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    Published on: March 7, 2007

    The Financial Times reports that organized efforts to slow or halt Tesco’s development plans in the US could, if successful, cost the British retailer as much as $50 million (US).

    The efforts appear to be the work of the United Food and Commercial Workers (UFCW), which objects to the possibility that Tesco’s planned stores in Southern California, Arizona and Nevada may not be unionized.

    An organization called Health First, which purportedly represents local residents concerned about air quality, has filed two different lawsuits seeking a restraining order that would not only halt Tesco’s work on a distribution center in Riverside, California, but could even force it to undo work already completed. The first request for an injunction was denied, but the second has not yet been ruled upon.

    However, as FT writes, Health First “is not known to other local environmentalists and is believed to have been established with the sole purpose of challenging the Tesco project. Tesco has requested information on Health First from its lawyers, Johnson & Sedlack, but has told the court it had received in reply ‘blanket objections and refusals to provide information or documents’.”

    Such an approach would not be out of character for the UFCW. MNB reported earlier this week that the union was distributing leaflets in Arizona trying to rally community support for a court ruling that would prevent Tesco from selling alcohol in its stores there, but the leaflets made no mention of the UFCW’s involvement. Mike Vespoli, a spokesman for United Food and Commercial Workers Union Local 99.” Vespoli says that it is the UFCW’s intention “to challenge (Tesco) every step of the way."

    Tesco reportedly has secured leases for more than 70 Fresh & Easy Neighborhood Markets, which it plans to start opening during the second half of the year.
    KC's View:
    This is such a crock.

    The UFCW should wait for the stores to open, find out what the employees are being paid, and then – if wages and benefits are deemed unsuitable – try to organize Tesco’s employees. And the environment should be such that there is no coercion on either side – just a fair vote on the issue. (Fat chance, eh?)

    But trying to stop the company now, before any of the store employees are hired or on the payroll, just seems a little premature.

    We do think that what appears to be UFCW deception is completely over the line. Health First? Don’t think so. The UFCW puts its own political future first, before even the needs and interests of the working class.

    (Excellent work, by the way, by the Financial Times, which has been all over the Tesco story.)

    Published on: March 7, 2007

    A report in the German media says that Lidl – the 5,000+ store discount supermarket chain that is a direct competitor to Aldi – is considering making a move into the United States.

    No time frame was given for such an incursion, though company executives said that it could take place in the “medium term.”
    KC's View:
    Y’know, just once we’d like to write one of these international expansion stories and have it be about a major US supermarket company – other than Wal-Mart – bringing its brand of retailing to the global community.

    Instead, it always seems to be about foreign companies coming here to open stores, or acquire chains. We have no problem with that – it is, after all, a flat world that encourages investment back and forth – but it says something negative about US ingenuity that all the investment seems to be one way.

    And, by the way, we didn’t make a big deal of it yesterday, but…if and when Pathmark is swallowed up by A&P, that will make for one more US chain that is owned by a foreign company (Tengelmann of Germany).

    Published on: March 7, 2007

    Good piece in Advertising Age about the success of Dove’s “Real Beauty” campaign, which has been inextricably linked with the strengths of the Internet as a marketing tool.

    The success of the campaign has been undeniable. “The ‘Real Beauty’ campaign, now in its fourth year for Unilever's flagship brand, celebrates actual women of all shapes, sizes, ages and colors,” Ad Age writes. “Although it derives from Dove's historic positioning around authenticity, this spin has been credited with boosting Dove sales and share in every country in which it's been launched.” The campaign hasn’t just been a commercial success, but also has made a political point – creating conversation and even debate in many of the places where it has appeared.

    Several lessons have been learned through the Dove campaign, according to Ad Age:

    1. Globalization works… “The ‘Real Beauty’ concept originated in Ogilvy's Dusseldorf office, then rapidly made its way to London. A London newspaper article trumpeted an underlying truth about the effort: It wasn't advertising; it was politics. This was no surprise to Dove's global brand director, Silvia Lagnado. Wanting to push the $2 billion brand further, she had commissioned the research showing that only 2% of women worldwide considered themselves beautiful. The team knew from the start its concept was politically charged, and was able to test it and refine it as they took it around the world.”

    2. Good ideas can provide their own momentum… “Continual innovation is central to effective marketing. Almost as soon as the campaign entered the U.S., the agency incorporated new-media elements such as real-time voting on cellphones and tabulation display via giant billboards. So powerful was the public relations effort that paid media was light…”

    3. Companies have to be willing to embrace a dialogue… One of the most important things that companies must do in creating such campaigns is allow dialogue among users of the product to flower…and bed willing to take a position, even at the risk of offending some quarters. There is such a thing as the intelligent loss of business, and a campaign that ignites passions on both sides of a debate also can ignite sales.
    KC's View:
    Dove, of course, had one other thing on its side – it was on the side of the angels in this debate, arguing that all women are beautiful, regardless of how they look. When you come down to it, that’s a pretty safe argument…but Dove made it in unusual and even provocative ways.

    Last month, we were walking down a street in Munich and came upon what must have been a four-story-high banner for Dove featuring a near-naked woman (with all the really personal bits strategically covered) who must have been in her mid-sixties. At first, to be honest, we were startled and wondered if we really needed to see this. But then, after a moment, we had to concede the point – she was beautiful, and it didn’t matter how old she was.

    Published on: March 7, 2007

    A new survey by Elle magazine and MSNBC suggests that some stereotypes about the inability of women to be leaders remain a real factor in 21st century America.

    “While more than half our 60,000 respondents said a person's sex makes no difference to leadership abilities, most who expressed a preference said men are more likely to be effective leaders,” MSNBC writes. “Of male respondents, 41 percent said men are more likely to be good leaders, and 33 percent of women agreed. And three out of four women who expressed a preference said they would rather work for a man than a woman.”

    The survey found that about 33 percent of men and women would rather work for a man, while about 13 percent would prefer working for a woman, with the remainder saying they had no preference.

    And, MSNBC writes, “When asked who would be more likely to lead effectively, males were preferred by more than a 2-1 margin by both men and women — even though women got high marks for being problem solvers and providing more supportive work environments.”

    Other interesting results:

    • “71 percent of female bosses saying they have to work harder and be smarter than men to achieve the same level of success.”

    • Younger workers 18 to 29 appeared to have a higher preference for female chiefs than those 30 and up, possibly pointing to a generational change.

    Asked to use words to describe women, respondents chose adjectives like "moody," "bitchy," "gossipy" and "emotional." The most popular term for woman, used 347 times, was "catty."

    And, MSNBC writes, “Women are stuck between a rock and a hard place, trying to be ambitious without overdoing it. According to our study, women don’t want to come off too confident and aggressive for fear of being labeled bitchy. But they also don’t want to be wishy-washy or risk being called indecisive or emotional.”
    KC's View:
    We can only hope that by the time our 12-year-old daughter enters the workforce, some of these continuing prejudices will have faded away. Though, as we think about it, biases like these never fade away. We all have to make a concerted effort to put them away.

    To be frank, the most indecisive and wishy-washy people we’ve ever worked for have been men, and the most driven and hardest-working have generally been women. (And we’re not even counting the boss known around the office as Mrs. Content Guy.)

    It’s interesting to see these survey results in the context of business and society in general. After all, there continue to be gender discrimination lawsuits against at least one major retailer in this country, as well as charges that senior executives existed in an old boy’s club atmosphere that sometimes had sales meetings in questionable venues.

    But we also for the first time have a woman with a real shot at becoming a major party candidate for the US presidency and even gaining the White House. (Like her or not.) And some of the best and the brightest companies out there have a woman at the helm, and their number is likely to grow.

    Which is only to say that the world isn’t perfect. But we all have a responsibility to make it more so.

    Published on: March 7, 2007

    Good piece in the New York Times this morning about how, “in a twist of science, the law and what some call trans-fat hysteria,” bakers in some parts of the country “are being forced to substitute processed fats like palm oil and margarine for good old-fashioned butter because of the small amounts of natural trans fat butter contains.

    “Some researchers believe that the trans fat that occurs naturally in butter, meat, milk and cheese might actually be healthy. But to satisfy companies that want to call their foods completely free of trans fats,” these bakers are switching to ingredients like trans fat-free margarine.

    The Times writes: “The focus on removing trans fat has centered on the kind created by partial hydrogenation, which turns liquid oil into a solid fat like shortening that adds creaminess and shelf life to commercial baked goods and, for home cooks, makes a flaky pie crust. Trans fat is also created when certain inexpensive and sturdy oils are heated in deep-fat fryers.

    “But Americans eat far more artificial trans fat than natural trans fat, which is found in small amounts in butter and meat…But to the Food and Drug Administration, which is in charge of most packaged food labeling, there is no difference between the trans fat that occurs in cows and other ruminant animals and the kind that is artificially created and favored in large-scale food manufacturing. An F.D.A. rule that took effect in 2006 states that if a product has a half a gram or more of trans fat per serving, the amount has to go on the food label and the food can’t be called trans fat-free, even if butter is the only fat.”
    KC's View:
    See, this is something that we didn’t really know…we’d sort of heard it in the background, but it didn’t register.

    It sounds reasonable to us that if trans fats are going to be listed on the label, it ought to distinguish between natural and artificial trans fats. But maybe that is too nuanced for the government to grapple with.

    Published on: March 7, 2007

    • Wal-Mart announced yesterday that it will provide free shipping on products ordered from its online site, providing that customers have them shipped to a local Wal-Mart and then pick them up there.

    According to a CNN story, “The company said products bought on typically arrive at the store within seven to 10 business days and customers will be alerted about the delivery via e-mail.” The service is available at about 750 stores around the country, and Wal-Mart wants to have it in more than 3,000 stores by the end of summer.
    KC's View:
    We think that this is basically a good idea, because free shipping – or at least the perception of free shipping, as in the “Amazon Prime” program – eventually becomes a prerequisite when consumers make decisions. But seven to 10 days for delivery? That strikes us as old-world time…not the kind of Internet time that people increasingly work on.

    Published on: March 7, 2007

    • The Wall Street Journal reports this morning that the states of Connecticut and Maryland are looking to close a tax loophole popular with retailers such as Wal-Mart.

    The loophole allowed retailers to deduct from their taxes rent payments made to so-called captive real-estate investment trusts.

    Connecticut Attorney General Richard Blumenthal tells the Journal that his office is investigating the practice.

    "It is our policy to comply with all the laws in every state in which Wal-Mart does business and these are lawful structures," John Simley, a Wal-Mart spokesman, tell the Journal. "Even without the tax benefits, there are compelling reasons to use this type of structure creating a separate vehicle solely to manage real estate and administer capital requirements."

    • The Wall Street Journal reports on Wal-Mart’s practice of having executives and other employees designate Value Producing Items (VPIs), for the sole purpose of focusing marketing and merchandising attention on specific products in such a way that drives sales.

    One example: “In late 2005, Unilever made a special pitch for its environmentally friendly All Small & Mighty laundry detergent to Wal-Mart Stores Inc. Chief Executive Lee Scott.

    “Mr. Scott, who had pledged to make Wal-Mart a green company, was so impressed he designated the product one of his personal VPIs for 2006, and from then on did everything he could to sell the detergent. He touted it in a TV interview with Charlie Rose and urged Wal-Mart employees to give it prominent display in stores.

    “The detergent rang up $100 million in U.S. sales last year, its first full year on the market. And Unilever executives estimate that Mr. Scott was responsible for 15% to 20% of that. "’t was our most successful new-item launch’ of 2006, Unilever Vice President Joe Cavaliere says.
    KC's View:
    This is a good piece, and you should check out the Journal this morning to read the whole thing.

    The central lesson is this one: retailers that actually try to sell stuff, as opposed to just putting them on the shelves and collecting slotting allowances, can move the needle in terms of sales and profits.

    Published on: March 7, 2007

    • Both CNN and the Wall Street Journal report that federal investigators are looking into allegations that counterfeit rare wines have been sold by some of the world’s top auction houses, such as Christie's in London and Zachys in New York.

    While the auction houses say that they did everything possible to assure the wines’ authenticity, the Journal notes that if their involvement is proven it could result in prosecution under federal fraud statutes.

    USA Today reports that “the U.S. Department of Agriculture is telling farmers not to plant a popular long-grain rice variety after the discovery of unapproved genetically engineered traits in what's supposed to be conventional rice…The unapproved rice was discovered during routine testing of the non-genetically engineered rice, called Clearfield CL131. Trademarked by Germany's BASF, the seed is licensed by Horizon Ag of Memphis. The companies notified USDA of the test results last week.”
    KC's View:

    Published on: March 7, 2007

    • The Grocery Manufacturers/Food Products Association (GMA/FPA) announced that Emily S. Beizer has been named Vice President of International Affairs for the organization. Most recently Beizer served as Senior Policy Advisor, Government and Global Trade for Mayer, Brown, Rowe & Maw LLP, and previously was Legislative Director/Deputy Chief of Staff to GMA/FPA president/CEO Cal Dooley when he served in the US Congress.
    KC's View:

    Published on: March 7, 2007

    • Hong Kong-based Dairy Farm Ltd. reported that its total 2006 sales were up 8.5 percent to the equivalent of $6 billion (US), and that underlying profit for the year was up 11 percent to $211 million (US).
    KC's View:

    Published on: March 7, 2007

    Ernest Gallo, who with his brother created the winery that even to this day sells one out of every four bottles of wine in America (according to a New York Times obit this morning), died yesterday at age 97.
    KC's View:

    Published on: March 7, 2007

    Regarding the A&P acquisition of Pathmark, one MNB user wrote:

    With all your comments about the struggles of both A&P and Pathmark to deliver meaningful offering to their respective customers, I can't believe you missed the softball Christian Haub lobbed in to you in yesterday's press release - his comment that A&P was committed to "retention of the Pathmark banner, format, customer appeal and sales productivity" - isn't that how Pathmark got into this mess in the first place?

    Well put.

    And another MNB user wrote:

    I do not do business or real estate valuations, but is Pathmark really worth nearly $10M per store? Like you suggest, there is more to this.

    And, continued discussion of the value of free Wi-Fi, and whether Starbucks should offer it…

    MNB user Phil Censky wrote:

    As someone who has taken Internet access for granted since high school, I firmly believe subscription-based Wi-Fi is an anachronism. Consider the alternatives: free wireless at places like Panera, cellular Internet cards (from Sprint, Cingular…), Smart Phones and city-wide wireless projects. If Internet access is a high priority, Starbucks will probably be avoided. Not only does it cost money, but it takes more time to finally get connected. On business trips, I always keep my eyes out for “free wireless” signs because that’s where I’ll head for breakfast/lunch, which means I avoid Starbucks (though I’d really like a quadruple Venti nonfat hazelnut mocha). I love Starbucks beverages and I don’t flinch at paying over $4 for my beverage of choice, but Starbuck’s isn’t my 3rd place anymore because of the wireless issue. I’m a 26 year old professional. I have to imagine my demographic is pretty important to Starbucks. Consider this: according to Harris Interactive, about 50% of college students own a laptop computer. If you want these consumers, you’d better have free wireless.

    Airports, restaurants and hotels take note: a new generation of (relatively) savvy consumers expects free internet access and will patronize those who offer it.

    That, and an ample number of plugs so we can all charge our computers and cell phones.

    Another MNB user wrote:

    Here's my disclaimer - I actually work one day a week at a Starbucks store.

    About Wi-Fi: Starbucks has actually had many internal discussions with their staff about this, because they realize that customers are asking for it. They have calculated that it actually costs the stores money on these customers that sit for hours, and it takes away from other customers' experiences. Therefore they have decided it is not a good business move to offer free Wi-Fi. It reminds me of the discussion awhile ago about having the guts to say no to unprofitable customers.

    About the brand dilution: "store within a store" Starbucks are actually licensed, but all free standing stores are company owned. I have had many of the same sub-standard experiences in airport and grocery store stores - mediocre service, lower quality drinks, etc. I also see customers come in to our store and complain about the non-corporate stores. Starbucks has not sufficiently addressed this issue, and it is something many people that work in the corporate stores have been complaining about for years.

    We were saying nice things yesterday about universities with food industry education programs, but one MNB user disagreed with our conclusions…

    It is has been my observation that the benefit to organizations from hiring out of schools…is actually fairly limited. Many new hires come out of these programs thinking they're already experts and therefore don't need the necessary experiences prior to becoming a manager. It may very well be generational but the unwillingness to work their way up is often time frustrating and appalling.

    We can see where that could be a problem.

    But we’ve also heard of situations where people come out of college and want to work for retailers…but then they find out that the retail expects them to follow the same career path as a high school graduate…which doesn’t seem to make sense.

    There has to be a happy medium. Seems to us that it is up to retailers to find ways to engage these students, catering to their strengths and interests in a way that benefits the organization.

    And by the way, almost everybody who graduates from college thinks he or she is an expert. It usually takes a dose of reality and a decent sized failure to wean them off that illusion. But that’s okay…it’s called continuing education.
    KC's View: