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    Published on: July 10, 2007

    by Michael Sansolo

    Why here and why now? That’s a question I’ve heard quite a lot since I announced I’d be leaving FMI full time and joining Kevin in this merry pursuit. The reason is pretty simple and it goes way beyond my long friendship with Kevin. The community of the future can be built on-line. Ask all those students you know about We’ve got important issues to discuss and Kevin and I are going to air them here constantly as we look to build a new dialog.

    There are plenty of things on which I disagree with Kevin when he engages in his various MNB rants; however, one of the things that drew me to this partnership is the open dialog. Whether we all agree or disagree, opening ourselves up to opinions and views that cause us to think makes us better. I look forward to engaging Kevin in debate and discussion, as well as engaging with the MNB community on an ongoing basis – if you disagree with me, just let me know...and if you feel strongly about something, take your best shot.

    So let’s get things started by telling you what I believe in (especially because some of these issues just aren’t going to come up again):

    Rachael Ray turns me on. She’s spunky and believes in home cooking. Then again, I could say the same things about my wife and she actually cares that I care.

    I think we’d all be a lot better off if we tried to listen to people with opinions different than our own. I know people who never listen to anyone more liberal than Rush Limbaugh or more conservative than Michael Moore. We’re all capable of hearing a contrary point of view and maybe learning. Plus, it gives you a chance to yell at your radio. (By the way: the media is always biased…especially when it disagrees with me.)

    I love Jon Stewart’s Daily Show, but I really worry that there are Americans getting their news from a guy who had a supporting role in Big Daddy.

    People with Bluetooth phones need to wear a feather in their hair when conducting a phone conversation. I grew up in New York and people seemingly talking to themselves in elevators, subways cars or on the street still freak me out. You want the convenience of Bluetooth, wear a feather! If not, I promise to get involved in your conversation.

    My parents told me lots of stuff that still matters. Start with their number one lesson: treat others as you want to be treated. Lesson number two, always be proud of what you do every day. Mom and Dad had it together.

    When I worked a cash register we had to count change the right way. I love technology, but the art of counting change (and the math skills it teaches) is something we could use these days, plus it made the cashier always interact with the customer. Being a cashier also teaches you to treat everyone with respect. You never know who is in line.

    The truth is way easier to remember than a lie. I live near Washington, DC., which is a city badly in need of this motto.

    The designated hitter is killing baseball. Also, I don’t think God cares which team wins the Super Bowl or the World Series...except when the Mets are playing.

    The media is always biased…especially when it disagrees with me.

    When it comes to the industry:

    Consumers are confusing. They are contradictory, can be very hypocritical and sometimes they are misleading. It’s just the way it is.

    We need way more diversity in the industry and fast. The population is more mixed than ever, but company leadership isn’t. This industry has got to reach into the inner city, the Hispanic community and more to match the face of the shopper. Plus, we need lots more women making decisions or we need lots more men cooking and shopping.

    Buyer/Seller relations are always going to have rough spots and some will never get worked out. However, there are so many areas where cooperation rules that we could solve problems almost constantly. Restarting ECR-like efforts to address data accuracy, create common standards on food safety, sustainability, energy use and nutrition labeling might produce some nice gains.

    Speaking of ECR, the industry possesses more good research, studies and guidebooks than anyone can ever use (including those from the ECR project itself.) We have got to start turning all of this into action. Start with this one suggestion: don’t let any one on staff attend a meeting out of town without an assignment to bring back one new idea. If they don’t get any ideas, don’t send them to that meeting again. EVER!

    There are amazingly smart people in this industry and on all sides of the fence. I know single store operators who have management skills that would amaze anyone.

    The best companies I have worked with have had a common trait. They are permanently dissatisfied with the status quo. They know that winning today means nothing tomorrow and constantly look for ways to get better.

    There’s more, but the goal here at MNB is context and dialog and not just listening to ourselves. Let’s get this new conversation started.
    KC's View:
    Just FYI…”Sansolo Speaks” will be a regular feature on MNB…usually appearing at least once a week, and more often when Michael feels a rant coming on.

    Published on: July 10, 2007

    The New York Times this morning reports that “more than 700 tubes of toothpaste containing a chemical used in some antifreeze products have been removed from 6 of 120 stores inspected since July 2 … The chemical, diethylene glycol, has a sweet taste like its more expensive cousin, glycerin, and can cause liver and kidney damage.”

    The tubes were counterfeit Colgate toothpaste, and reportedly originated both in South Africa and China.

    The Times notes that Connecticut Attorney General Richard Blumenthal “is seeking to lead a coalition of states to protect consumers from defective or tainted products,” and that he called federal oversight policy on such imports one of “purposeful neglect.”
    KC's View:
    That noise you are about to hear is the stampede of public officials who are going to start believing that Country Of Origin Labeling (COOL) is an idea that makes sense.

    Published on: July 10, 2007

    The Wall Street Journal reports this morning that China's former top food and drug regulator, Zheng Xiaoyu, has been executed as a result of his conviction for taking bribes and dereliction of duty.

    The Journal writes, “The rare execution of such a high-ranking Chinese official follows a string of food- and drug-safety lapses that have raised concerns about China's regulatory standards both at home and abroad. Another former SFDA (State Food and Drug Administration) official convicted on corruption charges was given a suspended death sentence Friday.”
    KC's View:
    Okay, it is a little barbaric.

    But I betcha a similar approach would focus the minds over at USDA and FDA.

    Nothing says “we’re serious” like a guillotine.

    Published on: July 10, 2007

    Fortune features an interview with Whole Foods CEO John Mackey, in which he addresses questions about the company’s plan – contested by federal regulators on competitive grounds – to acquire Wild Oats. Excerpts:

    On The FTC… “Look at the track record of the Federal Trade Commission the last six years. They have approved 96 oil and gas mergers. They approved Smithfield buying the No. 2 pork producer, giving them around 30% market share in the U.S. [In 1999] they approved Exxon and Mobil merging. It's ludicrous to single [us] out for anticompetitive reasons. [The rules] are obviously being selectively enforced.”

    • “Whole Foods will try to avoid tangling with the FTC ever again in the future. It's ironic: You can open as many stores as you want without permission from the FTC, but if you try to buy stores, that requires permission. The solution is obvious: We won't be buying stores, we'll be opening them. You don't see Wal-Mart acquiring anyone in the U.S. anymore. It's easier for them and us to just open stores.”

    On the acquisition’s effect on pricing… “It will have a positive impact on Wild Oats prices, because we will lower prices there. It will not have much of an impact on our prices, because we have already announced we will sell off farmers' markets like Sun Harvest and Henry's and close down some redundant stores. We will get $700 million of sales out of Wild Oats, but that is only 10% of the combined company. So it will not give us a huge increase in our purchasing scale. It shouldn't do anything to our prices. Our prices are more constrained by [rival upscale grocers] H-E-B and Wegmans. That's who we price against.”

    On competing with the likes of Wal-Mart… “We're going to continue to try to compete with them in terms of better service, quality, and larger selection. We're innovating on the product side: We have a commitment to ethically traded products. We're upgrading our animal-welfare program, and in London we've introduced our five step animal-welfare process. It's coming to the U.S. soon. We'll rate all our animal producers in terms of their welfare standards from one to five. We'll have that on the packaging or the case. Much of the meat sold in conventional supermarkets wouldn't meet our No. 1 standard. Producers will want to know what they can do to get their rating from a 2 to a 3. Competitiveness solves that problem.”
    KC's View:
    Mackey also says, by the way, that Whole Foods plans to experiment with a smaller, more modest store format that could offer the same sort of selection but with fewer bells and whistles.

    Unless, of course, the FTC suddenly decides that it wants to restrict that kind of growth, too. Seems unlikely, but nothing would surprise me at this point.

    Published on: July 10, 2007

    While much of the media world focuses on trans fat bans, nutrition and dietary concerns, and healthier eating trends, the folks at Wendy’s apparently believe that there is room for more robust offerings. Hence, it is introducing a new hamburger called the ‘Baconater,” described as “six strips of hickory smoked bacon on top of a half-pound of never-frozen beef.” This follows the chain’s introduction of a “Triple Stack Cheeseburger” and a “Steakhouse Double-Melt Cheeseburger” – all of which seem focused not just on clogging arteries, but unclogging the pipeline of consumers into the fast feeder’s stores and rejuvenating its sales.
    KC's View:
    There’s nothing wrong with offering consumers plenty of choices that cover the entire spectrum of nutritional implications, from heart healthy to heart attack.

    I have to admit, though, that this is a little troubling – mostly because it seems to be more about bulk than taste…an attitude that is reflected in many of choices that Americans and American businesses make.

    Published on: July 10, 2007

    Yesterday, MNB noted that France-based Carrefour expects to generate as much as $3.9 billion (US) in sales this year, which would represent a 22 percent increase over last year; The company already has 100 hypermarkets in China, and plans to open between 20 and 25 new units a year for the foreseeable future.

    Now, published reports say that the French retailer is considering its options for what its approach will be in India, and probably will make a decision by the end of the year about possible alliances.

    India, while densely populated, creates all sorts of legal obstacles for international retailers looking to open there and requires local businesses be involved with any global players. Wal-Mart, for example, is in a joint venture with a major Indian company and expects to open units there as soon as next year.

    Carrefour, while looking, hasn’t committed itself to a projected first opening date. Yet.
    KC's View:
    In the global economy, India is one of those places – just like China – where the big guys have to be in order to maintain leadership. Reticence and timidity will not pay off there, I would guess.

    I don’t know about you, but I can’t wait for my first trip to India.

    Published on: July 10, 2007

    Published reports say that Aldi, the Germany-based discount retailer, will open its 150th store in Australia within two months, and has a growth strategy that will have it opening between 30 and 40 stores a year there for the foreseeable future. This marks a somewhat quickening pace of Down Under expansion for the chain, which first came to Australia six years ago.
    KC's View:

    Published on: July 10, 2007

    Ron Burkle, the man described by most media reports as a “supermarket magnate” who currently owns positions in both Pathmark and Wild Oats, reportedly has been meeting with members of the Down Jones board of directors to discuss a possible bid for the company, which owns the Wall Street Journal.

    The discussions are being held by the Dow Jones board as it seeks alternatives to a bid made by media magnate Rupert Murdoch. There has been some resistance within the WSJ community to a Murdoch ownership because of concerns that the owner of Fox News and the New York Post will tamper with the WSJ’s approach to journalism.

    According to a Reuters story, “Burkle has been exploring a structure for Dow Jones that would incorporate an employee stock ownership plan.”
    KC's View:
    I said this before I went on holiday, and I’ll repeat it. No matter what kinds of guarantees the Dow Jones folks try to get from Murdoch, once he owns the WSJ those guarantees won’t be worth the paper they are written on. If he buys it, he owns it, and he gets to do what he wants with it. Some will think this a good thing, and others will wail and gnash their teeth. But it will be the reality.

    Published on: July 10, 2007

    The Wall Street Journal reports that “Thomas Stemberg, founder of the office superstore giant Staples Inc., (which) helped pioneer the concept of category killers,” now plans to “bankroll a new generation of specialty retail chains with small footprints and narrower focuses” by creating “a new $300 million venture-capital fund to invest in retailers.”
    KC's View:
    I love these two quotes from Stemberg:

    • “Most categories have been killed.”

    • "The predominance of our opportunity will come from America becoming more and more segmented in its demographics. Many needs aren't being met."

    Which mean, I think, that the real winners in the future will be the companies that see consumer opportunities in new and unusual ways, creating and recognizing needs rather than just responding to the obvious.

    Makes sense.

    Published on: July 10, 2007

    The Food Marketing Institute (FMI) announced yesterday via press release that it will start its 2008 convention in Las Vegas a day earlier to add a keynote education session from 4-5 p.m. on Sunday, May 4, at the Mandalay Bay Convention Center, and also plans to hold several workshops before the event from 2-4 p.m. on May 4.

    The topics and speakers for all these sessions have not yet been set.

    FMI said the decision was made “to benefit the many attendees who arrive during the weekend.”

    The 2008 Las Vegas show will feature both an exhibit floor and educational sessions; a year later, in Dallas, FMI will move to an all-education format that will be used every other year, with an exhibition floor on alternate years.
    KC's View:

    Published on: July 10, 2007

    • Wegmans reportedly plans to open two new 150,000 square foot stores in 2009 – one in Fredericksburg, Virginia, and the other in Collegeville, Pennsylvania. Both openings are contingent on final site plan approvals, according to published reports.

    • Shaw’s Supermarkets announced that it will close two Rhode Island stores, one in Providence and one in Pawtucket, on September 1, saying that the units were underperforming.

    • Published reports say that the Great Atlantic and Pacific Tea Co. (A&P) has closed 21 Farmer Jack locations in Michigan after it was unable to find buyers for the sites. Kroger bought 20 stores, and independents reportedly are buying 25 units.

    • The New York Times reports this morning that Groupe Danone is acquiring Royal Numico, a baby food manufacturer based in The Netherlands, for the equivalent of $16.8 billion.

    According to the Times, “Franck Riboud, Danone’s chairman and chief executive, said that ‘the price Groupe Danone is offering today is a reflection of the outstanding quality and positioning of Numico as one of the world’s leaders in healthy nutrition.’

    “Food companies are expanding in the specialty nutrition market, where sales are growing faster than in the rest of the food industry. Danone makes the dairy drink Actimel, which is promoted as an immunity enhancer, and already owns the baby food brand Bledina, which is part of its dairy unit.”
    KC's View:

    Published on: July 10, 2007

    • Wal-Mart de Mexico, commonly known as Walmex, said that its second quarter sales were the equivalent of $4.73 billion (US), up nine percent from the same period a year earlier, on same-store sales that were up 0.9 percent. Net profit for the period was up seven percent, to the equivalent of $275 million (US).
    KC's View:

    Published on: July 10, 2007

    Yesterday, MNB reported on a New York Times story saying that “in just three years, sales of 100-calorie packs of crackers, chips, cookies and candy have passed the $20-million-a-year mark, making them a breakout hit on par with the SnackWells low-fat fad of the 1990’s.”

    I missed a zero. The story actually said “the $200-million-a-year mark.”

    I goofed. I apologize.
    KC's View:

    Published on: July 10, 2007

    Yesterday on MNB, I said that I was amazed that the Southern California labor situation hadn’t been straighten out during my vacation, and wrote:

    Right now, I’m happy to volunteer my services – and those of my new partner, Michael Sansolo – to go to Southern California and help management and labor come to some sort of agreement that makes sense. And when that’s done, we’ll figure out whether Barry Bonds should be banned from baseball, whether Scooter Libby should be pardoned, what the national immigration policy should be, and how to deal with Islamic fundamentalists. I mean, what the hell. I’ve been on holiday and I’m feeling frisky.

    One MNB user wrote:

    Your comments today made me laugh. It's a shame that there can't be some middle ground to be found here. I'm a union meat cutter in the Midwest and we are facing all of this coming this fall...I dread the thought of it. I see both sides of the issue. I am seeing first hand the impact the rising costs have impacted our budget. I've had a 25¢ raise in the last 3 years. We have been able to maintain good insurance coverage and I know that is where my raises are going, but what about the cost of fuel, heat, electric and oh by the way, food? Yet my store has just had a nonunion wal-mart (notice on caps) about a mile from our store and the impact has been felt. I'm not stupid...I know this effects my owner’s bottom line.

    I guess if I truly believed that the owners were doing their best to get me a raise and were willing to curtail their expansion just a bit to give us a small increase I could more fully support trying to absorb some of the increases today with not as much of an increase as I believe that my family needs. I know it's a awful problem dealing with competition, but sacrifices need to be made on BOTH sides. Without that type of an attitude I'm afraid that even your "feeling frisky" isn't gonna do it!

    I’m at least glad I made you laugh.

    MNB had a story yesterday about states looking to measure the impact of big box retailers and perhaps restrict development, which led me to comment:

    While I’m not in favor of protectionism in general and think that (as I’ve written ad nauseum) “compete is a verb,” I’m not sure this is a bad idea. I think it is in every community’s best interests – whether that community is as small as a hamlet or as large as a country – to find out whether the dominant forces in the economy are having a positive or negative impact on overall community conditions.

    In fact, I’ll go one step farther. I think that communities that do not sit in judgment on such things aren’t doing their jobs.

    To put it mildly, MNB user W. Alan Burris disagreed:

    This is the silliest item I have seen in your mostly great emails in a long time…

    To begin, what you are endorsing is protectionism and saying that you don’t like protectionism is not mitigation.

    There is no such thing as a “community” in the people sense you are using the word. In any community (in the geographical sense) there are people with different interests. There are landowners who would like to sell their property for a good price. There are contractors and their employees who would like more and better paid work building the new store and improving the infrastructure. There are prospective employees who want the jobs to be offered by the new business. There are prospective customers who want better selection and service at lower prices. Etc. On the other side there are small local merchants and their employees who are offering less selection at higher prices and fear for their investment and jobs. And there are people that are concerned about the view, possible congestion, etc. or who just don’t like change. There is no “positive or negative impact” on the your imaginary community, only on individuals. When you say that the “community” should decide, you are really saying that politicians should decide (impose their personal will) based on the wishes of their political supporters (contributors) and people with the most political clout, and on their perceived self interest. If the “community” doesn’t like a project, the people in the community have only to not sell the needed land, not help build the store, and most critically, not patronize the store. Your “community” can only thwart the preferences of individual members of the geographical community for the benefit of other better connected people. The issue that I am concerned about is collectivism vs. individual human rights, not where stores should be located.

    BTW, I just finished reading a fascinating book, given to me by a friend, titled “Radical Son” by David Horowitz. This autobiography describes how he came to change his political philosophy from collectivism to individualism. You should read it.

    I’ll pick it up. You make some interesting points.

    I do know one thing, though. As I get older, I tend to mistrust “isms” more and more. Because I find that what I believe generally doesn’t fit any pat philosophy or theory.

    Unless, of course, you count Marxism.

    As in Groucho.

    On the subject of Country of Origin Labeling (COOL), MNB user Wayne Barrett wrote:

    My family has made a conscious decision to not consume any food that we do not know where it came from. This is quite hard to do without COOL, but we have given up all seafood unless it's caught by family or friends in the Chesapeake Bay or the Atlantic Ocean.

    Our decision not only affects the local grocery stores but also restaurants.

    Maybe retailers and restaurants can step up to the plate and let us know where our food products are coming from.

    It's interesting that Congress does not want COOL for food products, but non food items have "Made in China" or "Made in (name the country)" on them. Interesting?

    Yesterday, MNB had a story about how a number of the nation’s major food manufacturers plan to announce “dramatic,” “impressive” and – perhaps most important to industry execs - voluntary restrictions on how their products are marketed to children – enough so that a federal task force that would have suggested mandated restrictions decided to postpone its recommendations from a July release to September.

    Gary Knell, coordinator for the task force as well as president/CEO of Sesame Workshop, was quoted as saying: "I am led to believe that we will get some impressive commitments from major advertisers. I am looking forward to dramatic statements on the part of the food companies so we can begin to look at media companies as part of the solution, rather than part of the problem."

    Which led MNB user Eric B. White to observe:

    I am very confused/intrigued by the comments of the CEO of Sesame Workshop and see them as being point being that my 2 ½ year old watches Sesame Street and PBS Sprout (each day and on demand at night etc.), and one of its major sponsors has been McDonald's. So much so that my son thinks Ronald is somehow a Sesame Street spokesperson!

    Does this mean that Mr. Knell will turn away all the ad $$ that Mickey D's throws their way? Sounds like double talk.

    It has been years since I’ve watched “Sesame Street,” so I was unaware that Mickey D’s was a sponsor. I suspect that whatever message the fast feeder is sending via the program, the focus probably is on healthy eating and exercise…though I agree with you, the message can be a little confusing to a two-year-old.

    It is an excellent point. The day that Ronald McDonald is confused with Bert or Ernie or Big Bird or, my personal favorite, Elmo, will be a sad day indeed.

    Regarding the 100-calorie portion sizes that have grown so popular, MNB user Bob Warzecha wrote:

    Maybe, as you pointed out, that consumers don't want to think. But I offer up another theory: consumers have no self-control. What's wrong about buying a larger container of crackers, chips, cookies or candy, count out the exact amount that would equal a 100-calorie serving and put away the box until tomorrow? The consumer would save a huge amount of money this way versus buying the 100-calorie packages.

    You’ll get no argument here.

    Finally, in writing about the 100-calorie sized packages, I said that my favorite soon-to-be-released product is 100-calorie bags of Twizzlers, “which are only the best candy in the marketplace. (Okay, maybe that’s a little over the top. But it is the one candy that, on a desert island, I’d chose to have cases of washed up on shore.)”

    One MNB user agreed:

    Also, while I eat about 99% healthy foods, I do have one weakness in the candy area (other than dark, dark good chocolate) and that's Twizzlers. I don't buy them because I could never open a bag and just eat a little. So, I was glad to hear you mention they are available in 100-calorie bags. I can open a bag of those and just eat that.

    Of course, in movie theaters they’ll probably charge eighteen bucks for those little bags…which is why you have to go to the supermarket, buy them there and then sneak them in.

    But MNB user Bob Vereen wanted a clarification on my opinion:

    I hope you aren't a fan of strawberry Twizzlers. The only "real" ones are licorice.

    KC's View: