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    Published on: May 2, 2006

    Today’s customers have more choices than ever and few retailers can claim that their customers are exclusive to them. But TCC Retail Marketing specializes in designing programs that change customer behavior:
    • Giving customers a worthwhile reason to shop your stores more frequently and spend more of their grocery budget with you.
    • Influencing your competitors’ high spending customers to switch to your stores.
    • Creating sales increases between 4% and 5% over a 4 to 6 month period.
    Operating in more than 50 countries, TCC has worked with 30 of the world’s top 50 grocery retailers to increase sales, profitably – running more than 4,000 programs with many of the world’s major retailers, including Carrefour, Tesco, Casino, 7-Eleven, Metro, Tenglemann, Spar, Rewe, Exxon, BP and Shell.

    For more information, please contact…

    Americas: Gordon Cooper - gordon.cooper@contco.com

    Europe: Mark Featherstone - mark.featherstone@contco.com

    Asia: Richard Beattie - richard.beattie@contco.com

    For more information, go to:

    http://www.contco.com/us

    KC's View:

    Published on: May 2, 2006

    One in a series of previews of the 2006 FMI Show…

    In a constantly changing retail environment, the Food Marketing Institute (FMI) has been vociferous about its goal of changing the annual show and convention in ways that will make the event more relevant to both retail attendees and exhibitors. So MNB engaged FMI senior vice president Brian Tully in an exclusive e-interview to gauge this work-in-progress,

    MNB: What's the biggest change/improvement to this year’s show floor?

    Brian Tully: As you know, we made the commitment with last years show to re-invent the event every year with new categories of emphasis. This year we are focused on fresh product, beverages and private label. Each of these scored high on audience surveys as categories of interest. This segmentation of the show floor will make it easier for retailers and wholesalers to organize their time and focus when visiting the suppliers. With this being the second year of implementation of this initiative, I think it is still new enough to call it new for the customers visiting the show as much as it is different from last year.

    In addition to the new focus areas for ’06, we are working with Daymon Worldwide and their Forum event for the private label category. We are opening the private label section for everyone on Saturday afternoon to accommodate Forum attendees and to give a special preview to FMI Board members.

    We have also moved the New Product Showcase up to the front of the exhibit floor. That means we will be leading off with what is new, thereby allowing people to decide where they want to go if they are seeing a new product that intrigues them. This is the place where customers cast their ballot for the Retailer’s Choice Award ---- a vote by customers for the most likely to succeed products in 10 categories.

    MNB: What kind of feedback did you get from retailers based on changes made last year?

    Brian Tully: What we heard mostly from retailers is change is good and it is expected. They felt they were forced to “shop the floor” in much the same way they would like consumers to “shop the store”. “New” is the most often stated reason for coming to the show. For FMI as organizers of the show, our part is the presentation of the suppliers, their products and setting the minds of the customers to prepare for certain expectations that we anticipate will be met by the exhibitors. Organizing the exhibits in this way helps us achieve this goal.

    MNB: What's the philosophy behind the greater integration of the floor and the education program?

    Brian Tully: This is a large industry and there are many “communities” within this industry that work and serve consumers under the umbrella of the supermarket. When we organize the show by rotating products/services/concepts and job functions we tap into communities with their own set of constituents and issues. It makes sense for us to round out the interaction between trading partners within a community with a program that tees up the issues for problem solving and awareness. It seem to us, if we don’t have that as part of the sell message then you are missing an important part of why constituents within the community would want to come to the show.

    MNB: Tell us a little about the new private label focus and its importance to consumers/retailers, as well as the reaction you've gotten from brand marketers that have traditionally supported the show.

    Brian Tully: It all starts with the consumer and consumers are more savvy about good value then ever. They have responded positively to the improved quality in private label products. Retailers are linking their own branding messages of trust in quality and value to the products bearing the store’s name. Retailers like the gross margins too. So retailers have a business interest in growing store brands in the mix of products available to their customers. Brand manufacturers see this trend everyday in the marketplace, so it is nothing new to them.

    The 2006 FMI Show is scheduled for May 7-9 in Chicago, Illinois.
    KC's View:
    A reminder about the upcoming FMI Show. On Sunday, May 7, we will be hanging out at the bar at one of our favorite Chicago bistros, Bin 36, from 6-7:30 p.m. And if any members of the MNB community would like to stop by, say hello, and chat for a bit…well, the first couple of bottles of wine will be on us.

    It’ll be a great opportunity for all of us to put faces and voices with the names and words that appear on MNB plus an excuse to drink good wine. (Not that we need an excuse…)

    (Bin 36 is located at 339 N Dearborn on the west side of Marina City, between the river and Kinzie.)

    We’ll see you in Chicago.

    Published on: May 2, 2006

    Published reports say that six of the twelve members of a Japanese research panel looking into the safety of US meat imports – which currently are banned because of mad cow disease concerns – have resigned, complaining that there was too much political pressure to reopen the nation's borders to American beef.

    The Japanese government reopened its borders to US beef late last year, but then closed them again when a shipment of beef contained spinal matter that was specifically banned by the agreement that opened the borders.

    The US has been trying to get the Japanese to again open their borders, with USDA trying to figure out how to satisfy American business interests as well as Japanese politicians.
    KC's View:
    These resignations only prove what many of us have believed for a long time. The mad cow discussion is more about politics and business than food safety.

    And what the government and industry don't realize is that the only way either one wins is by focusing on food safety.

    Published on: May 2, 2006

    The Sacramento Bee reports that as Grocery Outlet tussles with Albertsons over the use of the Lucky retail brand name, the new store bearing the Lucky name may be a little underwhelming.

    "While some shoppers welcomed the wider aisles, cleaner look and improved selection in certain departments, others came away disappointed," the Bee writes, adding, "some shoppers complained that the new Lucky is too similar to the old Grocery Outlet – far smaller, at 13,500 square feet, than most supermarkets, and lacking many of the amenities, like a deli counter, that consumers want."

    Grocery Outlet is the California-based chain that recently put up the Lucky banner on one of its newly renovated stores, saying that because Albertsons hadn't used the name for six years it no longer had legal rights to the name. Grocery Outlet has been citing federal law, saying that companies that do not use trademarked names for three years then lose exclusive rights to those trademarks.

    Albertsons, which inherited the Lucky brand when it acquired American Stores, had in fact stopped using the brand – though this hasn't prevented it from trying to maintain rights to the name through legal recourse. The company also is trying to find some evidence anywhere that it hadn’t completely abandoned the brand, though Grocery Outlet's investigators are confident that no such evidence exists. A federal judge in San Francisco denied Albertsons a temporary restraining order that would have kept Grocery Outlet from using the name, but there likely will be numerous court dates before any sort of final decision is reached.

    Furthermore, Grocery Outlet has filed a lawsuit against the larger retailer charging it with trademark infringement and unfair competition. The filing, in part, says that Albertsons' actions in the Lucky case "are likely to cause confusion, to cause mistake, and/or to deceive customers and potential customers of the parties, at least as to some affiliation, connection, or association of defendants with Grocery Outlet, or as to the origin, sponsorship, or approval of defendants’ goods, services, or commercial activities by Grocery Outlet."
    KC's View:
    We haven't been to the new Lucky store, so we can't give you a personal POV. However, we would suggest that whatever the legal resolution, if the use of the Lucky name is just a name change – or is perceived that way by consumers – all the legal wrangling and lawyers' fees will be for naught.

    You have to stand for something. Because consumers are smart enough not to fall for anything.

    Published on: May 2, 2006

    The Boston Globe has an interesting piece about Max Rothschild, described as a "swine scientist" who is part of a "national collaboration that earlier this year received a $10 million federal grant to map pig genes."

    The belief is that by learning as much as possible about pig genomes, the industry will essentially be able to grow more and better pigs. Rothschild "also envisions a day when every farm animal is bar-coded, which would enable producers to better track their herds and more quickly trace the source of outbreaks like mad cow disease. The bar codes also would let the breeders pamper the top pigs with better feed and sort them from the run-of-the-mill animals," the Globe writes.
    KC's View:
    Somehow, $10 million to track and safeguard the meat supply seems like a small federal investment.

    Then again, USDA doesn’t seem to feel that it is the government's job to safeguard the meat supply – just guess at how much mad cow disease there may be.

    While we think that this breeding initiative sounds like a great idea – we have long felt that our ability to feed the planet is the best weapon that the US has – we're sure there will be folks protesting against it.

    Published on: May 2, 2006

    Fascinating piece in the Los Angeles Times about billionaire investor Ron Burkle of Yucaipa Cos., who has made a ton of money buying and selling supermarket chains.

    Burkle, who has been engaged in a running battler with a New York Post columnist who he says tried to extort him in exchange for favorable coverage, currently is launching a bid for a number of newspapers that are being sold by McClatchy Co. But Burkle says the bid was prompted by his respect for the integrity of fourth estate, not any desire to meddle in editorial decision-making. And, he says that there are some parallels with the supermarket business.

    The Times writes: "In recent years, the national grocery chains 'were competing on who had the lowest level of services or the lowest level of benefits for employees,' said Burkle, who has reentered the industry with the purchase of stakes in the Pathmark and Wild Oats chains. 'We thought that was just a bad business model.'

    "Although profit margins in the newspaper business average around 20% versus a razor-thin 2% or so in the grocery industry, Burkle said he doesn't focus on margins when looking at acquisitions…'People have said (newspapers) is too tough a business or that the only way you can make this work is if you dramatically cut costs,' he said. Expectations are down, he said, and 'we think that probably creates an opportunity.'"

    According to the Times, the newspaper unions involved with the McClatchy papers actually are favorable to a Yucaipa takeover, even though it is generally conceded that there will need to be cutbacks. But Burkle is perceived as employee-friendly, doing his best to preserve health benefits and willing to offer employees an ownership stake in the company in exchange for givebacks.

    Burkle tells the Times that people obviously are always going to need information…and that newspapers have to find new and compelling ways to deliver it.
    KC's View:
    Just as people will always need food, and stores have to find new and compelling ways to provide it.

    Published on: May 2, 2006

    • Albertsons announced that it has scheduled Tuesday, May 30, as the date upon which it will hold its shareholders meeting to consider its break-up and sale to Supervalu, CVS, and an investor group led by Cerberus Capital Management.

    • The Baltimore Sun reports that Wegmans has signed a lease for its first store in Maryland's Anne Arundel County, a 140,000 square foot unit that will include a restaurant on the mezzanine level. The unit will be Wegmans' second in Maryland.

    • The Wall Street Journal this morning reports that Cott Corp. is focusing on the energy drink and bottled water businesses to provide some of the "sparkle" that it used to get from its soft drink sales. Company CEO John Sheppard tells the Journal that he "plans to turn around the Toronto-based company by diluting its heavy reliance on carbonated soft drinks and increasing its share of the growing markets for energy drinks and other 'nontraditional' beverages, such as juice-flavored drinks.

    • The Chicago Tribune reports that four Cub Food stores in the Chicago area are being close next month, "the first fallout from the sale of Jewel-Osco's corporate parent to Supervalu." The units will be closed by June 24.

    These Cub units are owned by Cerberus Capital Management, which bought a total of 26 Illinois Cub stores from Supervalu so that Supervalu could acquire area Jewel and Jewel-Osco stores from Albertsons.

    • The Connecticut State Legislature has passed a bill that will ban the sale of soft drinks in public elementary, middle and high schools. The bill already has been passed by the state Senate, and Gov. M. Jodi Rell has promised to sign the legislation, which will take effect in July.

    • Winn-Dixie has been charged by federal authorities with the illegal possession, transportation and sale of undersized "spiny" lobsters. If found guilty, the bankrupt company could be hit with a fine of as much as $200,000.
    KC's View:
    Good thing that the charges didn’t include displaying the undersized lobsters on a bed of ice, or the government probably would have had Winn-Dixie's management doing time at Abu Ghraib.

    Published on: May 2, 2006

    • The New York Times reports on how Wal-Mart's Sam's Club division is aligning itself with small businesses as a way of generating new sales. "For thousands of independently owned convenience stores, restaurants and hair salons, the nation's largest — and most feared — retailer also happens to be a business partner," the NYT writes. "Through its Sam's Club division, a chain of 570 club stores, Wal-Mart helps them process credit-card transactions, build Web sites, pay employees and take out loans, all at bargain prices.

    "In that sense, Sam's Club is an oasis within the harsh climate of Wal-Mart. At Sam's, the very qualities that make Wal-Mart such a formidable competitor — its size and hard nosed negotiating tactics with suppliers — have been unleashed on behalf of small businesses."
    KC's View:
    We thought a long time ago that Wal-Mart would do itself a lot of good by helping the companies nominally believed to be its competitors. We even thought at one point that when Fleming was in trouble that it might make sense for Wal-Mart to buy the wholesaler and become a major supplier to the nation's independent supermarkets.

    There were probably dozens of good reasons not to do such a thing, but it certainly would have made for an interesting dynamic…especially if Wal-Mart were able to pass on to those independents lower prices on goods and services.

    Published on: May 2, 2006

    • Publix Super Markets reported first quarter net profit of $288.4 million, up 11.3 percent from the same period a year ago. Sales for the period were up 7.2 percent to $5.5 billion, with same-store sales up five percent.

    • Tyson Foods reported second quarter revenue that was down to $6.25 billion, compared to $6.36 billion during the same period a year ago. The company posted a Q2 loss of $127 million, compared to a profit of $76 million a year ago.
    KC's View:

    Published on: May 2, 2006

    …will return. We promise.
    KC's View: