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    Published on: September 13, 2007

    The Wall Street Journal this morning reports that as Wal-Mart launches its fall and holiday season advertising campaigns, it will not be using the familiar “Always Low Prices” tagline that it has featured for almost two decades. Rather, it will use a slogan that it hopes will lure more affluent shoppers through the front door: “Save Money. Live Better.”

    The first campaign carrying the new tagline began last night on cable and broadcast television, and according to the Journal, it highlights “name brand products to impart quality” and portrays “warm scenes of families with a tagline that promises a good life for less.”

    Various spokesmen say that the company is aiming to attract customers at all income levels, who are familiar with Wal-Mart but don't know about the breadth of merchandise available in its stores.
    KC's View:
    This strikes me as marginally risky, mostly because it smacks of Wal-Mart possibly trying to be something it is not. I recognize that the company needs to expand its customer base as well as its store count if it is continue growing, but one has to wonder if this is enough to bring in new customers without possibly alienating the core consumer base.

    By the way, I just said “risky.” I didn’t say Wal-Mart shouldn't do it. But any change in approach after two decades has its attendant risks.

    Just ask Julie Roehm.

    Published on: September 13, 2007

    Safeway is scheduled to show off its first solar-powered store today, at a unit in Dublin, California, where an acre-wide rooftop solar array provides energy for the 55,000 square foot store.

    According to the company, this solar store is just part of its “green power initiative,” which it described in the following terms:

    “Solar and wind energy are just part of Safeway's extensive company-wide environmental focus. The company has invested in other retail-based energy savings strategies to reduce the company's carbon power demand such has new energy-efficient refrigeration and lighting. Safeway is one of the largest retail recyclers of paper, cardboard, plastic and other materials. The company is at the recently joined the Chicago Climate Exchange, the world's first and North America's only voluntary, legally binding greenhouse gas emissions reduction registry and trading program. Safeway has committed to reduce its carbon footprint from the base year 2000 by 390,000 tons of carbon dioxide. Additionally, each year Safeway recycles enough paper, cardboard, plastic and other materials to fill a football field 190 feet high.”
    KC's View:
    It is interesting to watch bottom-line-driven companies like Safeway, Tesco and Wal-Mart make what appears to real commitments to environmental initiatives even while some folks question whether global warming and climate change are issues on which we ought to be placing so much political and economic focus.

    Just as a matter of interest, there is a story in the Wall Street Journal detailing one way in which the melting of the Arctic can be seen in the melting of the Northwest Passage. An excerpt:

    “In the past six years, as climate change has steadily thawed the arctic, more recreational boats have crossed the passage than in the first 95 years since Roald Amundsen pioneered the route between 1903 and 1906. The hope, then and now, was to establish a trade route from the Atlantic to the Pacific.

    “This summer, sailors like Mr. Swanson are breezing through the famously inhospitable 3,200-mile passage in weeks instead of years. And there's barely an iceberg to photograph as a souvenir … Soon, such journeys could become routine. Scientists predict a long-term thaw in the far north will open the passage to safe commercial shipping as early as 2020.”

    Scary stuff.

    Published on: September 13, 2007

    Two interesting stories out of the UK about retailers and price…

    In one piece, the Evening Standard reports that “As dairy, bread, pasta and meat prices surge on the global markets, Tesco, Sainsbury's and other supermarkets have been forced to put up prices in their stores.

    “Asda, however, is planning a high-risk strategy to take a massive hit to its profit margins by absorbing most of the increase known in the trade as ' agriflation'. Sources at the chain, owned by US giant Wal-Mart, admit the company is seriously concerned that its cash-strapped shoppers may feel forced to defect to cheaper rivals Lidl, Aldi and Netto if it passes on too much of the extra cost burden … Analysts said Asda was in a more precarious position than Tesco and Sainsbury's because the public see it as the cheapest of the three, and are more likely to trade down.”

    According to the paper, “An Asda spokesman confirmed the policy but declined to say how much of a hit it would take on profits. He added that the store would still be pushing through some price rises where it could. On goods that are less hit by agriflation, such as cosmetics, it would attempt to cut prices.”

    Meanwhile, the Guardian Unlimited has a story saying that Tesco CEO Sir Terry Leahy believes that the company should raise its prices in order to deliver “a revolution in green consumption.”

    The Guardian writes that Leahy believes business, consumers and government will be forced to make big changes “to move to a low-carbon economy and that could mean prices would have to rise. ‘We have to do this,’ he said.

    “Carbon costs have ‘not yet been priced into consumption today’ and business would have to take account of the damage it was doing to the environment,” according to Leahy.

    The Guardian continues: “Sir Terry said consumers expected the company to take a lead in helping them follow greener lifestyles and would accept price increases if they could see the value of them. He said Tesco would not be out of line with its rivals because they would have to make similar changes.

    “Sir Terry, who has become one of the UK's most outspoken advocates of corporate environmental responsibility, said ‘the global threat from climate change is now clearer than ever’ and warned ‘the whole economy has to change’ for developed countries to cut their carbon emissions by 80% by 2050.”
    KC's View:
    Interesting juxtaposition, especially because both companies seem to be talking about much the same thing and coming to different conclusions. And yet, both may be right.

    It seems to me that at least part of the reason that food costs are going up is that energy and raw materials are increasing…which is what is fomenting the whole green movement to begin with.

    The two companies seem to addressing the problem from different directions. Asda is saying that it needs to keep its prices down in order to maintain its low price image, and will cut margins if it has to. Tesco is saying that it isn’t just about price, but quality of life – and that its consumers should and will be able to pay more in order to keep the planet in better shape.

    I have no doubt that both companies are sincere in their approaches, and that they will be both steadfast and flexible.

    I think that Leahy is right, and that the competition will be forced to charge more in order to create a more environmentally friendly economy. They’ll all be in this together.

    And I think Asda will do its best to keep prices down, and that more UK supermarket price wars will result.

    At some point, I suspect, the strategies will converge – lower prices where possible, and higher prices where necessary, with plenty of hot competition to go around - and the companies, the customers and the planet will be better off.

    I would remind you of something that Michael Sansolo wrote in his column just a couple of days ago:

    I saw a powerful example of this during my recent trip to Australia. Sydney’s major morning newspaper reported that about eight percent of Australians were willingly spending more money to sign up for environmentally friendlier energy. The cost for an Australian family opting into this new program ranges from $50 to $400 per year.

    Now clearly, eight percent could easily be explained as reaching a small, but committed audience with the financial power to absorb the cost. However, the lesson is just as profound. People are spending more for a cause they believe in.


    Smarter sometimes means spending more. But experience tells me that smarter almost always makes sense.

    Published on: September 13, 2007

    The Wall Street Journal reports that Tesco CEO Sir Terry Leahy is saying that it is likely that the company’s first US stores – called Fresh & Easy Neighborhood Markets, and scheduled to roll out in Southern California, Arizona and Nevada – will be opened in November. Though he’s not saying exactly when in November.
    KC's View:
    Every once in a while I will get an email from an MNB user questioning whether Tesco is all that great a company, and wondering why it can't open stores in the US any faster.

    To which I would suggest that the discipline being shown by Tesco is exactly why it should be considered formidable. I suspect that it could have had stores open months ago, but the stores are only one pat of the equation. It is the infrastructure – the sources of fresh, quality and differentiated products – that will really make Tesco unique. It has to make sure that it has its supply chain right before it opens its stores in the US, because it won’t be as simple as ordering another pallet of this or that.

    Published on: September 13, 2007

    Published reports say that British authorities believe they have identified a new case of foot-and-mouth disease, at a farm in Surrey, on the outskirts of London. More importantly, the farm on which the new case has been found is just 30 miles from a farm where another case was found last month, and where there was a mass slaughter of the cattle in order to contain any spread of the disease.

    A similar slaughter of cattle at the new farm has begun, and officials reportedly have established a three-mile containment zone. All animal traffic has been banned in Surrey, even as officials wait for confirmation that the disease actually has reoccurred.

    There is a financial implication to the new discovery. The European Union suspended the sale of live British livestock when the August case became public, and has now suspended plans to end that suspension in November. A broader meat export ban reportedly is under consideration.

    Both the August case and the new one are within fairly close proximity to a government laboratory where research into maladies such as foot-and-mouth disease takes place, but an effort to ascertain whether the August outbreak originated there were inconclusive.
    KC's View:

    Published on: September 13, 2007

    The Wall Street Journal this morning reports that Sen. Sherrod Brown (D-Ohio) is confident that Congress will be able to pass legislation that he introduced that would prevent retailers and other non-financial services companies from owning banks.

    There is something of a deadline for the proposed law. On January 31, 2008, a moratorium on the Federal Deposit Insurance Corporation (FDIC) ruling on any such applications will expire, and Brown says he believes the bill can get passed before that date. The House of Representatives already has passed a version of the bill.

    Wal-Mart filed just such application earlier this year, but withdrew it in the face of significant opposition; Target still has an application pending before the FDIC. Traditional banks and financial services companies have objected to competition coming from companies outside their circle.

    "I don't think it would strengthen our communities for Wal-Mart or Home Depot or companies like that to get into the banking business," Brown said Wednesday in a speech to the National Association of Federal Credit Unions.
    KC's View:
    To which I’m sure the credit union folks stood up and said, “Say Hallelujah!” Which is generally what happens when you preach to the choir.

    Published on: September 13, 2007

    • The Los Angeles Times this morning reports that Wal-Mart has said that David Porter – who was a top executive in home video and music merchandising at the retailer before resigning to work at DreamWorks Animation SKG – will not be allowed “to deal directly with the retailer for the next five years to avoid the appearance of favoritism.”

    According to the story, “Porter had intimate knowledge not only of Wal-Mart's inner workings but also of the home video strategies of DreamWorks' Hollywood rivals,” but that Wal-Mart “doesn't want other studios to think DreamWorks has an unfair advantage because Porter is on its team. Home video is a crucial source of revenue for the studios, often determining whether a movie makes a profit or not.” Wal-Mart is responsible for about 40 percent of all DVD sales in the US.
    KC's View:

    Published on: September 13, 2007

    • The Austin Business Journal reports that H.E. Butt Grocery Co. will acquire five Albertson's store locations in the area.

    "Central Texas is growing fast and this is part of our long term plan to keep up with that growth," Jeff Thomas, HEB senior vice president and general manager of the Central Texas region, tells the paper. "We've been wanting to serve these neighborhoods for a long time."
    According to the story, HEB plans to double the staff size at each of the new stores.

    • The Wall Street Journal reports that PepsiCo is defying tradition in China by introducing a red soda can, which the company says is designed to be coordinated with the nation’s flag and national sports team colors. Traditionally, however, it has been Coca-Cola that has had red cans, while Pepsi has featured blue cans.

    The Journal suggests that Coke is amused by the move, and that at least some consumers are confused.
    KC's View:

    Published on: September 13, 2007

    • Safeway announced that Michael R. Minasi, senior vice president of marketing, has been promoted to the role of president of marketing.
    KC's View:

    Published on: September 13, 2007

    • Pathmark reported a second quarter loss of $18.8 million, compared to a loss of $8.8 million during the same period a year ago.

    Revenue for the period ended dropped to $998.5 million, down from $1 billion in the previous year. Same-store sales for the quarter dipped 0.2 percent.

    Pathmark said that the Q2 figures included $7.2 million in costs related to its acquisition by The Great Atlantic & Pacific Co. (A&P).
    KC's View:
    Normally, I’d make a wisecrack here like, “Already the A&P effect is being felt. Just wait until the deal is done…”

    But I’ve been criticized lately for being a little mean to the folks in Montvale. So I won’t.

    (We only kid because we love.)

    Published on: September 13, 2007

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las

    Or, to simply read the commentary in text form, continue below…



    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, brought to you by Webstop, experts in the art of retail website design.

    So while I was on vacation I got a phone call from a reporter at the Stamford Advocate, a local newspaper just a few miles down the road. I talk to this guy a lot, mostly because he covers retailing and I am someone who at least sounds like he knows what he’s talking about when it comes to retailing.

    I have to tell you, though, this particular conversation alarmed me – both about the state of journalism and the state of retailing.

    The question this particular day was about why a store called the Coffee Bean in the local mall was closing down after 10 years. Could it be that the mall had increased rents to the point where this franchisee couldn’t afford to stay there?

    Maybe, I responded. But the store’s closure might have more to do with the fact that a Starbucks recently opened just a couple of stores down the hall. Not only is Starbucks a tough competitor with enormous resources, but I had to say that during the months the two units competed, at no time, at least to my knowledge, did the Coffee Bean do anything outside the envelope in order to make its case to shoppers. The store said it had better beans and better coffee, but what, exactly, did it do to aggressively promote and market its differential advantages. Let’s assume, for the sake of argument, that it actually is better than Starbucks – not an argument I’m usually prepared to buy, by the way. But just being better is never enough – and thinking so without matching it with tough, aggressive, competitive strategies actually betrays an unusual combination of arrogance and naïveté. There’s really no there, there – and it is a mistake, I think, that too many retailers make when competing with behemoths and marketing giants.

    That’s why I was distressed on the retailing side … but I also was a little troubled on the journalism side.

    You see, when I asked this reporter if he’d gone to the store to ask customers – at both Coffee Bean and Starbucks – what they thought of this turn of events, he said he had not. Which sort of surprised me, because his office is just across the street from the mall – it couldn’t take more than 10 minutes to make the trek and get a little eyewitness testimony. “I don’t want to tell you how to do your job,” I said, “but if you across the street and see 12 people on line at Starbucks and nobody at Coffee Bean, you’ll have your lead. And if you find the reverse, it gives you a lot more questions to ask.”

    I relay this not to pump myself up or attack this reporter, who I am not going to name, but rather to make the point that a general lack of curiosity can be found in many journalists. I don’t expect them to be perfect, I don’t expect them to be everywhere, but I do expect a certain level of curiosity…and a willingness to cross the street to see what’s happening.

    Both Michael Sansolo and I are old newspaper reporters … or maybe I should say “former newspaper reporters” … and we’ve commented from time to time that when we hear a police siren, we still get the urge to follow and check things out. But I’m not sure how many reporters feel that way, and these are the people writing and reporting about your businesses and your industry. I’m also not sure what you can do about it – I would never suggest that you not talk to them, even though sometimes they get things wrong … not because they are biased or malevolent, but just because sometimes they are lazy or bored.

    The states of journalism and retailing – not everything I would want them to be.

    For MorningNewsBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: September 13, 2007

    …will return.
    KC's View: