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    Published on: December 4, 2006

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    KC's View:

    Published on: December 4, 2006

    Wal-Mart continues to make a number of headlines as it struggles to get its footing in the face of uninspiring sales increases and questions about its strategies and tactics.

    For Wal-Mart, it is always complicated and never dull.

    The Washington Post writes, for example, that when Wal-Mart wanted to expand its customer base and grow its sales, “It designed a line of up-to the-minute clothes. It stocked its shelves with organic cotton sheets and sustainable fish. It wished its customers a ‘Happy Holiday,’ not a "Merry Christmas.’ It hired civil rights leader Andrew Young to burnish its image. It joined the National Gay and Lesbian Chamber of Commerce. This year, it began remodeling nearly half its stores.”

    But not so fast…

    “Many of Wal-Mart's core customers disliked the new clothes and skinny jeans, which also failed to set off a serious buzz among the fashion conscious,” the Post writes. “’Merry Christmas’ is back, after the American Family Association and the Catholic League launched a boycott. In May, Wal-Mart pulled out of South Korea, and followed that with a retreat from Germany in July. In August, Young quit after making inflammatory remarks about ethnic grocers in African American communities. In September, Wal-Mart said it was getting rid of layaway, which analysts said sent the wrong message to the 20 percent of its customers who do not have a bank account.”

    In other words, one step forward, two steps back.

    Consistency seems to be one issue.

    In Minnesota, the Pioneer Press writes that Target Stores seems to be outperforming Wal-Mart in part because “Target's strategy as a discounter of cheap chic playing more to slightly wealthier consumers, whose discretionary spending has been less vulnerable to rising gasoline prices and other economic undulations than that of Wal-Mart's core shoppers, who have lower incomes.”

    However, there also seems to be a growing sense – at least on the part of some analysts – that Target has succeeded by being more consistent in its approach and not undertaking the shifts in strategy that Wal-Mart lately has been attempting.

    Meanwhile, Wal-Mart also has political issues to deal with.

    Traditionally a Republican-leaning company, the retailer has been ramping up its donations and connections to the Democratic Party, a wise move since Democrats won back control of the US Congress in the November elections.

    Bloomberg reports that Wal-Mart’s main goals are to “persuade lawmakers that criticism of its labor practices is unwarranted and that free trade helps consumers.” While it has had some success getting support from some lawmakers, Bloomberg reports that “Wal-Mart's efforts to reach out to more Democrats may not be enough to soften the anti-Wal-Mart stance of critics such as Representative George Miller of California and Senator Edward Kennedy of Massachusetts, who will head panels overseeing labor issues. Both have said they will try to pass the Employee Free Choice Act, which would force companies to recognize unions when employees sign a card expressing their desire to organize.”

    And Democratic Senator-elect James Webb of Virginia, according to Bloomberg, “says Wal-Mart is a symptom of the failure of U.S. trade policy, which penalizes American workers and industries by flooding the market with cheap imports and making it too easy for companies to export jobs overseas.”

    One step forward, two steps back.

    The New York Times reports this morning that Wal-Mart is seeking ways to show its appreciation to its 1.3 million US employees. According to the Times, “Wal-Mart managers at 4,000 stores will meet with 10 rank and-file workers every week and extend an additional 10 percent discount on a single item during the holidays to all its employees, beyond the normal 10 percent employee discount.” The company also is giving employees a special polo shirt when they’ve completed two decades of service.

    But even these efforts ring hollow for some Wal-Mart critics, who point out that there is a growing perception within the company that management is disconnected from the concerns of its employees, and that it has created “robotic,” formal (and some would say ultimately unresponsive) responses to concerns about staying home with sick children or dealing with family emergencies. And not everybody seems impressed by a knit shirt.
    KC's View:
    That extra 10 percent discount on one item could be a pretty good deal if the employee is buying a flat screen television…but it doesn’t sound like a lot of the employees who are really concerned about working conditions and wages will be shelling out the thousands of dollars needed to buy one.

    That said…we still think that the competition shouldn’t get too complacent about Wal-Mart’s immediate troubles.

    We would be most concerned, if we were competing with Wal-Mart, about the observation last week by one analyst that Wal-Mart seems to be acting like a start-up rather than a mature company.

    If a company the size of Wal-Mart adopts the “start-up” mindset, this should scare the daylights out of the competition. We should all act like start-ups.

    A mature company may be one that is waiting to die.

    Mantra for the morning: Maturity is overrated.

    Published on: December 4, 2006

    The Chicago Sun-Times reports that since taking over Jewel as part of its Albertsons acquisition, Supervalu has been “raising the bar” on customer service by instituting a program called “G.O.T.,” an acronym for "greet, offer and thank."

    This program encourages employees to engage customers in conversation, helping them to find items, rewarding them for helping shoppers walking through stores.

    According to the story, Jewel also is working on reducing checkout lines. “Supervalu also is spending about $1 billion this fiscal year to build new stores and remodel old ones. It will focus on adding Osco pharmacies to new stores, and installing organic and international foods sections to all stores.”

    Jewel holds a commanding market share in the Chicago region at 40.5 percent – though it is a somewhat less commanding lead than the 44.2 percent it had two years ago.
    KC's View:
    It would appear that the management at Supervalu, unlike the toaster salesman who used to run Albertsons, actually understands what matters to shoppers.

    Surprise, surprise.

    Published on: December 4, 2006

    Business Week reports on an interview with Tom Stemberg, the former CEO of Staples, in which he addresses the general competitive climate facing many retailers.

    For one thing, Stemberg says, being big isn’t everything it is cracked up to be. “Size does not appear to be the advantage it once was,” he says. “When you're big, there's a lot of people who shoot at you, from unions to communities that don't want you. The value of size has diminished over time.”

    But the more insightful quote from Stemberg concerns some of the retailers that he believes have the brightest futures.

    The best and most successful retailers, Stemberg says, are “perpetually focused on the customer. Staples is going beyond price and focusing on making it easier for the customer to shop. Best Buy, with its Geek Squad, is very focused on enhancing the customer's ability to use its products. That'll be successful. PetSmart is focused on pet owners, not just the products. The pet-hotel concept, for instance, will be a winning concept.”
    KC's View:
    This sentiment strikes us as being both common sense and uncommon wisdom.

    We suspect that a lot of retailers, if they were to survey their employees, would find that they know a helluva lot more about operational issues than they do about customers. They may understand some broad demographic trends, but do they really, really know who their best customers are and why these shoppers are dedicated and/or loyal?

    “Focus on making it easier for the customer to shop.” “Focus on the customer, not the products.” “Enhance the customer’s ability to use the products.”

    Uncommon wisdom.

    Published on: December 4, 2006 reports that South Korea has rejected a shipment of US beef that came from a Nebraska processing plant after discovering that bones were present in the product. It is the second US beef shipment to be rejected by Korean inspectors.

    The bone pieces were said to be less than one inch in length, and Korean officials said that they were not considered to be risk materials.

    South Korean only recently agreed to once again accept US beef shipments after a three-year ban because of concerns about the spread of mad cow disease.
    KC's View:
    We know we’re wearing you folks out with this, but we keep wondering about all the stuff that isn’t being found – not just in places like South Korea, but also here in America.

    Published on: December 4, 2006

    Forbes reports that Tesco has outbid several other global retailers, including Wal-Mart and Carrefour, to acquire a controlling interest in Makro Cash and Carry stores in Malaysia. Terms of the deal were not disclosed.

    • Numerous published reports say that Tesco has opened what is being described as “the greenest retail store in the UK,” using windmills to power the checkouts and captured rainwater to wash the store’s delivery vehicle. Tesco reportedly has called the store a "benchmark for green technology in construction and retail.”
    KC's View:

    Published on: December 4, 2006

    Much has been written about the health benefits of resveratrol - a compound found in red wine that is believed by some to help fight cancer, improve heart health and even extend life. Now, there may be evidence that some red wines may be healthier than others.

    The Times of London reports that while French and Italian wines have been declining in popularity in recent years owing to increased enthusiasm for American, Chilean, Australian and New Zealand varieties, they may in fact be healthier for consumers that so-called “New World wines.”

    “The artery-clogging effects of a fatty Christmas dinner can best be counteracted by washing it down with a red from south west France or Sardinia, new research has suggested,” according to the Times. “British scientists have discovered that red wines from the two regions boast the highest concentrations of a chemical that underlies the drink’s well-publicised benefits for cardiovascular health.

    “Wines from Nuoro province in Sardinia, and the Gers departement in the foothills of the Pyrenees, are particularly rich, containing up to 10 times more of the beneficial compounds than alternatives from Australia, South Africa and the United States.”
    KC's View:
    Alexander Fleming, who discovered penicillin, once said, “Penicillin cures, but wine makes people happy.”

    Little did he know.

    If he had, he might have bought stock in a little French winery somewhere…

    Published on: December 4, 2006

    • Food Lion reportedly has decided that it will begin remodeling stores that have not been part of the market renewal programs that it has been embarked upon over the past few years.

    • The Dallas Business Journal reports that Albertsons LLC, which is controlled by an investment group headed by Cerberus Management, plans to close four units in the Dallas-Fort Worth market by the end of the month, saying that the stores have been struggling financially and that there was no evidence that a turnaround was imminent.

    • Royal Ahold announced that it will sell its Polish retail operations to French supermarket chain Carrefour. Terms of the deal were not disclosed.

    Reuters reports on a new study suggesting that people who drink four or more cups of coffee a day may have a lower risk of developing type 2 diabetes than non-coffee drinkers. However, scientists are not exactly recommending that people increase their coffee consumption, citing concerns that coffee also can elevate blood pressure.

    • McDonald’s announced last week that it will be installing Redbox DVD rental kiosks in more of its stores, following a test that began in 2004 and that grew to a presence in some 800 locations, responsible for 15 million DVD rentals – at $1 per night - in just the past 12 months. Redbox kiosks also are located in another 1,000 retail stores around the country.

    • The Chicago Sun-Times reports that in a recent speech, PepsiCo's new North American Chief Executive Officer John Compton said that its Quaker Tropicana Gatorade division has been a pleasant surprise – “it was largely responsible for PepsiCo's 9 percent revenue growth last quarter,” according to the story.

    Gatorade, Compton said, has become one of the company’s crown jewels, showing continued growth for a company that has seen carbonated soft drink sales slow down and that has put a real focus on healthier products.

    KC's View:

    Published on: December 4, 2006

    USA Today reports that “McDonald's, often blamed for childhood obesity, is testing high-tech mini-gyms for kids at seven stores in California, Illinois, Colorado and Oklahoma. The gyms have gizmos for kids ages 4 to 12, from stationary bikes with kid-friendly video screens to hoops courts that electronically cheer players.” If they are successful, the company says it will roll the concept out to a “significant” number of locations.
    KC's View:
    Makes sense to us. After all, it is a lot easier to buy a few jungle jims and stationary bikes than it is to do something really significant, like changing the trans fat-laden oil that the company cooks with every days.

    We wonder how much money Mickey D’s is putting into its janitorial budget – because if kids start exercising after eating all that crap, they’re probably going to be throwing up a lot.

    Hey, wait a minute. If the kids eat the junk food and then throw up….maybe they won’t be so obese.

    Could this be Mickey D’s hidden agenda for solving the nation’s childhood obesity epidemic?

    Published on: December 4, 2006

    The New York Times reports that Hershey Co. will introduce a new limited edition, peanut-butter-and-banana-creme Reese’s cup marketed to commemorate the 30th anniversary of Elvis Presley’s death.

    “Featuring a dashing picture of a young and svelte Elvis on the front of the package, the Reese’s Elvis Cup, as it will be called, will land on store shelves next July, in plenty of time for Elvis Week in August,” the Times reports.

    The candy will come in standard size, mini and, of course, king size.
    KC's View:
    Here’s an idea. Hershey ought to sponsor a contest in which it will give a white, jewel-becrusted jumpsuit to whoever can each the largest number of Elvis candies without throwing up or dying.

    Published on: December 4, 2006

    Last Friday, we referred to a particularly delicious 2004 Lyman Pinot Noir…but we’re embarrassed to admit that when we wrote that, we were having trouble deciphering our own scribble.

    It was a 2004 Lynmar Pinot Noir.

    Sorry about that.
    KC's View:

    Published on: December 4, 2006

    MNB user Mark Heckman wrote us with a great line about all of Wal-Mart’s troubles:

    Wal-Mart is ironically having the same problem that the rest of the retail industry has had for the past decade….competing with Wal-Mart.

    When you’re the leader, when you’re the one setting the bar, that’s almost the inevitable problem.

    But Wal-Mart believes in one of our continuing mantras: Compete is a verb.

    And Wal-Mart believes in action, not just words.

    On another issue, MNB user Joe Cannon wrote:

    In regard to the size of dollar bills for the blind, why not simply have biometric payment scanners everywhere one goes so there is neither a need for the blind or anyone else to worry about the size, nor would cashier registers have to be retro fitted for the new bills. It‘s where we’re headed……….. a cashless society.

    MNB user Jeff Foster chimed in:

    For anybody that wants to replace the $1 dollar bill with coins should take a trip to Canada. They have made the change and when we vacationed there several years ago we found that at the end of the day after several transactions we had a pocket full of coins.

    I guess I would rather have a pocket full of light dollars than a pocket full of heavy coins. At least the paper dollar bills will fit into your wallet.

    And what about the Canadian $2 dollar pieces that have a different type metal center?

    Regarding the trans fat issue, and some companies’ unwillingness to adapt to the new reality, MNB user Matthew Sherman wrote:

    Are there any manufacturers out there who are reading this?! The trans fat situation is still going on today -- after how long?? I would guess that those who come up with these 'brilliant' labeling changes have absolutely zero experience in a manufacturing setting. In order to implement these changes, it takes a tremendous amount of money, time, and paperwork, all at the expense of the manufacturer. Throwing a small symbol on a label is not as easy as it sounds.

    We had a number of emails last week responding to our story about retailers developing places for women shoppers to park their husbands while shopping (preferably parking spaces with big leather chairs, decent magazines and flat screen televisions tuned to ESPN).

    One MNB user wrote:

    In October of this year I needed to purchase a formal dress for an event we were going to. We ended up at Macy's in Christiana, Delaware. Despite that it also happened to be near Homecoming for several local High Schools (and was PACKED with girls looking for that "perfect" dress), the customer service was fabulous.

    One of the most outstanding things though was that while I tried on dresses, he sat on a comfortable couch and watched football games on large flat screen TV's that they had mounted in this area! He loved it and so did I as I didn’t feel I had to rush at all. (And PS- I found a great dress at a fabulous price!) I'll be back to shop there again!

    One MNB user – a female MNB user, as it happens – was unimpressed:

    Poor iddle boysies - do you think it's any more interesting for women hanging around while their men choose clothes? How many of you are sufficiently self-sufficient to go all by yourselves? And how many of you are so manly that you delegate the decision making and wait to see what your woman brings home for you? My heart truly bleeds.

    For the record, we do all our own clothes shopping and would never think about forcing Mrs. Content Guy to go with us or to choose our clothes for us.

    KC's View:

    Published on: December 4, 2006

    In the week’s National Football League action…

    Baltimore 7
    Cincinnati 13

    Arizona 34
    St. Louis 20

    Atlanta 24
    Washington 14

    Detroit 21
    New England 28

    Indianapolis 17
    Tennessee 20

    Kansas City 28
    Cleveland 31

    Minnesota 13
    Chicago 23

    NY Jets 38
    Green Bay 10

    San Diego 24
    Buffalo 21

    San Francisco 10
    New Orleans 34

    Jacksonville 24
    Miami 10

    Houston 23
    Oakland 14

    Dallas 23
    NY Giants 20

    Tampa Bay 3
    Pittsburgh 20

    Seattle 23
    Denver 20
    KC's View: