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    Published on: March 31, 2006

    Marks & Spencer announced this morning that it is selling Kings Super Markets in New Jersey to a consortium of US investors for about $61.5 million (US).

    The move comes some five years after Kings originally was put up for sale by the British company, which acquired it in 1988 from the Bildner family. In December 2002, D’Agostino’s agreed to buy Kings for what now seems like the whopping price of $160 million, but couldn’t get the financing to complete the deal. And there were various efforts by Gristedes to buy the company that didn’t pan out.

    In August 2003, M&S announced that it was taking the company off the market because it couldn’t get the price it wanted.

    The M&S goal has been to sell off non-core and foreign businesses, and it disposed of its French and Spanish assets back in 2001.

    “The disposal of Kings is the last part of our programme to refocus Marks & Spencer,” group finance director Ian Dyson told the BBC. “Kings is a strong brand with a committed workforce but it doesn't fit with our core business.”

    The US group consists of Angelo, Gordon & Co, MTN Capital Partners LLC and Bruce Weitz, who will serve as the operating partner. Weitz is a former senior executive at Duane Reade Drugstores and First National Supermarkets, and not the actor who played Mick Belker on “Hill Street Blues.”
    KC's View:
    The Kings story has been a sad one of late, and we hope that the company can recapture some of the old energy and magic that marked it back in the day, when it was hailed as a paradigm of innovation.

    It’ll certainly help if the company has committed ownership; it never is good for morale when you feel like the ultimate bosses are halfway out the door.

    Published on: March 31, 2006

    Published reports say that a Dutch court charged with investigating the multimillion-dollar accounting scandal that has disrupted Ahold’s operations has put most of the blame on the company’s former CFO, Michiel Meurs. However, the court also blamed former CEO Cees van der Hoeven for enabling the policies that eventually caught up with management.

    The scandal involved the overstatement of earnings by the company, primarily by its US Foodservice subsidiary. The court said what has been generally perceived and repeatedly reported – that Ahold was so concerned with hitting double-digit growth numbers that it ignored the internal controls – both ethical and financial – that would have prevented such occurrences from taking place.

    This legal finding is not connected to the civil suit against van der Hoeven, Meurs, and two other former executives in the Netherlands that charges them with fraud.

    KC's View:
    A fish stinks from the head. In this case, there is more than enough stink to go around.

    Published on: March 31, 2006

    Advertising Age reports that Target is hardening its negotiating stance in its dealings with manufacturers as it “expands its private-label brands to improve margins and undertakes the daunting challenge of expanding the food section at most of its 1,418 stores.

    “Suppliers of both large and small brands said Target has demanded unprecedented price concessions during the past year, in addition to beefing up what some call an uncompromising strong-arm tactic not even seen in Bentonville: an online reverse auction buying system considered by some suppliers as a margin-busting, no-win option for them.”

    This trend is taking place, according to Ad Age, as Wal-Mart tries to improve its marketing and design functions and become more collaborative with suppliers.

    The reverse auctions, Ad Age writes, “tip the scale in favor of private-label manufacturers ahead of branded manufacturers by forcing suppliers to blindly bid on price alone. Additionally, the retailer’s so-dubbed category captains within its buying division today not only want data on product and shipments, but also are making endless data requests suppliers fear will be used against their own brand when the chain launches its next premium-priced house brand.”

    Target responded to the Ad Age allegations by saying that while its processes are hard for some suppliers to get used to, it has gotten positive feedback from a number of manufacturers.
    KC's View:
    We can only wonder what the reaction in Bentonville has been to the charge that its buying divisions are getting soft.

    This story suggests that the pitched battle between Target and Wal-Mart can only get bloodier – that as Wal-Mart tries to poach Target’s cheap chic approach, Target will be trying to get tougher and sharper on price.

    The people who we really feel sorry for are the ones in the middle, who don’t have the marketing muscle to be really competitive in these areas. It ratchets up the pressure on these mainstream companies to find new and innovative ways to differentiate themselves.

    It isn’t for the faint of heart.

    Published on: March 31, 2006

    Published reports say that Metcash, Australia’s largest distributor of grocery products, has formed an alliance with Foodstuffs, the New Zealand market leader, which will the combined Australasian companies more than $11 billion (US) worth of buying power. While their businesses will remain independent, they will share information and technology while taking advantage of their combined buying strength.

    “The combination of our buying power and other economies of scale generated through our alliance will allow us to supply cost effective and high quality groceries to our combined customer bases throughout New Zealand and Australia,” Metcash CEO Andrew Reitzer said in a statement. “We are delighted to be teaming up with the market leader in New Zealand and the initial benefits of our strategic alliance will be evidenced in the boost in our private label businesses.”

    Foodstuffs has a unique business structure, consisting of three separate, regionally based, retailer-owned co-operative companies – one based in Auckland, one in Wellington, and the third in South Island - and a corporate body.
    KC's View:

    Published on: March 31, 2006

    The Washington Post reports on a new NPD Group study saying that despite some statistics showing that beer sales are down, 55 percent of people who drink alcohol at lunch prefer to have beer instead of wine or cocktails.

    The study also says that 58 percent of those who imbibe during “happy hour” prefer beer as their alcoholic beverage.

    The Post also reports that “nearly 40 percent of Americans (ages 21 and older, of course) include alcohol with their dinner when they're eating out over the weekend. During the week, that figure dips to 34 percent.”
    KC's View:
    People drink beer at lunch?

    Maybe it is age, but we’ve found in recent years that if we have any sort of alcohol at lunch, it just makes us want to take a nap.

    Published on: March 31, 2006

    A new study from the Food Marketing Institute (FMI) and the American Meat Institute (AMI) says that meat departments can provide food retailers with a significant competitive advantage, and also that price is the most significant factor consumers use in determining what type of meat product to purchase.

    “Effective meat marketing and merchandising strategies provide supermarkets with a prime opportunity to differentiate their stores from other venues and grow their customer base,” said FMI Senior Vice President Michael Sansolo.

    Among the results of the study:

    • The vast majority (86 percent) of shoppers who do most of their grocery shopping at supermarkets stay loyal to their primary supermarkets when buying meat. When seeking alternative outlets, they tend to prefer a warehouse club or butcher shop (4.7 percent each).

    • In contrast, just more than half (58.7 percent) of shoppers who typically frequent supercenters to purchase weekly groceries also purchase meat products there, and more than one-quarter (26.5 percent) skip the supercenter meat aisle and buy their beef, chicken and pork at conventional supermarkets.

    • Shoppers are equally split on the quantities of meat they purchase and when they use it. Slightly half (51 percent) buy meats in large quantities and freeze it for use over time, compared with shoppers (49 percent) who plan to use meat purchases within a few days.

    • Price tends to have the greatest influence on the kind (cut or type), quantity and location of meat purchased. Almost 90 percent of shoppers compare meat prices within the store and 80 percent compare prices across multiple stores.

    • Nearly one-fifth of shoppers (17.4 percent) have purchased organic meats in the past three months, and nearly half of these purchases (48 percent) were made at conventional supermarkets. Natural and organic food stores accounted for 29 percent of organic purchases, followed by butcher shops (10 percent), supercenters (9.3 percent) and warehouse clubs (1.1 percent). The reasons cited include superior taste, better nutritional value, long-term health benefits, enhanced product freshness and curiosity about the differences between organic and non-organic meats.

    Beyond price considerations, shoppers identified key factors that would increase their overall meat purchases: better quality of meat products and cuts (50.5 percent), more/better variety of meat products and cuts (40.9 percent), more/better customer assistance and guidance (20.8 percent), more information on where meat is produced (17.7 percent), more/better recipes (13.9 percent), and more/better signage for meat categories (11.7 percent).
    KC's View:

    Published on: March 31, 2006

    • The Wall Street Journal reports this morning that Subway Restaurants is making a concerted approach to generating more dinnertime business, launching a new series of TV commercials starring Jon Lovitz. It won’t be easy, says the Journal since people who want fast food for dinner generally want burgers and pizza instead of sandwiches.

    Bloomberg reports that Coca-Cola is launching a new ad campaign this weekend using the theme, “Live On The Coke Side of Life.” The commercials, according to the report, looks at “simple, optimistic moments in life” and connects them to the consumption of Coca-Cola.

    This new campaign, according to Bloomberg, is the company’s fourth since 2000, when it retired the “Always Coca-Cola” campaign that it used for seven years.

    • Bankrupt Winn-Dixie reportedly has sold its 12 stores in the Bahamas for $50 million to BK Foods, a local company.

    Marketwatch reports that the US Food and Drug Administration (FDA) has announced that manufacturers that use sucralose, better known as Splenda, to sweeten their products can make the following limited health claim:

    "Frequent eating of foods high in sugars and starches as between-meal snacks can promote tooth decay. Sucralose, the sweetening ingredient used to sweeten this food, unlike sugars, does not promote tooth decay."

    However, FDA is not allowing actual packets of Splenda to carry the same claim.

    • The Los Angeles Times reports this morning on the previously reported decision by Safeway’s Vons division to eliminate double couponing – it already has been dispensed with at 200 stores, and will be killed at the chain’s remaining 100 stores within the next month or two.

    Kroger’s Ralphs chain will continue with double couponing.

    • In Colorado, King Soopers and City Markets have settled a lawsuit that charged them with not having stores that were accessible enough to people with physical disabilities. The suit, filed under the provisions of the Americans with Disabilities Act (ADA), has resulted in the stores improving access for people in wheelchairs at their checkout lanes, bathrooms, service counters and parking lots.

    • The St. Louis Business Journal reports that as part of the broader cultural move toward gourmet pet food, Nestle Purina PetCare is introducing family-style premium meals for dogs, called “Beneful,” with names like "simmered chicken medley" and "savory rice and lamb stew."

    Not only is the food designed to be almost good enough for pet owners to eat themselves. But it also comes in clear, ready-to-serve, re-sealable plastic containers.
    KC's View:

    Published on: March 31, 2006

    • Wal-Mart’s Asda Group reportedly has begun asking its suppliers for up-front cash payments if they want to keep their status as “preferred suppliers.” The payments, which are said to be unusual in the UK marketplace, can run into the millions of dollars, are being used by Asda to sharpen its prices as it tries to make up ground on market leader Tesco and keep a revived Sainsbury to move from third to second place.
    KC's View:

    Published on: March 31, 2006

    We reported yesterday that Albertsons CEO Larry Johnston saw his compensation double to $16.4 million in salary, bonuses and stock options last year, and stands to make $52.6 million this year if the sale of the company goes through as expected.

    We suggested that many at Albertsons would be appalled, and one MNB user responded:

    Appalled is a kind way to describe it Kevin.

    Not only is Johnston cashing in, but the payoffs will occur all up and down his team structure I'm sure, except for the store people, probably.

    Here is what I wonder about:

    Who represents the shareholders in this?

    Doesn't the Security and Exchange committee review these types of transactions?

    How is it that the Albertson's Board could not read the results produced over the last 5 years and agree to compensation packages we are hearing about?

    Morale at a low point...declining market share....a broken company....

    And MNB user Bob McMath wrote:

    Don't know why anyone would be surprised at this package! Look at what the top executives at K-Mart got as they took their leave of that company as it almost collapsed. Time after time, the mismanagement of companies has been rewarded with incomprehensible exit packages from directors who are both insiders, as well as their friends with whom they share other directorships in other companies.

    If those responsible for the exit packages spent more time worrying about the running of the company instead of how to get out of it with enormous personal benefits, companies might survive longer and better.

    We also got a lot of response to yesterday’s MNB Radio piece about the need for ethics courses in business schools.

    MNB user Tom Devlin wrote:

    I could not agree with you more regarding courses being taught on ethical behavior in today’s colleges. Ironically I took a Master of Science degree in Leadership and Strategic management in a small college in Westchester County New York called Mahattanville College. It was taught by two professors at the same time and was very engaging. One of the professors who recently left the school is now CEO of Darcy Partners, which is the world’s largest ethical officers group. This course along with an anthropology course I had taken at Mahattanville as well opened my eyes more than any other college course would hope to do. It was an amazing experience and top colleges today should copy the teachings that went on at little Mahattanville. The business world would be in much better shape.

    Another member of the MNB community wrote:

    As always, I think this was an extremely good topic to discuss and the recommendation of an ethics class is great, but not enough.

    I graduated from college within the last few years as a business major. Business ethics was a required course. I have worked since age 16, but it wasn’t until I began working for the University system in my last year of college, that I truly understood the importance of business ethics. What I saw from the leaders paid by our university was an astounding LACK of ethics. Maybe it’s the world of academia, maybe it is because it receives state funding, but the people who students look up to and respect seemed to be completely lacking a moral compass. Business ethics should not only be a required course to receive a degree but also a required training for any member of an educational institution, and I would say a required training for any business that truly wishes to gain the talent of the upcoming generation.

    Like you noted from the recent conference, today’s generation of college students is attempting to be ethical in the way they spend their money, supporting beliefs such as promoting higher wages for workers, and protecting the environment. I do not think it is off base to assume that they also want to work for companies that display a code of ethics that is up to their standards. I know that values can be compromised to survive in life, but I have seen it time and again and this generation is more willing to work for less money for a company they believe in, than contribute anything to an organization they feel is unethical, and a smart business leader will pay attention to this trend and capitalize on it to attract the best talent to become the future leaders for their organizations.

    MNB user Aaron Brodniak wrote:

    I am a re-entry student currently completing my B.S. in Human Resources. My experience concerning ethics taught in college has actually been quite positive. I have been required to take Business Ethics and Business Environment courses in which we discussed individual ethical choices and how ethical business decisions affect society. Although some students in the classes did not initially comprehend certain ethical implications involved in everyday business decisions, I believe they were given the basic tools to begin the process of critically evaluating their decisions. The true test will be up to the individual and if their future employers encourage ethical behavior.

    Another MNB user wrote:

    FYI – when I was in graduate school (late ‘80’s), we had an ethics section as a program requirement. The cases presented in those particular classes were some of the MOST difficult to answer in the entire program. There was never a clear “right” or “wrong” answer, but the classes gave us some skills in evaluating a decision from an ethical framework, and gave me an appreciation of the difficulty in trying to satisfy each and every stakeholder in a world filled with shades of grey.

    In many instances, the issues you address in MNB (USDA’s BSE testing program, hiring locked out workers under false names or ID’s, corporate malfeasance, etc.) are relatively simple, black & white examples where the right decision should be obvious. Mandatory ethics education in an MBA program would have no impact on decisions made in these settings. These types of decisions are not driven by a lack of education or skills, but by greed, pressure and politics.

    And yet another MNB user wrote:

    Just imagine the amount of money that would have been saved in America if everybody had ethics. If the politicians even had a hint of ethics the world would be a better place. In business just think of the scams that wouldn't have been hatched, or if they were hatched maybe an ethical person would have turned them in for doing something illegal.

    You are on the money with this idea, the only problem is it has to start at home, be carried through the schools, churches and civic organizations and finish with our leaders. If it’s the president or the little league coach, everybody needs to set an example. If not our society will implode.

    We also got several emails about Wal-Mart’s decision to hunt for a couple of senior level PR executives.

    One MNB user wrote:

    These guys are killing me. Just like the director of ethics or whatever they came up with recently, Wal-Mart continues to treat the injury and not the root of the issue with moves like the P.R. roles. I'm not saying that they don't need the help, but I can't help but see this as reactive and not looking at how they behave on a day-to-day basis.

    I think the criticism of Wal-Mart on many levels is off base, and I'm not a big W.M. fan. The issue to me seems to be rooted in Wal's "fight first, ask questions later" way of running that company. I had the opportunity to speak to members of a regulatory agency who indicated (on their own) that they can't stand dealing with the company due to their arrogance and the need to pick every fight.

    MNB user Jeremy Jones wrote:

    What an odd story. On the one hand it’s easy to accuse Wal-Mart of being overly desperate to defend their image in the press. On the other hand, it’s hard to blame them for doing so when the New York Times turns an article that probably should have been confined to the classified section into ‘news.’

    We have to be honest here. We’ve worked in PR and we’ve worked in journalism. And while journalists make mistakes, make misjudgments and can be fairly criticized for both, they have a far different role than people in public relations, who generally have as their jobs creating so much spin that people get dizzy and cannot tell fact from fiction.

    But that’s just our opinion.

    MNB user Liz Schlegel wrote:

    I think it's fascinating that Wal-Mart, it appears, is thinking about this as a "war," instead of a communications opportunity. If they're searching for someone to sell a war, maybe Karl Rove is available. Or Colin Powell,

    On the other hand, maybe they'll search for a PR executive who will really think about - and work to deepen - Wal-Mart's relationships - with the public, the employees, its suppliers, and its stakeholders... and yes, its critics. And maybe they should start figuring out that job description by listening to your excellent radio piece on ethics!

    We also got a number of emails responding to yesterday’s piece – and our annoyance – about the political fight brewing in Florida over what should be the official state pie.

    MNB user Steve Sullivan wrote:

    Perhaps, in this age of specialization and diversification (also known as being all things to all people), the Florida legislators could make the following pronouncements:

    Official Tree-Fruit Pie: Key Lime
    Official Ground-Fruit Pie: Strawberry
    Official Tuber Pie: Sweet Potato
    Official Meat Pie: Chicken Pot

    Now, you were expecting me to say Pecan should be the Official Nut Pie, right? I think that title should be reserved for any legislator that spent more than 5 minutes debating the issue.

    One MNB user say the story as an opportunity:

    Key Lime pie has my vote. I've altered holiday plans from Australia in the past to include a trip to Florida -- and while I'll tell everyone it is for a visit to the Space Centre, the Florida Keys or Disney World, it is truly so that I can enjoy a slice of Key Lime pie each night. Then I discovered that the famous "pink hotel" in Hawaii sells it. Perhaps they need to make it the State Pie and then protect the use of the name "Key Lime Pie" as has been done with the likes of Champagne?

    Any chance of having MNB readers submit their recipe??

    The question has been posed, and the floor is open.

    Regarding our story about Wal-Mart being criticized for selling the DVD of “Brokeback Mountain,” which is generally described as the “gay cowboy movie,” one MNB user wrote:

    Let’s get things straight, people. “Brokeback Mountain” is a love story about SHEEPHERDERS, not COWBOYS. It’s a matter of wearin’ your pants in- or outside your boots, if’n ya know whut I meen, pardner.

    Finally, continued comment about the screw top vs. cork debate.

    One MNB user wrote:

    To paraphrase an argument from the TV decency debate; if you don't like the screw top, don't buy it.

    Agreed. We persist in making this argument because we feel there is a marketing/business mistake being made here.

    And MNB user Dan Jones said that he wanted to paraphrase a famous old Woody Allen line about sex:

    Wine without a cork is an empty beverage experience. But as empty beverage experiences go, it is one of the best.


    KC's View:

    Published on: March 31, 2006

    On Sunday, life begins again.

    At 8 pm EDT, the World Champion Chicago White Sox will face off against the Cleveland Indians, and the 2006 baseball season will begin.

    It’s about time.

    For at least 24 hours or so, fans of the game will believe that anything is possible, that their teams can go all the way, that all the days of summer will be warm and bright. It won’t be that way, of course. But we can dream.

    Roger Angell of The New Yorkeronce wrote: “Baseball is the writer’s game, and its train of thought, we come to sense, is a shuttle, carrying us constantly forward to the next pitch or inning, or the sudden double into the left-field corner, but we keep hold of the other half of our ticket, for the return trip on the same line. We anticipate happily, and, coming home, reenter an old landscape brightened with fresh colors. Baseball games and plays and mannerisms - the angle of a cap - fade stubbornly and come to mind unbidden, putting us back in some particular park on that special October afternoon or June evening. The players are as young as ever, and we, perhaps not entirely old.”

    I believe.

    I believe even though the spectacle of MLB Commissioner Bud Selig in a press conference yesterday acting as if the steroid issue had only now gotten serious and credible enough to deserve attention made me want to put my old Mickey Mantle wooden bat from Little League through the television set.

    So now he will allow an official investigation, acting like Claude Rains’ Captain Renault in “Casablanca” saying that he is “shocked, shocked” that there is gambling going on at Rick’s. And then he looks at his new investigator, former Sen. George Mitchell, and clearly thinks that this is the beginning of a beautiful friendship.

    This I can’t believe, even if Selig has done little during his term as commissioner to prove that he is anything other than an ineffectual tool of ownership with no respect for the fans and the game. Selig has the look of a deer in the headlights, wishing that the oncoming vehicle would somehow go away. It won’t. I just wish Selig would go away, and take Barry Bonds with him.

    Selig pretends that this is about more than just Bonds and the records he is assaulting with the help of countless steroids. More self-delusion. Sure, there are probably plenty of other players who will be implicated in this scandal, and they all should be treated harshly. But right now, this is about Bonds as he tries to carve out a place for himself in the record books, but instead of using a bat uses a hypodermic needle.

    It makes it hard to believe.

    Maybe Roger Angell was wrong. The players aren’t as young as they used to be, and all this makes me feel old.

    Don’t forget to change your clocks on Saturday night/Sunday morning…move them all one hour ahead, unless, of course, you live in a place that doesn’t.

    Me, I love Daylight Savings Time. I don’t mind writing in the darkness in the early morning hours, and that extra hour of sun at dinnertime, when I’m not working, is golden.

    On the iPod this week: “This Is Us,” by Mark Knopfler and Emmylou Harris, which just makes me want to dance with my wife.

    Did you see where Virgin Galactic, the Richard Branson venture that is selling $200,000 tickets for a brief space flight in 2008, is saying that women with breast implants need not apply.

    "We've discovered there may well be issues with breast augmentation," said company spokesman Will Whitehorn. "We're not sure whether they could stand the trip -- they could well explode."

    Which sounds more like Mel Brooks’ “Spaceballs” than “Star Trek.” Though those implants certainly will be boldly going where no one has gone before.

    Speaking of “Star Trek,” Virgin Galactic reportedly is talking with the series’ Capt. James Tiberius Kirk about taking one of the flights.

    So apparently they aren’t worrying about exploding toupees.

    McDonald’s has adopted as its coffee slogan the following phrase: "Wake up and smell your life.”

    Maybe it is just me, but when I wake up and smell our life, the first thing I usually do is take a long, hot shower. Lots of soap, lots of shampoo.


    Go see Spike Lee’s new movie, “Inside Man,” which is a terrific and stylish bank robbery thriller with wonderful performances by Denzel Washington and Clive Owen, not to mention a wonderfully diverse cast of New York faces and voices that give the movie texture and grit. Maybe the best thing about the movie is that it actually feels like it was shot in New York, not Toronto like so many other films that say they take place in the Big Apple.

    A bunch of people have asked me what I have up my sleeve for my usual April Fool’s Day story.

    The answer is nothing. Not this year.

    Y’see, it only makes sense to do an April Food’s joke on April Fool’s Day…but that falls on Saturday this year. And MNB doesn’t post on Saturday.

    Ah, well.

    The jokes were going to be prime.

    That’s it for this week.

    Have a good weekend. Enjoy the sun. Watch a ballgame. Catch a movie.

    KC's View: