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    Published on: April 2, 2007

    The New York Times reported over the weekend on something we wrote about here on MNB back in December – the use of cell phones in Japan to provide increased information to consumers.

    Describing cell phones as “the Swiss Army knives of technology,” the Times reports that “in Japan, McDonald’s customers can already point their cell phones at the wrapping on their hamburgers and get nutrition information on their screens. Users there can also point their phones at magazine ads to receive insurance quotes, and board airplanes using their phones rather than paper tickets. And film promoters can send their movie trailers from billboards.”

    MNB wrote about this way back in December: “One of the things we’ve seen while visiting Japan this week is a system that dramatically increases the level of transparency in the store, especially in the produce department. Aeon, the nation’s largest supermarket retailer, uses what is called a ‘QR’ tag on its private label produce items to allow consumers to take a picture of the tag with their cell phones, then instantly connect to the Internet, where the tag is scanned and then the shoppers are given details about where the product comes from…including a picture of and biographical information about the growers. ”

    Noting that American cell phones do not include this kind of technology, the Times describes it this way: “The most promising way to link cell phones with physical objects is a new generation of bar codes: square-shaped mosaics of black and white boxes that can hold much more information than traditional bar codes. The cameras on cell phones scan the codes, and then the codes are translated into videos, music or text on the phone screens.

    “American universities and technology companies have been experimenting with the codes in their labs for several years. Now, as more cell phones come equipped with cameras and the ability to run small computer programs, the codes are beginning to appear on some state drivers’ licenses and on some mailing labels, mostly for commercial use.

    “There are other technologies being developed for consumers to scan objects, including radio waves, computer chips or satellite location systems, but the bar code technology is the most developed — and simple and cheap enough even for individuals to publish them on printed materials or on Web sites.”
    KC's View:
    We are extremely impressed by this technology, and how Aeon uses it to communicate a broad amount of information to consumers. Actually, what the availability of information really communicates to consumers is a) confidence in the product and b) a desire for complete transparency.

    As the use of the technology widens, we believe that it will put some pressure on retailers and manufacturers to stop making choices (some smart, some not so much) about what gets communicated to consumers. Just make everything available…and let consumers decide what is important.

    Published on: April 2, 2007

    The CBC reports that Del Monte Pet Products “is voluntarily recalling some of its dog and cat treats after concluding that one ingredient, wheat gluten from a supplier in China, contained melamine.” The products include Jerky Treats Beef Flavor Dog Snacks, Gravy Train Beef Sticks Dog Snacks, Pounce Meaty Morsels Moist Chicken Flavor Cat Treats, Ol' Roy Beef Flavor Jerky Strips Dog Treats, and Ol' Roy Beef Flavor Snack Stick Dog Treats.

    The move came after Nestlé Purina PetCare said that wheat gluten containing melamine, a chemical used to make plastics and laminates, was provided for the manufacturing of the dog food by the same company that supplied Menu Foods, which also has recalled a broad number of products. It has recalled Alpo Prime Cuts in Gravy wet dog food with specific date codes that was made at one of the company’s 17 manufacturing facilities.

    Meanwhile, the New York Times reports this morning that national concerns about the safety of pet foods has reached the point where these seems t be new interest in homemade meals for pets.

    “According to Nielsen BookScan,” the Times writes, “for the week that ended March 25, after Menu Foods recalled more than 60 million cans of pet food packaged under numerous name brands and store brands, ‘The Good Food Cookbook for Dogs’ sold 194 copies, compared with 42 the previous week. Other books with even more modest sales totals also showed sharp increases over the previous week: ‘Real Food for Dogs’ sold 66 copies, up from 23, for example, and ‘Home-Prepared Dog and Cat Diet’ sold 34, up from 8.”

    And, “Sales of ‘Dr. Pitcairn’s New Complete Guide to Natural Health for Dogs & Cats,’ which is not a cookbook but includes some recipes, climbed to 413, more than twice the number of the week preceding the recall.”
    KC's View:
    Not exactly best-sellers, but wouldn’t it be interesting if supermarkets started selling such books packaged with the ingredients required by the recipes?

    We still think that the long-term implications of this problem will be eroded consumer confidence in the total food supply. This is a reality that American retailers and manufacturers better start acknowledging and dealing with.

    Published on: April 2, 2007

    Wal-Mart announced Friday that the company’s vice chairman, John Menzer, will assume the responsibilities of Chief Administrative Officer, a move that the company said would solidify “his leadership of corporate strategic planning and many company-wide support functions.”

    At the same time, it was announced that Eduardo Castro-Wright, president and CEO of Wal-Mart Stores - U.S.A., who previously reported to Menzer, now will report directly to company CEO Lee Scott. The move puts all three of the company's operating
    divisions -- Wal-Mart, Sam's Club and International -- directly under Scott, who said, “"It makes sense that the company's largest operation reports to the CEO directly.”

    Referring to Menzer’s appointment, Scott said in a statement, “"This will enable John to take a more active role in global procurement, an area of increasing strategic importance which John assumed in January. He will play a critical role in leading our global procurement efforts which are key to improving the customer experience around the world through better merchandise and lower prices. Additionally, John will focus his time and attention on expanding our growing financial services business to benefit the underserved."
    KC's View:
    This was an interesting development, especially because on Friday we reported on a Business Week interview in which Lee Scott seemed to be going to great pains to distance himself from certain decision-making processes at the company.

    Curious. Early in the week, Scott says that he doesn’t care if Wal-Mart ever opens a store in New York City. Company flacks then say that he only meant Manhattan. Then he does an interview in which he says he’s been directed to be less provocative (who tells the CEO of the world’s biggest retailer such things?), and a company flack says that Scott is “just one vote in the process to determine where we put our stores.”

    If the Bentonville Behemoth is trying to confuse us, it’s doing a good job.

    Published on: April 2, 2007

    Interesting story in Business Week about how Starbucks is about to introduce two new drinks this week – a Dulce de Leche Latte and Dulce de Leche Frappuccino, both of which are described as “luxurious taste treats.” More than that, these drinks indicate both “how the Starbucks marketing machine conjures and sells café romance to millions of people around the world” and “how a company…is struggling to hold on to its soul.”

    According to the story, “concocting a drink is never simple at Starbucks. The research-and-development department routinely tackles 70 beverage projects a year, with 8 of them leading to new drinks. A drink must not only appeal to a broad swath of coffee drinkers but also be easy for a barista to make quickly so as to maximize sales per store (hello, Wall Street)…and yet it must seem as though the drink is being handcrafted specially for the customer.”

    It is a tough balancing act, one that can take years of research and development – and it may be more important now than ever since Starbucks seems to be in a kind of public dance in which it tries to balance its desire for growth with the core values that have provided the foundation on which the company has been built.

    At the same time, the Seattle Times offers an interview with Starbucks CEO Jim Donald – a food industry veteran of companies that include Wal-Mart, Safeway and Pathmark – in which he addresses the company’s priorities and values.

    What we found interesting was how much focus Donald puts on maintaining a connection to Starbucks’ associates. For example, at one point he tells the Times how important it is “to retain the heritage and the history of this company, it is work to reach out and connect, to hire, to train, to keep the coffee culture within this company. [Pointing to a pile of letters:] These are personal notes I'm signing for partners [employees] in the U.K. I do this a lot — 33,000 times last year. I sign every note, so they know that it's authentic.”

    And, addressing some of the negative press that Starbucks has gotten lately, Donald says, “Unfortunately, when we get mischaracterized, it's not the truth and we really get mad about it.

    “Now you're right, investors say, ‘What about sales? What about profits? What about margins?’ That's what they want to know. Our customers are just saying, ‘Yeah, I see my latte. I need to get out of here.’

    “Where it really affects this company is, our partners [employees] know the kind of company we are, and any time that we have to defend ourselves, not necessarily publicly but internally, we do, and it takes time.

    “It's OK to be sensitive. It's OK to get a little rumbling in your belly before you get up to talk to 5,000 people. It means you care, you're concerned, you want to do what's right. If you just said, ‘Who cares what they say? It's not the truth,’ that doesn't work, not in a company that's connected to its partners like we are.”
    KC's View:
    Jim Donald has long said that a company’s leadership is only as successful as its front line employees. And we know from some personal experience (our son is a Starbucks barista) that the people who work there feel like assets, not costs and liabilities.

    In the long term, that is the most important element in the company’s long-range prospects for continued growth and prosperity.

    Published on: April 2, 2007

    • In Washington State, The Olympian reports the disbanding of Working Families for Wal-Mart, an advocacy group for the retailer that was, in fact, largely funded by the retailer.

    The organization was launched in 2006, and was designed to counteract the efforts of, a union-backed group. According to a statement, the suspension of the group’s activities came because of its belief that its work was done and that’s motives had been made clear.

    However, Working Families for Wal-Mart did have its share of problems, chief of which was when Andrew Young, the civil rights leader and former mayor of Atlanta, had to step down from the organization’s steering committee when he made statements deemed as ethnically insensitive.

    • There are reports that Wal-Mart has decided to donate $1 million over five years into an entity called the Center for Innovation in Health Care Logistics, which it describes as “dedicated to conducting research aimed at identifying and addressing gaps and roadblocks in the application and delivery of health information technology, and highlighting and replicating proven applications that are working to benefit patients and providers. The goal of the Center's work is to put the right materials in the hands of doctors and nurses where and when they need them; it also aims to eliminate the threat of medical errors arising from wasteful and unreliable practices in health care supply networks.”

    Wal-Mart is partnering with the University of Arkansas and Blue Cross Blue Shield in the effort.

    Wal-Mart vice chairman John Menzer said in a prepared statement that Hurricane Katrina demonstrated the need for improved information accessibility. "The best example of this need was Hurricane Katrina. Medical records, property records, court records were lost. Entire family histories -- medical, cultural and otherwise -- were gone in an instant, and the entire region is still recovering from this massive loss of information.”
    KC's View:

    Published on: April 2, 2007

    • In the UK, the Sunday Telegraph reports that Tesco plans to challenge the premise under which the government’s Competition Commission is examining charges that the nation’s major supermarket retailers may be dominating local markets at the expense of local shoppers. Tesco reportedly will argue that the UK’s grocery market is, in fact, national and not local – and that it is hoping to persuade the commission that its definition of “local” is “fundamentally flawed.”

    • There are reports in the British media that Tesco plans to launch a private label line of quit-smoking products, including gums, inhalers and lozenges, under the “Quit-Aid” name. This comes just weeks after it was revealed that Tesco plans to not sell any tobacco products in the stores it plans to open later this year in Southern California, Arizona and Nevada.
    KC's View:

    Published on: April 2, 2007

    • The Houston Chronicle reports on the opening of the newest and largest Kroger in that market, an 84,000 square foot store that has “organic beers, and its biggest collection of international cheeses” as well as “wider aisles and greater product assortment, including a wide variety of organic fruits and vegetables, an expanded wine section and a kitchen appliance center.” The paper suggests that the store has plenty of competition – including the “regional powerhouse” H-E-B as well as Safeway’s Randalls banner and Wal-Mart Supercenters.

    • The Buffalo News reports that “the waiting game continues for a buyer to emerge for Tops Markets,” the western New York-based chain that is owned by Ahold and that has been on the sales block since November. “There is no single, obvious prospective buyer for the chain. But whatever unfolds will mark a new direction for the chain, which has been owned by Ahold since 1991. Tops is the region’s market share leader, employs thousands of people in its stores, and is a well-known local brand.”

    There have been reports that Golub Corp., which owns Price Chopper, might be interested in the company, though local analysts seem to believe that a private equity firm is most likely to acquire the 72-store chain.
    KC's View:

    Published on: April 2, 2007

    We reported on Friday that Delhaize-owned Food Lion has launched a new series of television commercials – featuring as a theme song a new version of the old Partridge Family hit, “C’mon, Get Happy,” entitled, “Come In, Shop Happy” - to support its roll out of Bloom supermarkets in the Washington, DC, area.

    Our comment was that while we love the Bloom concept, we wondered the Partridge Family was the right note to hit for a modern take on the traditional supermarket.

    We got a number of emails suggesting that we were mistaken.

    MNB user Alexander Ntekim wrote:

    One of the new commercials is already online on the Bloom website. It seems like a really nice and well-developed campaign. Yes it is a little corny, and I understand going with a remake of a song from the 60s' seems like going in the wrong direction, but it's not bad. Plus keep in mind many of Bloom's customers are middle aged, so the commercials may create so loyalty for reminding people of "the good old days". Just a thought.

    MNB user Kimberly M. Brackett wrote:

    I have shopped Bloom while visiting its Seneca S.C. store . The concept of a hip 60's -70's feel appeals to the "girl" in me that loved David Cassidy. The store had an air of groovy -sophistication. The shop happy seems like a great fit.

    And MNB user Martin C. Maenza chimed in:

    If women ages 34 to 50 are part of the demographics that Bloom supermarkets is trying to reach with those commercials, a variation on the Partridge Family’s “Come On, Get Happy” is perfect. Consider: the women would have seen the show either in first run as young girls and teens or via syndication since. As someone who is 42 that song conjures up fond memories of my youth that included pleasant shopping trips in a simpler time. Plus, it is catchy and familiar. They could certainly do worse.

    Okay, okay. Maybe we’re wrong on this.

    It wouldn’t be the first time we’d be accused of not understanding women in the 34-50 demographic…

    We reported last week on a column written by Washington Post columnist Steven Pearlstein in which he was critical of cutbacks being engineered by Giant.

    One MNB user responded:

    As I was having breakfast this AM, I noticed the Washington Post article about Giant and Circuit City and could not wait to hear your comments about Giant.

    I'm not sure there is hope for Giant. When you open a new store, you have plenty of "customer service". I would go back to that store in 3 months and see if it's still adequately staffed. Once the bean counters start cutting the labor, it will be another plain, vanilla Ahold store. At this point Ahold's only advantage is location and possibly convenience. The business model that Izzy Cohen built and nurtured is gone - "Take care of the customer and they will support you". The good news is that there are other places to shop.

    Another MNB user wrote:

    The stores have gone south. Pearlstein has been kind.

    Service is at best spotty. Usually you are faced with people who do not want to work there and have no trouble letting you know this. From my experiences they resent the Stop & Shop mandates.

    Fresh produce selections vary by store. The store closest to my home has a produce section that would make Izzy cry….I go out of my way to shop elsewhere. Small selection, wilted product, bad signage.

    The stores are clean…that’s a plus. But there was a time when their slogan rang true to most shoppers – “That’s my Giant!” I no longer can say these words with affection. Now it’s just a store and I shop there.

    Regarding Publix and some of the criticisms it has received here on MNB - especially about its new pay-for-performance program that includes pay cuts for those who do not make the grade - one MNB user wrote:

    I have now worked for Publix nearly 25 years. I am honored to work with the finest group of retail-focused people on the planet. What really made me think was how my own history with this company has gone. I was promoted up through the ranks to Manager many years ago and was subsequently demoted back to Assistant Manager after a couple of years. It was demoralizing, humiliating, frustrating, embarrassing, and a downright kick in the gut. But I learned a lot from it. I persevered. I grew. I changed. I got promoted back to Manager after a few years and further up the ladder with this company. My outlook on how associates should be handled and treated has changed though that process. Publix is EXTREMELY generous with what they give their associates. I personally believe more associates should have to be put under this kind of scrutiny. If they want the kind of benefits that Publix has to offer, then they should have to prove their 'worthiness'.

    I know how generous Publix is, compared to others, because when I got demoted, I went looking. I checked the normal competition. I checked with suppliers to Publix and other retailers. I went to other retailers other than food retailers. I did a lot of personal investigation. I even went as far as filling out applications with other companies. In the end, I learned that Publix was the best place to be. I, personally, had screwed up a great job. It was up to me to correct my wrongdoings and get myself promoted back to where I wanted to be. I had to show others how good I was and even how good I could be. Complacency has no place in a competitive business environment. You cannot let down your expectations to meet those around you.

    You should expect your associates to reach for the stars and help them to get there (but don't be completely upset when they only get to the moon). Expectations are one thing. Results are another. If your expectations are low, you will only get low results. If they never get off the ground, then they deserve whatever consequences are given. In the real world, those companies that never get off the ground get run over and go out of business. Why should any person expect any business to give them a free ride? Free rides should not be part of the program.

    We waxed rhapsodic in “OffBeat” about our new Apple TV and iPod Shuffle, which prompted one MNB user to write:

    Just another great installment!!!

    I bought an iPod Nano just last week and got it working in about 10 minutes without the aid of a teenager, I with the same could have been said for my Kodak DVD recorder.

    First I had to justify purchasing such a young trendy item by a middle-aged man but I do love it. It was partly by your glowing endorsement, partly a desire never to grow old but thanks for the shove.


    One of the great things about Apple is that it offers technology for everybody, no matter how old or un-trendy one happens to be.

    Regarding Wal-Mart and its seemingly shifting priorities, one MNB user wrote:

    One of our sister companies sells private label to Wal-Mart, and up 'till a year or so ago they had a laser-focus on "can I sell this for $1.97?" All of a sudden, we got "develop something new and unique and we'll worry about cost later." I sold my Wal-Mart stock that day.

    After reading Friday's excepts (on MNB), I'm buying again.

    On another regular subject here on MNB, one MNB user offered:

    My economic analysis on loyalty cards: I don't think they are used for the purpose of offering discounts to regular customers, I think they are primarily used to not give discounts (weekly sale prices, gas discounts etc.) to a small but not insignificant number of customers who for one reason or another do not use loyalty cards. Examples might be a homeless person, a mentally challenged person, Donald Trump or Paris Hilton.

    Why give a discount to 100% of your customers when 20% of them will buy without a discount. At the end of the day/week/year the money's got to be there for the retailer or manufacturer to stay in business. Those who do not use loyalty cards (or clip cents off coupons) really subsidize those who do. A similar economic model is at work in the auto retailing industry.

    Finally, we quoted a piece from the Los Angeles Times on Friday about how there are calls fro more extensive labeling on wine bottles. Those who object to changes argue as follows:

    “It might be disenchanting if the label also listed the chicken, fish, milk and wheat products that are often used to process wine. And it would be hard to maintain the notion that wine is an ethereal elixir if, before uncorking, consumers read that their Pinot Noir or Syrah contained Mega Purple (a brand of concentrated wine color), oak chips or such additives as oak gall nuts, grape juice concentrate, tartaric acid, citric acid, dissolved oxygen, copper and water. The mention of bentonite, ammonium phosphate and the wide variety of active enzymes used to make some wines would end the romance.”

    Which led MNB user Geoff Harper to write:

    Just wondered whether "Bentonite" is what Wal-Mart uses to weaken the competition…

    The secret is out.

    Red bentonite gets the competition to behave in bizarre ways, like raising prices.

    Gold bentonite robs the competition of all their marketing savvy.

    Blue bentonite only affects companies competing with Sam’s Club, while white bentonite only affects supermarkets competing on food prices.

    And green bentonite, the most common kind, just kills the competition. Slowly. Painfully. And finally.
    KC's View:

    Published on: April 2, 2007

    In the first game of the 2007 Major League Baseball season, the New York Mets defeated the World Champion St. Louis Cardinals 6-1.

    And in the Final Four weekend NCAA college basketball tournament, Ohio State defeated Georgetown 67-60, while Florida beat UCLA 76-66. The title game takes place tonight.
    KC's View: