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    Published on: April 3, 2007

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    KC's View:

    Published on: April 3, 2007

    The Boston Globe reports this morning that the US Food and Drug Administration (FDA) is continuing to investigate whether the tainted wheat gluten found to have made its way into pet food has also gotten into human food. "To date, we have nothing that indicates it's gone into human food," Dorothy Miller, director of the FDA's Office of Emergency Operations, tells the Globe. “We have a bit more investigation to do.”

    According to the report, the wheat gluten that was contaminated with melamine, a toxic chemical found in pesticides and plastics, was shipped to the US from China late in 2006 and early in 2007, and in some cases went to some factories that make human food as well as pet food.

    To this point, almost 100 different brands of wet and dry pet food have been recalled, and FDA continues to warn that there could be additional recalls. The FDA has confirmed that some 14 pets have died as a result of consuming contaminated pet food, though there are unconfirmed reports that far more have died or gotten sick.
    KC's View:
    This just has the feel of a story that isn’t going to go away for a while…that the FDA will probably clear the human food factories of having any problem, and then another problem will crop up, and the cycle will begin all over again.

    It seems to us that the real problem isn’t the specifics, but rather the broader implications and suspicions that are aroused by the pet food problem.

    We also think we’re going to start seeing a number of companies introducing gluten-free products that will at least implicitly appeal to people concerned about the safety of the food supply. Ironically, we saw a press release from the Hain Celestial Group about its new multi-brand Gluten Free Product Initiative with more than 100 products spanning a number of brands made by the company.

    Now, there’s no question that this initiative was under way well before the current wheat gluten crisis, so it’s not like Hain is being opportunistic. But certainly the timing is favorable, and it seems likely that the woods will be full of wheat gluten initiatives of one sort or another.

    Published on: April 3, 2007

    The Financial Times reports Tesco goes to court today in California to fight a legal challenge that would stop construction of its distribution and food processing center in Riverside County, a delay that the retailer says could cost it more than $50 million.

    The court challenge calls for a 13-week delay in construction until a hearing can be held in June; it has been filed by Health First, a group that says it is concerned about air quality in the region. However, there has been speculation and accusations that Health First is simply a beard for union organizers looking to slow Tesco down because it has not committed to hiring a unionized workforce. Health First is unknown to California environmental activists, and reportedly has refused to provide documentation about who or what is providing its funding.

    In fact, FT notes that a leading and legitimate local environmental group is backing the Tesco building project.
    KC's View:
    If indeed Health First is just a way for the union to slow down Tesco under the guise of other priorities, then the courts ought to toss the case fast and let Tesco get to work.

    If the United Food and Commercial Workers (UFCW) – which has said that it will do everything it can to stop Tesco’s expansion in Southern California, Arizona and Nevada – is resorting to subterfuge to get its way, then it is behaving without honor and honesty.

    Then again, what else is new? As time goes on, it becomes increasingly clear that union organizers are far more interested in their own power and influence than in the well being of their members. Otherwise, they’d simply wait to see how much Tesco is paying its employees and what level of benefits it is offering…and then make a decision whether to try to organize the retailer’s workers.

    Published on: April 3, 2007

    Business Week reports that the US Food and Drug Administration (FDA) is expected to delay by 30 days its final ruling on whether food from cloned animals and their offspring is suitable for human consumption. FDA is extending the public comment period that followed the government’s preliminary assessment that such food is, in fact, safe to eat.

    According to Business Week, “The FDA declined to confirm or give any explanation for the extension, but the provision for additional time comes amid a broad public outcry against the agency's plans to make the U.S. the first country in the world to allow milk, meat, and other products from cloned animals into the general food supply. Nearly 4,000 comments have been made on the FDA's Web site. Many of them are from individuals who object to the agency's preliminary plans on the grounds of ethics, safety, or morality.”
    KC's View:
    It strikes us that if one has a moral or ethical objection to consuming food from cloned animals, one can satisfy those beliefs simply by not buying, eating or drinking such products.

    FDA only ought to be making its determination based on science.

    Now, having said that, FDA ought to reverse itself on one point – it ought to require that cloned food be labeled as such. That way, people can make informed and personal decisions.

    Published on: April 3, 2007

    In Australia, press reports say that Coles Group – the nation’s second-largest retailer – has received a takeover offer that is the equivalent of $16 billion (US) from Wesfarmers, Australia's biggest home-improvement retailer, and a consortium of buyout firms. The bid reportedly is eight percent higher than an offer from a consortium led by Kohlberg Kravis Roberts (KKR) that was made and rejected by Coles last October.

    Bloomberg reports that “buying Coles would give Perth-based Wesfarmers and the buyout firms 2,999 supermarkets, discount stores and office supply outlets in an economy in its 16th year of expansion.” If the offer is accepted, “Wesfarmers will keep the Target and Officeworks chains. Coles' supermarkets, liquor stores, Kmart outlets and gasoline stations will be spun off to a venture half-owned by Wesfarmers and the rest owned by the buyout firms.”
    KC's View:
    There has been speculation that retailers such as Wal-Mart and Tesco might be tempted to make a bid for Coles. At this point, it may be a case of raise or fold.

    Published on: April 3, 2007

    Wild Oats, the nation’s second largest natural and organic supermarket chain – soon to be absorbed into Whole Foods, the nation’s largest natural and organic supermarket chain – announced this week that it “is encouraging consumers to make environmentally friendly green shopping resolutions to celebrate Earth Day 2007. By making small changes in shopping habits, consumers can make trips to the grocery store more environmentally friendly, ultimately protecting the health of the planet for future generations. In honor of Earth Month, Wild Oats is offering tips on how to shop green on Earth Day and every day including reusing and recycling more, buying organic, cleaning with environmentally friendly products, buying in bulk and more.”

    Among the tips advocated by Wild Oats – reuse shopping bags whenever possible, choose organic rather than synthetic products, and buy local products whenever possible.

    According to a statement released by the company, “Wild Oats is committed to providing consumers with products and education that support not only a healthy body, but also a healthy environment. This April, Wild Oats Markets is posting shelf-talkers in all stores to help customers identify eco-friendly items and educate them on making environmentally conscious changes today for a better tomorrow.”
    KC's View:

    Published on: April 3, 2007

    The Contra Costa Times reports that “with better wine varieties now available in boxes, wineries are attempting to give the category a new identity far from the rowdy boating trips and drunken fraternity parties that gave box vino its cheap, low-quality image.

    “The effort seems to be slowly paying off. Box wine is now the fastest growing wine category. According to data from AC Nielsen, three liter box wine volume grew 44 percent in the past year, compared to a three percent gain in overall table wine volume.”
    KC's View:
    That sound you hear is the Content Guy crying.

    First the world switches to screw tops, now boxed wine grows faster than any other kind.

    It’s like a slippery slope greased with merlot.

    Published on: April 3, 2007

    • It is expected that Wal-Mart will finalize its agreement with India’s Bharti Enterprises later this month, creating the joint venture in which Bharti will invest $2.5 billion (US) over the next eight years. Wal-Mart reportedly has signed on to provide the back-end operational expertise for the new chain of stores.
    KC's View:

    Published on: April 3, 2007

    • The Chicago Tribune reports that areas of the city underserved by the supermarket industry are, contrary to conventional wisdom, not necessarily poor – and that in these neighborhoods, grocery deliveries by Ahold-owned Peapod are increasing three times faster than elsewhere in the city.
    KC's View:

    Published on: April 3, 2007

    • Family Dollar Stores appointed Wook Lee, the former global vice president of production service at Target, to be its senior vice president of global sourcing, a new position.
    KC's View:

    Published on: April 3, 2007

    We wrote yesterday about the use of cell phones in Japan to provide increased information to consumers – reported on by the New York Times this week, and actually by MNB 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. ”

    We suggested that the availability of this much information really communicates to consumers is a) confidence in the product and b) a desire for complete transparency, and it will put pressure on the food industry to simply make all information available to shoppers.

    MNB user Glen Terbeek observed:

    Clearly, the shopper is quickly getting the information advantage/control in the consumer products "demand" chain. First, through the Internet, and now the cell phone technology mentioned in this article. And there will be more technology breakthroughs in the future.

    One of the biggest wastes in the industry is the money spent over and over again creating "moments of desire" that go unfulfilled because of the gaps in time and location before the shopper can satisfy that desire created. Shoppers often forget that Desire as a result. Remember, "Moments of Desire" are created in many places and times, not just during the shopping trip to the store. So imagine reading a magazine/newspaper ad anywhere, anytime; and then capturing the products of interest using the technology of the day. And then having the items fulfilled by an agent of the advertiser, when the shopper requests their next delivery or for pick up at a convenient location. That agent could be the current retailers, Amazon, or maybe the new Tesco format. Creating the "Moments of Desire", and then instantly "capturing that Desire".

    There is no doubt that putting more information control in the hands of the shopper will change the business model of the industry to be much more efficient and effective for the shopper as well as everyone else in the process; what a marketer's dream. It most certainly will redefine the current rolls of the players in the industry and the current economics. Remember, "Those that make information work for the consumer first, will be successful". Accordingly, the industry needs to start focusing on the demand chain, starting with the shoppers.

    Shoppers are, of course, the most important link in the supply chain. Not that you’d always know it from the way some companies behave.

    We keep arguing that loyalty marketing is badly used by most food retailers because they see it as a way of delivering coupons and discounts, rather than as a way of creating a new kind of relationship with the shopper.

    To which MNB user Geoff Harper responded:

    I agree that it is no surprise that most loyalty programs do not work (because they are not executed well) but there are examples of loyalty programs that work very well. Among them are Lees Supermarket in Westport, MA, Green Hills Farms in Syracuse, NY and, based on your own comments....Tesco.


    What most companies do not realize is that the most effective kind of loyalty marketing program is one that consistently demonstrates that the retailer is loyal to the consumer. Which requires a fundamental rethinking of how retailers approach the definition of loyalty.
    KC's View:

    Published on: April 3, 2007

    The Florida Gators defeated the Ohio State Buckeyes 84-75 to win the NCAA men’s basketball national championship for the second year in a row.
    KC's View: