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: April 27, 2006

    The San Francisco Board of Supervisors has unanimously passed a bill requiring grocery stores to retain employees for 90 days after a change in control or ownership of a store.

    The Grocery Worker Retention Ordinance is considered to be a victory for the United Food and Commercial Workers, which pushed for its passage. The bill now goes to the desk of Mayor Gavin Newsom, who is expected to sign it into law.

    The California Grocers Association (CGA) argued that existing state and local regulations were sufficient, and that the new bill would only serve to dissuade retailers from opening new stores in the city.
    KC's View:
    This strikes us as a colossally stupid piece of legislation, and we would agree with the CGA's assessment of its potential impact.

    If a store changes hands, common sense tells you that the new ownership is going to try and keep the really good people and get rid of the dead weight. But forcing new ownership to try and operate with the dead weight is to put an unreasonable burden on the enterprise.

    Published on: April 27, 2006

    • As part of an overall environmental effort, Tesco has announced that it will create an environmental fund that is the equivalent of $175 million (US), part of which will be used to build what it is calling "the greenest store in the world," a UK unit that will be built completely out of recycled and recyclable materials.

    Tesco CEO Sir Terry Leahy called the fund "a big investment, and said that it is “a very interesting and potentially very important development. Everyone is concerned about energy, about carbon, about energy security. The cost of energy has gone up for everybody and Tesco is no exception. We've had to deal with huge rises in energy costs in the last year so, of course, this has really stimulated within the business a search for alternatives.''

    Leahy said that the company has pledged to reduce by half the amount of energy used in its stores by 2010, compared to that used in 2000, through the use of wind turbines and solar panels in addition to more conventional energy sources, and clear ceilings to reduce the use of artificial light in stores.

    Not every one was buying into Tesco's view of the world. Sandra Bell, a spokesperson for an organization called Friends of The Earth, said: "If you look at the impact the measures will have on the global business you could call it greenwashing." She suggested that this was just an attempt by Tesco to clean up its image problems in the UK, where it has been under fire for what some view as too-rapid expansion and the victimizing of small independent retailers.

    Leahy said the environmental policy was a long-term effort, not a quick public relations fix.

    • The Wall Street Journal reports this morning that Tesco has moved into the fifth position in the list of global retailers, bumping Kroger into the sixth spot.

    Wal-Mart remains in the top spot, with Carrefour in second place, Home Depot in third, and Metro AG (of Germany) in fourth.

    • At the same time it announced that it generated the equivalent of $1.7 billion (US) with its UK online operation, up almost 32 percent compared to a year ago, Tesco "is set to launch a huge Internet expansion," with a focus on the sale of nonfood items ranging from furniture to major appliances to electronics.

    It may be a measure of Tesco's growing dominance of the UK marketplace that even as it was growing its online business, a study came out this week saying that the overall online grocery market in the UK has remained steady – or stagnant – at five percent of the total, even as the number of people using such services has increased five percent since 2003.
    KC's View:

    Published on: April 27, 2006

    The Chicago Tribune reports that Sears Holdings is running a kind of "garage sale" at the former Kmart headquarters in Troy, Michigan, trying to "clear out everything from staplers to file cabinets," with products including "hundreds of chairs, tables, office supplies, commercial kitchen equipment and apparel" for sale at bargain prices.

    Employees were given first shot at the merchandise, but now the public has been invited to feast on Kmart's carcass. (Okay, maybe that's a little strong…)

    The site is slated to be turned into a hotel, retail complex, condos, offices and theatres.

    Sears and Kmart merged about a year ago.
    KC's View:

    Published on: April 27, 2006

    Advertising Age reports that at its American Consumer Conference in New York, Wal-Mart executive vice president/chief marketing officer John Fleming laid out the retailer's "five key consumer insights":

    • Consumers are facing shrinking disposable income because of increased health care, education and energy costs, so Wal-Mart will redouble its efforts to offer "great values on better products." An example of this approach is the company's attitude toward organic foods – Wal-Mart wants to expand its selection in the segment, but keep prices affordable and accessible.

    • Customers have an expanding number of life stages with an equally expanding number of needs, which means that Wal-Mart will try to target those requirements more specifically, trying to be more relevant to more people.

    • Since Hispanics are Wal-Mart's fastest growing demographic, the retailer will be renovating and reorganizing stores and departments where appropriate to cater to that population group.

    • Because shoppers want to control the in-store experience, Wal-Mart is working to make its stores faster and easier to shop…and tailoring stores to local demographics and scenarios in a way that it never has before.

    • Sustainability has to be built into the business model, Fleming said, and not just because it is something of growing concern to consumers, especially young people. The company also has to face the stark reality that the world is consuming natural resources faster than they can be replenished, and so it simply makes sense for the world's biggest retailer to find a way to reduce its consumption levels.

    While Fleming said that Wal-Mart will continue to aggressively address concerns raised about its operating methods by the general public – and will fight back where necessary – the retailer will not over-rely on mass media as a communications tool.

    "The most important media channel we have is our store," he said.
    KC's View:
    None of this, of course, is good news for anyone who competes with Wal-Mart.

    It seems to us that one of the important lessons here is that Wal-Mart continually evaluates its consumers and how it should cater to their needs and desires. It is big enough to do things that other companies cannot, but we wonder how many of the nation's supermarkets consciously look for new and relevant "key consumer insights" that they can mine for new strategies and tactics.

    As opposed to, say, trying to figure out how they can hit up manufacturers for new slotting allowances….or cut labor costs…or try to save their way to prosperity.

    Published on: April 27, 2006

    • Wal-Mart said that its Seiyu operation in Japan had a first quarter loss that was the equivalent of $24 million (US), almost half the loss that the company had a year ago, before Wal-Mart took control of the company. Seiyu's quarterly sales were down two percent to the equivalent of $2 billion (US), with same store sales up 2.1 percent.

    KC's View:
    Call this the Kolodzieski effect?

    Published on: April 27, 2006

    • The Seattle Times reports that wants to get back into bed with Toys R Us…despite the fact that the two company had a long court battle that resulted in a divorce.

    The contretemps started when Toys R Us got upset that Amazon was allowing companies to sell toys through its website in what the toy retailer believed was a breach of a 10-year contract giving Toys R Us exclusivity on Toys R Us sued Amazon, Amazon countersued, and a judge ended up allowing Toys R Us to sever the contract without awarding financial damages to either.

    A 90-day separation agreement was put into place by the judge, with a contract end date set for June 30.

    Now, however, Amazon says it wants to reinstate the contract – though the Times writes, "The question is whether Amazon has a solid chance of reinstating the partnership — and why it would want to."
    KC's View:

    Published on: April 27, 2006

    • Cadbury Schweppes yesterday announced that it is acquiring the 55 percent of the Dr Pepper/Seven Up Bottling Group that it doesn’t own from the Carlyle Group. Cost of the acquisition: $334 million.

    KC's View:

    Published on: April 27, 2006

    • Donna Robbins, currently senior vice president of operations for Albertsons' Northern California region, reportedly will become president of the division when its acquisition by Cerberus Group is completed later this year.

    • Coca-Cola Enterprises, , the largest bottler of Coke products in the world, named John Brock, a former Cadbury Schweppes executive, as its new CEO.
    KC's View:

    Published on: April 27, 2006

    MNB reported yesterday about how some Wal-Mart employees are complaining about what they believe is the retailer's plan to implement a new personnel policy, requiring full-time workers to rotate their shifts rather than have long-term shift stability, is raising hackles among some of its employees.

    One MNB user with intimate knowledge of this shift offered his own perspective:

    So, what other new policy will Wal-Mart top, out of touch, management hatch? This one will be interesting to watch.

    Now, you get a set schedule by being one of the few long-time associates in a department. When I transferred to Roswell from Virginia, even with nine years service, I was the newest and worked whatever shift wasn't covered by three others who had set shifts and set days off, of their choosing.

    In three years I only came close to a set schedule once because of the department manager's insistence that it was best, in his POV, for the department. When he transferred, my schedule went back to 100% of whatever the computer figured was needed and didn't cause the Asst. Mgr., who had to hand schedule any deviation to whatever the computer spewed forth, any additional work on his part.

    Most associates, I believe, can't afford to stop working completely and finding another job for many is out of the question of it being anywhere near equal. So they will have to live with it; but I'll bet they don't work anywhere near as hard as they did previously.

    Scheduling was one of many reasons I left Wal-Mart two months ago.

    Losing good and dedicated employees is no way for Wal-Mart to grow.

    On the subject of how rising gas prices will affect consumers, one MNB user wrote:

    Not to mention that the cost of getting goods to the Supermarket via truck is going to be reflected in rising food prices. The cost of fuel for the farmer will cause a rise in costs on his end too. The cost of getting product to any retailer using the trucking industry is going to put most of us on a budget diet. We’ll be spending more on food even if we purchase less items. The same goes for clothing and those occasional jaunts to the fast food place. Their prices will rise too. Everything we buy will be costing us more because of the rise in the price of gas. It’s more than the snowball effect, it’s an avalanche!

    We've suggested that online shopping could increase because of the high gas prices, which led one MNB user to write:

    Shopped online recently for this very reason. Needed a hard to find item and the closest retailers who handled it are a 30 mile round trip from my home. Assuming one of them had it in stock - I was looking at spending $60 plus tax, gas, time, etc. Went online and within five minutes I found three retailers who had the item in stock - and at one it was ON SALE! So I spent $50 + $5 shipping and I look forward to said item arriving at my doorstep shortly!

    I even have the option of sitting in my porch swing, sipping an ice cold glass of sweet tea and enjoying the beautiful spring weather when the UPS driver arrives!

    We had a story yesterday about how consumers rank supermarkets highly in the area of customer service, but not all MNB users agreed with the rating:

    I was surprised to see that supermarkets ranked high for customer service. I guess I would be one of the 8% that say that they do a bad job. The only time I see anyone in the store that I shop at (Kroger) that is willing to help me find things is the customer service desk. I can never find anyone in the aisles - and the butcher doesn't know where the candied yams are....

    I don't shop often - only when my wife need me to pick things up on the way home. I am more willing to stop at the c-store at the top of our street for a list of items that includes toilet paper, ketchup and a gallon of milk - a pay a 20% premium on it - than go to the grocery store. At least at the c-store I can find the item, or a person to help me find the item, quickly.

    MNB reported yesterday about how Kraft Foods shareholders rejected the call by one stockholder that would have had the company abandon its sponsorship of the Chicago-hosted 2006 Gay Games and future competitions because she said the sponsorship was inconsistent with the company's mission.

    MNB user Joe Fraioli wrote:

    I would like to know this persons interpretation of the mission? Is it to involve yourself in other people’s lives and have issues with them without even knowing them? Glad this person was defeated….Thanks Kraft, go ahead and make our kids as fat as you want as long as you don’t let these nuts dictate what you do.

    And MNB user Sriram Daita wrote:

    Was the shareholder related to Keith Hernandez by any chance?

    Funny line. Wish we'd thought of it.

    KC's View: