLY. Ingredients are ingredients.

    Granted, Celiac issues are not generally known, (they will be as many more Americans are being diagnosed than previously believed at risk by the medical community) but one must assume a company as vast as McDonald’s must have a heightened awareness of all allergens in their food service recipes and should be well aware.

    The issues of Celiac/Sprue, (Sprue is a skin condition related to gluten,) are significant and highly dangerous. This is really outrageous behavior by one of America’s largest corporations.

    Once, I was “believer” that “majority rules” and these sorts of things pandered to a fringe minority of people who needed to take responsibility for their own health. Now, we are that minority. That said, a simple ingredient list required by law is all that’s necessary to prevent contamination and health issues that range from stunted growth to cancer.

    For McDonald’s to have falsified the list for whatever reason is despicable and not just harmful, but intentionally harmful. McDonald’s fries were once a rare treat for our daughter who has a menu limited in ways most parents can not begin to comprehend.

    I hope there’s a special deep fryer in hell for those responsible for this. Not to mention your equally important dietary and religious comments.

    Now we’re waiting for the other shoe to drop for Wendy’s, Burger King, etc.

    MNB user Lisa Malmarowski wrote:

    Maybe it's just me, but I find it really hard to believe that McDonald's didn't know what was in their fries OR couldn't or wouldn't demand to know.

    Ignorance isn't a defense - not when you're a multi-national company.

    And, MNB user Liz Schlegel wrote:

    Okay, help me out here. How do they NOT know what's in them? And why did they have to wait for "science to improve"? I know I'm old-fashioned, but I thought French fries were sliced potatoes cooked in hot oil. What else is in there?!

    When my lovely husband makes French fries at home, he slices potatoes (russets) as thin as possible. Soaks them in water (so they don't turn brown). Dry them (pat on paper towels). Drop a few at a time into hot oil (vegetable but not canola, sometimes with sesame). Repeat. Serve with salt. They are delicious and simple - not a health food, but a great tasty side dish. Especially with a burger (now, my Mom makes the best burgers in the world, but we're talking fries so we'll stick with that). And a Vermont-brewed beer.

    The best flavor is REAL flavor. I can't get over McDonald's dependence on preservatives, "flavor enhancers" and other unnatural methods to create what is, at base, a very simple food.

    People in the business of processed food know that when McDonald's changes, everything changes. Maybe they need to have "fresh fries" prepared and frozen (without extra ingredients) in factories around the world (like Anheuser-Busch with beer). Maybe they need better training at the frying level, or better equipment -- whatever it is, I'm sure they have the skill set to tackle the real problem without continuing to add undisclosed "extras" to the fries. It's time for them to stop doctoring their fries and just fry 'em up!

    We commented that if the fries are being cooked in oil flavored with beef and seasoned with dairy, this could create issues for people who have restricted diets because of religious beliefs. And one MNB user responded:

    If people have religious dietary restrictions (in this case, Kosher I don't know what other religions may have similar restrictions) and are eating McD's fries, they get what they deserve. It is not McD's fault - they don't claim to be Kosher, and everyone who really does keep Kosher knows that they are not. This is not to say that the issue is not a public relations problem for McD's, as they were apparently giving out false info. to people who may have allergies, just that it shouldn't be a religious issue. The religious who have diet issues, and may complain about this, should know better.

    In a story yesterday about baby boomers eating more and better than other generations, we commented that this was no surprise, since we are the most self-indulgent generation in modern history.

    Not that there's anything wrong with that...

    MNB user Gretchen Murdock responded:

    Maybe we are self-indulgent as a generation, but we are also experimental, experiential, and refuse to be categorized as “older”. New Yankelovich research shows that lines are blurring and that age demographics are less meaningful than ever before. I prefer to think of us as more flexible than other generations. That’s my story and I’m sticking to it.
    We’re with you.

    Of course, one MNB user who is part of Gen-Y had a different perspective:

    No surprise that us children of boomers are the first generation in American history to be worse off than our parents.

    Thanks, Boomers, for the tax cuts and quick-fix governing that will cost us billions. Sorry we won't have time to visit you in the home, we'll be busy working our second jobs...

    So young, and yet so bitter…

    Finally, we questioned the wisdom of Sears trying to void the long-term contract it has with Bob Vila, but one MNB user thought we had it all wrong:

    This should have been no surprise, once Sears got Ty Pennington. He's young, good looking, has a "golden halo" TV show and appeals to more demographic groups. Sounds cold, but the truth's all about who's HOT and who's not. Sorry Bob, you're not.

    It is a measure of how hip we are that we had to google Ty Pennington’s name to figure out who he is. Apparently he has some sort of home improvement TV show…

    Go figure.

    KC's View: