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    Published on: April 18, 2007

    Months before it opens the doors of its first Fresh & Easy Neighborhood Market stores in the United States, Tesco is using a website to permit consumers to get a peek at its philosophy and culture.

    In essence, Tesco is telling future and potential shoppers that it will be focused on healthy, high-quality fresh and pre-prepared foods with a big emphasis on private label…that it intends to be an environment-minded good neighbor with a local focus despite its British lineage…and that it will be a great place to work (with the subtext being that union membership won’t be required for employees to be paid well and have room for advancement).

    At the same time, CEO Sir Terry Leahy has described himself as “increasingly encouraged” about prospects for success in the US, enough so that the company has decided to triple its start-up investment to $130 million (US). "We are expanding quickly so we are going to be opening up and having the carrying costs of quite a lot of stores as we get going," Leahy said in a conference call.

    Some expectations are that Tesco could open as many as 300 stores within a year. Southern California, Arizona and Nevada have been tagged as the initial markets, but that doesn’t mean Tesco hasn’t identified sites in other locations as well.

    Leahy also said in the conference call that the company’s commitment to environmental issues would serve it well, especially in California, noting that “it's well timed as California reassesses its consumption in the light of climate change and people in the United States are looking are looking for an alternative to big box retailers.”

    Talking about the new website, Fresh & Easy Neighborhood Market CEO Tim Mason said in a prepared statement, "As we prepare to open stores in neighborhoods throughout the West, we are excited to provide consumers with a tool to learn more about Fresh & Easy Neighborhood Market and the opportunities that will be coming into their communities later this year.”

    However, specific locations and opening dates are not posted on the site, suggesting that Tesco has not quite given up on its penchant for well-timed secrecy.

    Among the statements made on the site:

    • “We're here to create value for our customers and earn their lifetime loyalty.”

    • “We believe in treating people the way we'd like to be treated: that's why nobody tries harder than we do for our customers.”

    • “We think that high-quality food should be accessible and affordable in every neighborhood….Smaller than the usual supermarket, our 10,000 sq ft shops will be easily accessible and offer everything from everyday staples to gourmet items. Lots of fresh and delicious food choices, including pre-prepared and organic foods, will make healthy eating convenient and affordable. In particular, our own fresh&easyTM line of products will have no added trans fat and no artificial colors or flavors. The simple packaging and labels on our private brand will help you see exactly what you’re bringing home - real food you can trust.

    • “We're a neighborhood market, so it only makes sense that we care about our neighbors and our environment…From solar panels to recycling to specially engineered refrigeration systems, we're doing everything we can to reduce emissions, use energy efficiently, and be environmentally responsible in all our facilities and operations. For example in our stores we’re using LED lighting wherever possible and implementing modified freezers and refrigerators that will cut energy use, and at our distribution center we'll have the largest solar panel roof installation in California. In addition, we'll continually work to reduce, reuse and recycle our display and transit packaging…

    “That's why we'll be keeping our stores, parking lots, and backyards clean and tidy, and our deliveries will be scheduled to minimize noise and disruption. We'll also be recruiting our staff from the local area and providing each of our stores with a budget for local product donations. Because good neighbors look after each other.”

    • “People who are valued are better able to value other people, so creating a rewarding workplace is very important to us.

    “We think that growth opportunities, flexibility, rewards, and treating people with respect are key to a positive workplace. We use a team-based approach, offer good salaries and benefits, and work together to create a friendly, positive environment. We provide quality training and are an equal opportunity employer.

    “We're looking for people who can work well in a team and understand that it's important to offer the friendliest shopping experience along with the freshest foods.”
    KC's View:
    It probably just a coincidence that this site has gone live even as Southern California’s three major chains – Albertsons, Ralphs and Vons – are still trying to negotiate a new contract with the United Food and Commercial Workers (UFCW).

    And it probably is just a coincidence that the site appears as the increasingly unscrupulous UFCW tries to accuse Tesco of intentionally selling alcohol to minors in its efforts to slow down whatever momentum the British retailer may have.


    Could it also be a coincidence that for the first time in some 15 years, currency exchange rates that gotten to the point where one British pound is equal to two American dollars?

    Perhaps not. After all, we did report earlier this week that Leahy has been named the UK’s most influential non-elected person…

    Published on: April 18, 2007

    Kmart, which probably has gotten used to Wal-Mart’s leftovers, announced that it has hired as its advertising agency Draft FCB, the same company that was dismissed by Wal-Mart just two months after in landed the account.

    Draft FCB was dismissed by Wal-Mart as part of the scandal connected to what was described as inappropriate romantic behavior between two of its marketing executives, Julie Roehm and Sean Womack, as well as the unacceptable acceptance of gifts from the agency by Roehm, which suggested that it may have had an unfair advantage. In making the charges against Roehm, Wal-Mart dismissed Draft FCB and immediately put the account up for review, and did not allow that agency to participate.

    Ironically, Wal-Mart ended up hiring the Martin Agency of Richmond, Virginia, to replace Draft FCB. Both Martin and Draft FCB are part of the part of the Interpublic Group of Companies.

    In hiring Draft FCB, Kmart dismissed Grey Worldwide as its agency, despite the fact that Grey was “finishing its work on a major brand-image campaign for Kmart that is scheduled to begin appearing next month.” Grey has been Kmart’s agency since 2003, and Kmart reportedly plans to launch that campaign on schedule despite the change in agencies.

    It hardly is a wash for Draft FCB. Wal-Mart’s business was worth about $580 million a year, while Kmart’s is worth just a paltry $200 million.
    KC's View:
    We wonder if Draft FCB romanced Kmart with the same alacrity – drinks, dinner, etc… - with which it allegedly pursued Julie Roehm?

    Published on: April 18, 2007

    Fortune magazine reports that while there has been enormous attention paid to Wal-Mart’s surveillance capabilities in recent weeks, it ends up that it managed to obtain what it believes to be incriminating romantic emails between two of its now-fired executives the old fashioned ways – it got them from the male executive’s estranged wife.

    However, Fortune also says that Wal-Mart promised Shelley Womack, wife of marketing executive Sean Womack, that the emails would never be made public. The attorneys for Julie Roehm – Womack’s boss, with whom he is accused of having an adulterous affair – say that Shelley Womack was told that her husband would only get a promised signing bonus if she agreed to hand over the emails.

    Wal-Mart did not respond to requests by Fortune for a comment on the allegations.

    Roehm is suing Wal-Mart for beach of contract in its firing of her; Wal-Mart is suing Roehm, accusing her of ethical misbehavior in her dealings with Womack and in her dealings with Draft FCB, the advertising agency she helped to choose to work on the Wal-Mart account…and which was dismissed at the same time as Roehm and Womack.
    KC's View:
    It is sort of ironic that with all that high tech equipment and sophisticated personnel at its disposal, including veterans of the CIA and FBI, the Bentonville Behemoth needed an angry spouse to make its case.

    We guess Joe Mannix wasn’t available.

    By the way, we love the Fortune headline: How Wal-Mart got the love e-mail (Betcha they’ve never used that one at Fortune before…)

    Fortune makes one observation that strikes us as dead-on. Everybody loses in this ugly series of incidents. Roehm and Womack lose because they’ve been painted as being morally and ethically questionable, no matter how the various lawsuits turn out. And Wal-Mart loses because not only does it not get the benefit of Roehm’s proven talents in the area of marketing and advertising, but the retailer may find it difficult to attract out-of-the-box marketing executives to an Arkansas environment that seems just a little bit poisoned.

    Published on: April 18, 2007

    The Toledo Blade reports that Kroger may be facing a possible strike authorization vote by more than three thousand employees in northwest Ohio.

    The employees are represented by the United Food and Commercial Workers (UFCW), and the extension of their labor agreement, which originally expired on April 7, runs out tomorrow. The Blade says that the workers will be asked to authorize either a strike or boycott if no deal is reached by 11:59 p.m. Thursday.

    Health care benefits are said to be the biggest bone of contention.
    KC's View:

    Published on: April 18, 2007

    • Tesco CEO Sir Terry Leahy said this week that the company has committed “to reduce the amount of packaging on both branded and Tesco own label products by 25% by 2010.

    "We will also label all our packaging according to whether it can be re-used, recycled or composted – and if it cannot, we will label that too. The first labeled products will be on our shelves by 2008," Leahy said.

    • Tesco this morning announced its newest small store initiative – not in the US, where it will open stores later this year, but in Japan, where it will begin opening Tesco Express units beginning later this month.

    Tesco already operates 100 supermarkets under the "Tsurukame" banner in Japan, and these will be the first units operated there under its own name.
    KC's View:

    Published on: April 18, 2007

    • Wal-Mart reportedly is tracking the sales of its environmentally friendly products as a way of measuring where its ecology-related marketing efforts will find the friendliest reception and where it will need to work harder to create awareness and sales.

    The “greenest” sate in the union, it says, is New Hampshire, with Connecticut, Rhode Island, North Dakota and California also ranking up there on its “Live Better” index.

    Wal-Mart also said that it conducted a survey revealing that “43 percent of Americans think they will be ‘extremely green’ in the next five years, but that only 11 percent classify themselves as ‘extremely green’ today,” according to a Reuters story.
    KC's View:

    Published on: April 18, 2007

    In a move that surprised nobody but simply confirmed popular speculation, Australia’s biggest retailer Woolworths has said that it is interested in acquiring some of the nonfoods assets – such as office supply and discount store operations – from Coles, the nation’s second largest retailer.

    Coles has been very much in play in recent weeks, with much speculation about possible bids from the likes of Tesco or Wal-Mart.

    There already has been a bid worth the equivalent of 16 billion (US) from Wesfarmers, Australia's biggest home-improvement retailer, and a consortium of buyout firms. That bid reportedly was eight percent higher than an earlier offer from a KKR-led consortium led by Kohlberg Kravis Roberts (KKR) that was made and rejected by Coles last October. The KKR consortium, however, reportedly is still in the hunt.
    KC's View:
    We got a wonderful email the other day from an Australian who is a member of the MNB community, pointing out that there are some interesting coincidences in all the attention that Coles is receiving. Among the observations…

    Roger Corbett, the recently retired CEO of Woolworths, is on the Wal-Mart board of directors, and former Wal-Mart executive Jack Shewmaker serves as an adviser to the Woolworths board.

    According to our correspondent, it also is interesting that KKR’s consortium includes private equity firms Bain Capital & TPG. Bain Consulting, like Bain Capital, is part of the Bain Group, has worked with Woolworths in the past, while TPG is part of the group that owns Myer department stores, which was only spun off from Coles last year.

    It all sounds complicated and slightly incestuous to us…but it’ll be interesting to see how it all turns out.

    Published on: April 18, 2007

    The Dallas News has a story reporting that while trans fat “has become the new fall guy for bad nutrition,” the national obsession with trans fat elimination means that many people are not concerning themselves with saturated fat, which isn’t very healthy, either.

    “The irony: Americans eat about five times more saturated fat than trans fat,” the News reports. “And while gram-for-gram, trans fat is considered somewhat more harmful than its cousin, too much of either greatly increases the risk of heart disease, stroke, diabetes and other ailments.”

    And so, the American Heart Association “is beginning a major campaign to teach consumers about the different fats and how to tell what foods they're in…Federal guidelines say between 25 percent and 35 percent of total daily calories should come from fats, but the bad fats should make up only a fraction of that. The heart association says less than 7 percent of total calories should be saturated fat – the average American gets about 11 percent now. Trans fat should be less than 1 percent of calories, half today's average.”
    KC's View:

    Published on: April 18, 2007

    • Published reports say that Meijer is sending its customers’ cell phones text messages informing them of gasoline price increases – and doing so several hours before the increases take effect.

    The program currently is being used in the company’s Indiana stores, but will be rolled out chain-wide next month. Customers can register via cell phone or on the retailer’s web site for the service.

    USA Today reports this morning that “the industrial chemical melamine has been found in more pet food, and suspicion is falling on a second pet-food ingredient imported from China as the source of the contamination.

    “Natural Balance Pet Foods said Tuesday it found melamine in samples of some of its food, which led to a recall. The company suspects melamine was in a rice protein concentrate used as an ingredient” in the pet food.
    KC's View:

    Published on: April 18, 2007

    •, always looking for new worlds to conquer, reportedly plans to launch its own MP3 digital download store next month, hoping to challenge iTunes’ dominance in the category.
    KC's View:

    Published on: April 18, 2007

    • Tesco announced that Colin Holmes, managing director of its convenience store business, is leaving for an eight-month sabbatical during which he plans to do charity work and spend more time with his family. Holmes is expected to return in another senior position; no replacement has yet been named.
    KC's View:

    Published on: April 18, 2007

    One MNB user wanted to join in the discussion of what role school districts should play in educating kids about nutrition and obesity issues – and enforcing strict rules about how much they eat and how much they exercise. (The discussion was prompted by tough rules implemented in Gillette, Wyoming.)

    This is an age-old question. I am now struggling with helping to raise two grandchildren. Eating is the biggest battle we face on a daily basis. Kids are totally in control of their intake. Adults can provide the good food and make suggestions; but the biting, chewing and swallowing is the child’s control. I see a mental thing impacting the kids, which I know they cannot help. They actually get goose pimples when thinking about eating foods they do not like.

    I remember my own childhood, struggling with chewing meat that my parents wanted me to eat. (My mother grew up in the depression and for years had only molasses and bread to eat and wanted me to eat things she did not have a chance to eat). I also remember having to eat cooked carrots (they still gag me) and not really liking many vegetables until I was an adult. We fought about breakfast food because Mom did not want us to travel the MN weather to school without a hot breakfast.

    My own sons often fixed their own supper because they did not want to eat what we were having. One of my adult sons is still very picky about what he will eat today. If he had any of it yesterday, he does not want it for a week or two.

    The twelve-year-old grand daughter who lives with us talks about eating healthy food, but considers her contribution to that to be eating raw carrots on a daily basis. She does eat quite a few fruits, broccoli tops, canned peas and Brussels sprouts. Here main diet however, consists of cottage cheese, yellow cheese, white rice, flour tortillas, plain pasta and mashed potatoes. She eats meat and chicken very sparingly.

    Having a school offering good choices at lunch does not work at all with her. She will go without eating lunch rather than eat anything they offer at lunch that she does not want. She needs food to survive the day, so we pack a lunch for her including things we know she will eat.

    As a baby, her brother spit out baby fruit whenever I fed it to him. To this day he does not eat fruit, will only eat canned peas or frozen green beans, and will eat all the meat he is able to cram in every day. He too will go without lunch, rather than eat something he does not want. Plain peanut butter will not go, but he will eat a sandwich if it has grape jelly and PB on it. NO other flavor jelly.

    The bottom line is that parents, teachers, education and exposure to good choices can only do so much to get kids to eat the right foods. They, like adults, will only eat what they want to eat. This, too, is a part of the growing up process.

    As in all things, we can only protect our children so much. Sometimes that’s enough, and sometimes, as recent events tragically illustrate, it isn’t.

    Roots and wings, as our mother used to say. Roots and wings. And then, whether one is religious or not, you end up praying.

    By the way, people should pay real attention to sentences like, “My mother grew up in the depression and for years had only molasses and bread to eat…”

    Sometimes we forget how lucky, even privileged, most of us are. Even if it doesn’t feel that way sometimes.

    Regarding the use of cell phones to order product, one MNB user Brian Polk wrote:

    I’m already concerned about identity theft, the fraudulent use of credit cards, online transactions; now we’ll have to worry about the security of our texts?! We need a security umbrella covering all electronic purchases/transfers.

    We got a number of emails regarding home improvement retailer Menards’ decision to include a number of grocery aisles in its stores as way of encouraging one-stop shopping.

    MNB user Tim Riemenschneider wrote:

    Being from the twin cities metro area, I have grown up with (and love) Menards. Some refer to Menards as the “man’s” Target store. While shopping there the past few times, I continued to be surprised by the new grocery sections near the rear of the store (actually where the cabinet hardware was). Despite stopping for various building materials, each time I departed Menards I had items such as breakfast cereal, soup, and milk, etc. It saved me an additional stop on the way home, and it was certainly less expensive than our local supermarket.

    Nothing like shopper testimony.

    And MNB user Chris Connolly wrote:

    While Menards is concentrated primarily in the Upper Midwest, (I believe) they are now the third largest home improvement company in the US behind only Home Depot and Lowe's. Since the company is privately owned, it's difficult to learn much about them…….but my perception is that they have been one of the few retailers who has shown an ability to take on companies like Wal-Mart on price and be successful doing so. Their price image to date has been tough to beat----and it will be interesting to see how they position themselves in the grocery business.

    In response to our story about Tyson Foods and ConocoPhillips forming an alliance to produce and market diesel fuel made from pork, poultry and beef fat, MNB user Andy Casey wrote:

    Using waste or byproducts from existing processes for producing ethanol or other fuel makes so much more sense than using corn or other specifically grown products.

    Diverting corn and other food crops to ethanol production tightens supply, causes price increases across a wide range of products and many scientists argue that cultivating corn for ethanol actually consumes more energy than it produces. Using pork fat on the other hand, would appear to have little downside.

    Unless of course, you are a pig.

    Just wait for PETA to weigh in on this one…they’ll probably be lobbying Congress to prevent such programs before you know it.

    We also continue to get email about the Imus controversy.

    MNB user Roberta Hawkins questions those who equate Imus with rappers:

    Everyone seems to want to compare what Imus said to the rapper’s lyrics…… NO COMPARISON!!

    Even though I disagree with the rapper’s lyrics at times. I don’t think they singled out the Rutgers girls basketball team.

    That was very personal.

    No argument. We think that the only reason to even bring rappers into the conversation is to point out how general discourse has coarsened and made certain words almost mainstream…until, of course, they are applied by the wrong person to the wrong group of people, and suddenly regain the vulgar nature that they never should have lost to begin with.

    Another MNB user wrote:

    I applaud Don Imus for all his charitable works. However at what point do we allow someone to use their money and power as shield to say anything they want? If Larry Flynt or Howard Stern sponsored a camp for sick children would we think any better of them? Honestly I hold Imus in higher regard compared to Flynt or Stern, but at some point we have to draw the line.

    We get the Howard Stern comparison. But Larry Flynt? That, to put it mildly, is a stretch…

    Another MNB user wrote:

    While I want to be believe that he is the generous philanthropist he seems to be, why is it that the ranch he has for these sick kids can only manage to affect approximately 100 kids per year or so? We are talking about millions of dollars here!

    As we understand it – and this was certified by the NY Attorney General’s office – the high costs were because while kids only went to the ranch for, say, four months a year, it was a year-round working cattle ranch. You can’t just bring in the cattle for when the kids are there.

    We observed the other day that the controversy could kill off all the good work Imus has done over the years, but one MNB user disagreed:

    Everything Imus has done will last forever and all the children and charities he has helped will be remembered by those who benefited from his actions. It is truly a sad day in which a man that has done so much good for the world is seen in such bad light because of 3 words that were spoken. Even if someone devotes their whole life to helping other people, the American people remember the one thing we do wrong.

    Let ye who has never offended anyone (or which you could take back something you said) cast the first stone.

    Sportswriter Mike Lupica wrote at one point that it is a shame and a tragedy when people’s worst moments are their last moments. We would agree.

    And regarding the moves in some quarters to remove Imus products (the sales of which supported the ranch for kids with cancer) from supermarket shelves because of the controversy, one MNB user wrote:

    Supermarkets should NOT pull Imus Ranch products. Consumers should continue to purchase Imus Ranch products because it benefits children with cancer. After all, why let the children suffer.

    Alas, we fear they may.
    KC's View: