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    Published on: October 2, 2007

    by Michael Sansolo

    If misery really does love company, we Mets’ fans are on the prowl. Luckily for us, we don’t ever have to look far. Finding misery is easy and sometimes fixing it is possible too.

    Take this little historical episode. Back in 1999, NASA accidentally crashed a Mars Climate probe into the planet for just the dumbest of reasons. When you read this you might remember what happened. Some of the software for the flight operation was calibrated in the metric system, while part of the probe itself used the Imperial system. (Or maybe it was the other way around.) The bottom line is our tax dollars created a new little crater on Mars.

    Precision matters and little things can cause big problems if they aren’t watched carefully.

    Luckily we don’t crash probes into anything in the supermarket business, but it’s not for lack of trying. MNB ran a story last week about the incredible number of products on the shelves that, according to one study, carry the wrong dimensions. The study’s authors say these mistakes cause a host of problems, down to incorrect planograms.

    There are two key questions in the study: how widespread are the mistaken measurements and what problems do they really cause?

    The first question might be immeasurable. The study authors, Gladson Interactive, claim 90 percent of products have incorrect dimensions and, quite honestly, that could be right or wrong. In many ways, it’s immaterial because the second question is so pressing. What problems are the measurements causing?

    In an age of electronic communication, clean data is everything. Actually, it’s the foundation of everything. Computers, wireless devices and the Internet make everything so much easier to do. But nothing works if the basic data is wrong.

    If the dimensions on a product are wrong, everything can go wrong. Forget about planograms, what about the cube on trucks. There are stories around of trucks failing weight checks because product was heavier than it should be. And there are stories of trucks being underutilized because the capacity load projected by a computer didn’t quite work out that way in reality. And the problem moves through the supply chain to the slots in the warehouse or the weight of cases that workers will be lifting.

    None of those situations are hypothetical. I’ve heard countless retailers and wholesalers talk about the errors caused by sloppy dimensions and many, if not all, have an employee measuring products in a warehouse somewhere to correct the wrong information included in many on-line orders.

    The reasons for the mistakes are actually pretty simple. Some are caused by changes in packaging or even small shifts in sizes between prototypes and final products. This being an industry of change, such things are bound to happen. And while the problem sounds so simple to fix (let’s get everyone a ruler and a scale) the scope of the issue does make it challenging. But our business is about taking on the challenges and fixing them. Isn’t it?

    Logistics are hardly the sexiest item for a column like this. Details rarely are. Shoppers care about good prices, nice service, cleanliness and a nice shopping environment. They don’t care how the product got there, they just care that it’s there. But without sharp logistics, none of those other attributes work as well as they should. Without sharp logistics, the industry wastes fuel, wastes trucks, wastes back room space and wastes staff time. All are precious commodities and shouldn’t be wasted lightly.

    Fixing data isn’t an issue of finger pointing. It’s just something that has to happen together and stay better forever.

    NASA hasn’t crashed a probe into Mars since 1999. Apparently, they learned their lesson. Maybe we could all do the same.
    KC's View:

    Published on: October 2, 2007

    The New York Times reports this morning that fair trade products – those that reflect a concern for producers’ social, economic and environmental well-being – generated $2.2 billion in sales during 2006, 42 percent higher than during 2005. And, the Times notes, these sales and products have benefited more than seven million people in developing countries.

    Still, despite the growing enthusiasm for fair trade products, there is hardly universal enthusiasm for them. “Some critics of fair trade say that working with thousands of small farmers makes strict adherence to fair trade rules difficult,” the Times writes. “Others argue that fair trade coffee is as exploitive as the conventional kind, especially in countries that produce the highest-quality beans — like Colombia, Ethiopia and Guatemala. Fair trade farmers there are barely paid more than their counterparts in Brazil, though their crops become gourmet brands, selling for a hefty markup, said Geoff Watts, vice president for coffee at Chicago’s Intelligentsia Coffee and Tea, a coffee importer.”
    KC's View:
    The real question is how much traction fair trade products are going to get … and how much consumers want to know. Earlier this year, I met a coffee importer and retailer in France who is creating stores offering utter transparency about where their fair trade coffees come from – consumers have access to narratives about the sources of the product they are drinking. I think that’s a fascinating approach, and the only question is how far it can go.

    Published on: October 2, 2007

    The Leader-Post in Canada reports that Sobeys has opened a new store n Regina, Saskatchewan, that is unique in its specific appeal to food enthusiasts.

    According to the paper, “Connoisseurs who like cooking and eating delicious food -- and maybe even enjoy watching gourmet cooking shows on television -- should love the new store … In addition to the usual selection of standard grocery items, the new store will have a special emphasis on gourmet foods, on fresh products and on restaurant quality gourmet foods that -- if desired -- can be taken home already cooked. A qualified chef will even be on staff to give cooking demonstrations and to consult with both customers and store staff about recipes and about the cooking of delicious meals.”

    Sobeys management describes the new store as a “test” that it will use to gauge growing consumer interest.
    KC's View:
    You have to push the envelope a little bit to see exactly how far the consumer wants you – or will allow you – to go. The notion that a store can be kind of a “live” version of the Food Network is sort of intriguing…and I’ll be interested to see how it pans out.

    Published on: October 2, 2007

    Interesting piece in the Times-Dispatch abut the Defense Commissary Agency (DeCA), which despite its low profile is one of the nation’s biggest grocery chains. “The agency's job is to provide low-cost, high-quality groceries to 12 million military service members and retirees, and their families, around the world,” the paper writes. “Ringing up sales of more than $5.4 billion last year, DeCA's 18,000 employees run 260 grocery stores in the United States and 12 foreign countries. The agency's service is vital to hundreds of thousands of Virginians: About 125,000 service members are stationed in Virginia, and an additional 138,000 retirees live in the state.”

    Being able to shop in a commissary is one of the main benefits of being in the military, with shoppers there able to save as much as 30 percent a year. DeCA doesn’t spend any money on advertising, and passes along savings and promotion dollars directly to consumers.
    KC's View:
    One of the issues facing DeCA that is not addressed in the article is the fact – confirmed to me when I took a tour of some DeCA stores not that long ago – that Wal-Mart actually is eating away at the commissary agency’s sales by building stores within shouting distance of military bases, and then advertising aggressively to military families. The irony is that these families often respond to those ads, despite the fact that the commissaries can be cheaper.

    Published on: October 2, 2007

    Unified Western Grocers announced yesterday that it has completed its $38.5 million acquisition of Seattle-based Associated Grocers.

    According to a statement released by the company, “Among the assets purchased by Unified were AG's inventory of grocery products, equipment and furnishings; among the liabilities assumed by Unified were AG's payables, the non-union employee pension plan and the lease on the company's Seattle warehouse. Further, approximately 650 AG employees were hired by Unified and have commenced their employment with the company.

    “Coincident to the transaction, Unified obtained new supply agreements from the vast majority of AG's existing customer base of grocery retailers. Unified also assumed certain existing supply agreements between AG and other retail customers, including an existing agreement with Haggen Food & Pharmacy and TOP Food & Drug.”

    John Runyan, the CEO of Associated Grocers, will stay with the company as executive advisor to Al Plamann, president/CEO of Unified.
    KC's View:

    Published on: October 2, 2007

    Crain’s Chicago Business reports that McDonald’s plans to launch a “frontal assault” on Starbucks and “turn itself into a Starbucks-style destination for customers looking for something to drink,” offering lattes, cappuccinos and other specialty drinks at all of its 14,000 restaurants in the US.

    McDonald’s management describes the move as a large growth opportunity, though there are a number of unknowns, most of which reportedly concern the company’s franchisees. “Costs will vary, depending on the size and configuration of each restaurant,” Crain’s writes. “Franchisees must buy equipment to make specialty coffees, and, eventually, smoothies, as well as wall-mounted refrigerators for bottled sodas and energy drinks, and would have to remodel the counter and drive-thru service areas to make room for the equipment.”
    KC's View:
    This could make sense, though I cannot imagine under any circumstances choosing McDonald’s over Starbucks, no matter how Mickey D’s prices its coffees. That’s just me, though I suspect that a lot of people would agree.

    The broader lesson, I think, is how competitive all these companies are in term of pursuing share of stomach. It’s a jungle out there…and whether supermarkets view it this way or not, I think they have to view themselves as being hip-deep in it.

    Published on: October 2, 2007

    The New York Times reports that pumpkin production is down for the second straight year, and that “scorching weather and lack of rain this summer wiped out some pumpkin crops from western New York to Illinois, leaving fields dotted with undersized fruit. Other fields got too much rain and their crops rotted.”

    There is a bright side, at least for retailers. Because the supply is limited, it is reported that prices are higher than usual.
    KC's View:
    One can only imagine the impact this would have on Linus.

    Published on: October 2, 2007

    USA Today reports that New Jersey’s Topps Meat Company “has expanded a recall of frozen hamburgers to 21.7 million pounds of patties because they may be contaminated with a deadly type of E. coli, making it the second-largest ground beef recall in U.S. history.”

    According to the story, “The boxed, frozen hamburgers were distributed to retail grocery stores and food service institutions throughout the USA. The company believes most have already been eaten, it said on its website, but emphasized that it is ‘imperative that consumers look for these products in their freezers,’ and if they find them, dispose of them immediately.”

    And, USA Today suggests this morning that the additional recall “is bound to fuel concern that E. coli outbreaks may be on the rise in the USA's meat industry for the first time this decade.”

    • The Washington Post this morning reports that “a consensus is building among government and food industry officials that the fix for the country's import safety system is likely to require better-targeted inspections, though not necessarily more of them,” though “the idea that inspections need not be increased has been challenged by consumer advocates and those in Congress who have proposed a series of reforms to the food safety system, including importer fees and consolidated oversight under a single agency.”

    • The Star Tribune reports that the US Department of Agriculture (USDA) is investigating a charge that Target Corp. sold conventional milk as “organic” between late 2003 and early 2007. The milk was provided to Target by Boulder, Colo. -based Aurora Organic Dairy, which has had its organic certification threatened by the USDA because of what are called “14 willful violations” of organic rules.

    • The Wall Street Journal reports this morning that “with prices for corn syrup and other ketchup ingredients going up faster than Heinz can raise its own prices, the Pittsburgh-based condiment king is overhauling its breeding operations to help compensate. Heinz is developing sweeter tomatoes that could cut down on its need for corn syrup, as well as varieties that resist disease, stay fresh longer and produce a thicker consistency.”
    KC's View:

    Published on: October 2, 2007

    • Tesco PLC announced this morning that its first-half net profit was the equivalent of $1.91 billion (US), up 19 percent from a year ago, while revenue from continuing operations was up 9.1 percent to $46.1 billion.

    • Walgreen Co. said that its fourth quarter revenue was up 10 percent to $13.4 billion, while its quarterly profit was down almost four percent to $396.5 million.
    KC's View:

    Published on: October 2, 2007

    • The Wall Street Journal reports that Hershey CEO Richard Lenny plans to step down from the company. The Journal says that Lenny is “frustrated with the trust that controls the Pennsylvania candy maker amidst opportunities for industry consolidation,” and the trust’s unwillingness to move on merger and acquisition opportunities.
    KC's View:

    Published on: October 2, 2007

    MNB reported last week on the impending retirement of Giant Foods’ Barry Scher, and the Washington Post had a very complimentary article about him yesterday, looking at his long career as Giant’s spokesman and a real political powerhouse for the company.

    But what was really interesting was the photo that ran with the piece, Scher was shown with a small replica of a giant boulder in the foreground, a rather famous boulder that is inscribed as follows:

    Our Policy:

    Rule 1. The customer is always right.

    Rule 2. If the customer is ever wrong, reread rule 1.


    Ironically, the original boulder sits outside Stew Leonard’s, the Connecticut-based retailer that competes rather successfully with Giant’s sister company, Stop & Shop, in New York and Connecticut.

    The only alteration made to the boulder – Stew Leonard’s signature underneath the pledge is covered by the Giant logo.
    KC's View:
    Stew, no doubt, would be flattered.

    Published on: October 2, 2007

    MNB user Philip Herr had some thoughts about CBS’s latest usage of the supermarket aisles to promote its fall programming schedule:

    This story, along with CBS's purchase of the in-store TV network gets me thinking that retailers are beginning to see "traffic" less as customers and more as potential viewers of ad messages. And as such, they develop a new income stream selling access to their customers. I get the same feeling at my local gym, where the music videos (too darn loud!) are interspersed with ads. I feel I am there at their convenience rather than the other way around.

    Suffice it to say, my gym experience is not as relaxing I as I wish and I actively avoid patronizing any advertiser (and I have a list!). Bottom line, any time a retailer (or service provider) starts to lose sight of what the traffic to the establishment represents, the quality of the experience they provide, declines.


    Agreed.




    On the subject of in-store marketing trends, MNB user Gary R. Loehr wrote:

    I have to take issue with Ad Age and you on this one. With all the shopper data and syndicated data available, these programs are being measured by manufacturers, retailers and marketing services companies. Most in-store providers include control store test analytics as part of their product offering. Manufacturers do not double the spending in area of their budget without evidence that getting efficient incremental volume.

    P&G recently announced that they now account for in store spending as a part of their advertising budget expenditures. Marketers have figured out that traditional media (TV and radio) has become too fragmented to reach a mass audience. At the same time consumers are finding more and more ways to filter out unwanted advertising (Tivo, XM radio). Shopper marketing generally reaches the consumer at a time when they are thinking about food. Reaching a consumer at a time when they are thinking about your product and at the time closest to the purchase decision is effective marketing.

    Marketers want to reach the consumer when the product, the consumer and their money are all in the same place. Shopper marketing comes closer to meeting that criteria than an ad on Sunday afternoon while I’m watching the game.

    I do agree with a point you have made in the past. Retailers need to make sure that they don’t overload the consumer with advertising clutter in the store or the consumer will find a way to tune them out. Keep it relevant, interesting and provide value to the consumer.





    Responding to last Friday’s “OffBeat” piece about the Culinary Institute of America, MNB user Bill MacDonald wrote:

    I don't know why, but you struck a nerve that I didn't know was exposed in your follow-up article on your re-visit to the CIA.

    You mentioned that you had been visiting the place for years and infer that in all that time you had enjoyable experiences. Then you had a bad visit and you questioned if they had taken their eye off the ball, a reasonable response, IMHO. Your next visit was a good one, in fact it seemed to exceed past experiences because of even greater efforts to satisfy. But then you close your comments by saying: "I’m happy to use it to tell you that the CIA seems to have turned things around."

    Seems to me they had a bad night and things have been good all along. That bad night wasn't necessarily the "new normal", based on your experiences it seems like it was an anomaly. I'd have been more comfortable with your comments if you had said something along the lines of: I'm happy to report that my concerns were addressed and the CIA seems to be what it has always been.

    I have no affiliation with the CIA, I think I drove past it once while tasting wines in the Hudson Valley, but I have been in the business of trying to do right by my customers for about 37 years and I know how it feels to have years of business graded on one day's visit.


    That is a fair criticism of my use of language. Point taken.

    And MNB user Marty Nicholson wrote:

    Glad to hear you went back to the CIA and had a great experience. My wife and I were up in the Hudson Valley on business in June, and to celebrate our anniversary (a few days early) we had a spectacular dinner at the American Bounty restaurant. We began with a glass of wine at their bar where the bartender and I discussed different wines – and, much to our surprise – he gave us several wines to sample. And not just one sip, either. These were half-glasses…and we were not even charged for them! What a surprise! We really enjoyed a Pinot Noir from Oregon (wish I could remember the name). Dinner was terrific – how can you go wrong with locally-grown Foie Gras as an appetizer? My thick pork chops were terrific and Edith’s fish was perfect. Our waiter was in his last two weeks of school, and was heading to Colorado to work in a resort. Not bad for a 22-year-old!

    We look forward to returning again.


    As do we.




    In a rant last week about wine advertising that I believed insulted people who either know something about wine or would like to learn, I wrote:

    This is a particularly American attitude, I think - it casts suspicion on people who are educated or want to be, it belittles nuance, and prefers things to be black and white or good and bad. Since when did we become a culture that doesn’t trust knowledge or the desire to have more of it? Some people like to say that America is a land of eroding values, but I would suggest that any culture that does not value intelligence is a truly a culture in decline. And this ad is a small but telling example of how this could be happening here.

    One MNB user responded:

    Maybe I missed a study somewhere, but where is it written that wine knowledge correlates to intelligence? What about people who have superior mechanical knowledge, or sports knowledge, or medical knowledge (or quilting, cooking, plumbing, etc.)? Where do they fit in on your intelligence scale? At the end of the day, wine is a beverage--actually it is decayed fruit--how does drinking decayed fruit make you more intelligent, cultured or in any way better than someone who chooses to drink decayed grain (AKA: beer)? Sorry KC, but you really are a wine snob!!

    I may be, but that wasn’t my point. I never said people who like wine are more cultured or intelligent…I was merely objecting to how they were being characterized. And for the record, I have no mechanical or medical knowledge, and will cheerfully admit that people who do are smarter than I am.

    But if a car company ran a commercial for its cars that suggested that people who are mechanically inclined are either snobs or obnoxious, that would be the same sort of advertising miscue, in my opinion.




    Two quick corrections…

    The other day, I mentioned the fact that Tesco is looking for locations in Northern California and Sacramento, to which MNB user Gary Maxworthy responded:

    Hey, Kevin - since when has Sacramento not been in Northern California ? !!!

    My apologies for the geographic imprecision. You’re right.

    And yesterday, we quoted from a Wall Street Journal interview with Leo Kiely, CEO of Molson Coors Brewing Co., in which he talked about having “big hairy audacious goals.” Numerous MNB users wrote in to point out that the phrase is not original with Kiely, and was in fact originated by Jim Collins in his book “Built To Last.”

    That’s absolutely right. Kiely didn’t credit Collins with the phrase in the interview, but I should have caught it…that’s what we call a six a.m. mistake.
    KC's View:

    Published on: October 2, 2007

    In a 13-inning thriller, the Colorado Rockies defeated the San Diego Padres 9-8 to earn the National League wild card spot and now will move on to the playoffs.

    And, in Monday Night Football action, the New England Patriots defeated the Cincinnati Bengals 34-13.
    KC's View:

    Published on: October 2, 2007

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    KC's View: