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    Published on: October 8, 2007

    Topps Meat Co., the New Jersey company that has been forced to recall almost 11 tons of processed meat from stores around the country because of concerns about E. coli contamination, went out of business on Friday.

    "This is tragic for all concerned," Anthony L. D'Urso, COO at Topps, said in a written statement. "In one week we have gone from the largest U.S. manufacturer of frozen hamburgers to a company that cannot overcome the economic reality of a recall this large."

    The only people who will remain at the company will be those who have to help the US Department of Agriculture (USDA) with its investigation into the causes of the contamination. The company stopped producing meat products just over two weeks ago when USDA found that the company – which said it prided itself on its safety measures – had inadequate safety measures.
    KC's View:
    The lessons here are many, especially because numerous reports suggest that Topps had some warning that the ceiling was about to fall in – after all, it had just settled a lawsuit revolving around tainted meat that as said to have sickened a young girl, and the Center for Science in the Public Interest (CSPI) has been critical of its approach to safety.

    But the ultimate lesson is that in 2007, speed kills. And as information and accusations move more and more quickly, retailers and manufacturers have less and less time to make things right. Which is why it is important to get things right to begin with.

    I go into stores all the time, and many of you still have signs up prohibiting the use of cameras – which seems to ignore the reality that virtually every customer you have comes into the store equipped with a still camera, video camera and tape recorder. They all are embedded in their cell phones, which means that your margin for error is really, really slim.

    Published on: October 8, 2007

    The Chicago Sun-Times reports that “Cargill Inc. is voluntarily recalling more than 840,000 pounds of ground beef patties distributed at Sam's Club stores nationwide after four Minnesota children who ate the food developed E. coli illness, a Cargill official said Saturday.

    The Sam's Club warehouse chain, which sold the burgers that sickened the children, had previously pulled the same brand of ground beef patties from its shelves nationwide.”
    KC's View:
    I have nothing to add to what I said above, except to reiterate the following:

    Speed kills.

    Published on: October 8, 2007

    The New York Times reports that US Department of Agriculture (USDA) officials concede “that they could have responded more promptly in ordering a recall of millions of pounds of potentially contaminated ground beef sold by a company in New Jersey. As a result, they said, the agency will review how it handles recalls and conduct a wide-ranging assessment of how meat plants safeguard against bacterial contamination.”

    According to the Times, “The delay, caused in part by the need for additional testing, has once again raised questions about the nation’s meat supply, which in recent years seemed to have far fewer problems with E. coli than produce, as a result of increased attention to the issue.”
    KC's View:
    It’ll be interesting to see how consumer confidence in the food supply ranks in a month or so. Because it can't be getting any better…and I suspect that things actually are getting worse.

    Published on: October 8, 2007

    Whole Foods announced last week that a special committee of its board of directors had completed its internal investigation of charges that the company’s CEO, John Mackey, had anonymously posted messages on the Internet that hyped his own company and denigrated Wild Oats – the retailer that Whole Foods acquired two months ago.

    The committee reportedly has turned its findings over to the US Securities and Exchange Commission (SEC), though it did not make those findings public. The board also said it would cooperate in any SEC inquiry into Mackey’s actions, though it also reaffirmed its support for Mackey.
    KC's View:
    Here’s the deal. Mackey won. The Wild Oats deal went through despite the opposition of the federal government, so there may be a slap on the wrist but little more. But he’ll have no problem with shareholders or board members.

    Had he lost, it might be a different story, and the board and Whole Foods shareholders might be looking for a scapegoat.

    Published on: October 8, 2007

    The Chicago Tribune reports that Wal-Mart, after having surmounted numerous obstacles in its efforts to open a store in Chicago, has seen the store generate lower sales than expected – about $50 million a year, compared to the $60 million to $70 million that was expected once the store opened. And the concern is that Wal-Mart’s vaunted urban strategy may not be everything the company said it was, which could hurt Wal-Mart at a time when it already is dealing with recalcitrant analysts who believe that its stock price and annual growth rates are not what they should be.

    “After saturating rural and suburban America, the Bentonville, Ark.-based retailer began to target America's big cities to recharge growth,” the Tribune writes. “Instead, Wal-Mart has largely become the enemy at the gates. Los Angeles, after allowing one store to open, threw away the welcome mat. Boston shut its doors. And New York, the nation's largest city, spurned the retailer's overtures so forcefully that Wal-Mart CEO H. Lee Scott Jr. said publicly earlier this year that he didn't care if Wal-Mart ever opened there.

    “Not so Chicago. Or so it seemed at first. With a pro-business mayor, vast food deserts, and an abundance of shuttered manufacturing sites ideal for building supercenters, Chicago was expected to become a shining example of Wal-Mart cracking the urban frontier. But the retailer encountered stiff resistance from organized labor, which poured at least $2.6 million into Chicago City Council elections earlier this year, in part to support aldermen likely to block Wal-Mart's march into the city. ” Which is at least one of the reasons Wal-Mart has found its efforts to open a second store stalled,

    The reasons for Wal-Mart’s less-than-expected success include “out-of-stock problems and unfamiliarity with inner-city shopping patterns,” according to the story, and “local business owners say they are disappointed with a program Wal-Mart launched aimed at helping them survive in the shadows of its new store.” Still, the Tribune reports that local residents say that they are happy with their Wal-Mart, and the store has been demonstrably good at both hiring people who might have been viewed as unemployable elsewhere and bringing retail options to neighborhoods that previously found them lacking.
    KC's View:
    Okay, so Lee Scott probably doesn’t wander the halls of headquarters in Bentonville warbling “My kind of town, Chicago is…”

    It is a tough town, with urban canyons deep enough to make even the Bentonville Behemoth feel small. But I have to say that I find it bewildering why the city would prevent Wal-Mart from opening in neighborhoods that need shopping alternatives. Such is the pull of the political undercurrents, I guess … but it doesn’t make me feel better about the system.

    Published on: October 8, 2007

    The Greenville News reports that Bi-Lo CEO Brian Hotarek said last week that while there has been a lot of interest in the company from potential corporate suitors, the company does not “anticipate a sale taking place in the near future" because of uncertainty and volatility in the financial markets.

    "I can't predict when that time will be," Hotarek said, but "if it's the right buyer, at the right price, at the right time, the company would still be sold."

    According to the story, Hotarek also said that the company has “a strategic plan that includes ‘continuous reinvestment’ in its business, with capital spending of about $75 million to $80 million each year over the next three to five years. That would include remodeling and relocation of some stores. While some underperforming locations will be closed, there should be a slight increase overall in the net number of stores annually.”
    KC's View:
    To paraphrase the Wicked Witch of the West, “Better to drive up the price of the company, my dear.”

    I’ll tell you one thing. I wouldn’t want to compete with some of the Bloom and reinvigorated Food Lion stores that I saw last week down in the Greenville area. Those look like tough, disciplined operations, and I have enormous respect for Food Lion CEO Rick Anicetti and his people.

    Bi-Lo may be the marketed leader in the Greenville-Spartanburg area, but it isn’t like things are going to get any easier.

    Published on: October 8, 2007

    MSNBC reports that ads for Black Friday – the day after Thanksgiving, when so many retailers open early and offer special deals in order to jump start the holiday shopping season – already are starting to show up online.

    The retailer facing an early release of its ad is Ace Hardware – and the ad reportedly can be seen at
    KC's View:
    You just know that that this is just the beginning…that we’re all going to deluged by these ads between now and mid-November.

    Wal-Mart already has announced some holiday price cuts. (Always low prices…but sometimes even lower.) And the holiday catalogs already have started to arrive in the mail.

    If we’re going to start seeing holiday ads and stories about holiday ads in the beginning of October, I’m going to take the pledge right now – I’m not going to shop the day after Thanksgiving, and in fact am not going to shop all weekend. Instead, I’m going to do as much as I can to do as much shopping as possible on the Internet.

    Published on: October 8, 2007

    Forbes reports that more than 20 CPG companies have launched a suit against International Outsourcing Services (IOS), the nation's largest coupon handler, charging that they lost at least $150 million in a coupon fraud scheme in which the company submitted fake coupons for manufacturers for reimbursement. Several of IOS’s former executives also were named in the suit.

    Among the plaintiffs: General Mills, Hormel Foods, Kellogg Co., Kimberly-Clark, Kraft Foods, Johnson & Johnson, Nestle, and PepsiCo.
    KC's View:

    Published on: October 8, 2007

    Walgreens reportedly is launching a new AARP Health Essentials catalog and website for members of the American Association of Retired Persons (AARP) that will offer a five percent discount on more than 20,000 HBC products.
    KC's View:
    Good idea, especially as more and more baby boomers enlist in AARP.

    But being someone who keeps throwing out the AARP solicitations and plans to do so until they put me in a rowboat, light it on fire and send it out to sea…I’d suggest to Walgreens that they avoid spending money on sending me a catalog.

    My feeling is that you join AARP, and before you know it you are wearing black shoes and black socks with your khaki shorts. (I have a friend my age who has started doing this, and I worry for him.) Then you start going to Denny’s for the four o’clock special, twenty year old women start calling you “sir,” and before you know it your kids are discussing assisted living facilities and whether or not they should take away the car keys.

    It’s a slippery slope, and I’m not going anywhere near it.

    (At my age, I might fall…)

    Published on: October 8, 2007

    The Washington Post reports that “over the past decade, the lobster boom (of Long Island Sound) has gone almost completely bust. The die-off has been so severe -- a 70 to 90 percent drop since 1998, according to scientists and state estimates -- that hundreds of lobstermen have been forced out of business. Unable to make a living in waters once as rich as bisque with crustaceans, many have had no choice but to abandon a trade that amounted to more of a cherished lifestyle than a job.

    “As the old lobstermen culture of Connecticut withers, desperate fishermen are hanging up their rubber waders to become boat mechanics, plumbers and landscapers. Some have declared bankruptcy. Others have sold their boats and houses in desperation, moving away. A few…have stayed on, trying to earn a hardscrabble existence from the pitiful catch that remains.”

    Numerous possibilities are cited as possible reasons for the death of so many lobsters, but the two most prominent are pesticides – which were sprayed on the nearby coasts of New York and Connecticut in order to reduce the number of mosquitoes – and global warming, which is raising the temperature of Sound waters beyond the point where lobsters can tolerate it. In addition, increased storm activity may have affected the sound’s oxygen levels.

    Supporters of the global warming theory suggest that record lobster levels in Maine support their belief – that the much colder waters there actually have warmed to the point where they are optimum for lobster propagation and, therefore, harvesting.
    KC's View:
    The town where I’ve lived for almost a quarter-century happens to be home to a family of lobstermen who used to have three lobster boats; we would often see them heading out into the sound, and there was a certain comfort in knowing that what they were harvesting would be sold in their local store and eaten in just a short time. Now, the Post notes, they’ve sold off one boat and refitted another one for clamming. And the real shame of it is that they now have to augment their own catch with Maine lobsters.

    Ironic, huh? At a time when we’re all talking about producing, selling and eating “local” food in order to reduce the industry’s carbon footprint and thus begin to counteract the effects of climate change, global warming actually is forcing some people to not eat locally harvested food.

    Published on: October 8, 2007

    • The Michigan Business Review reports that Mark Murray, president of Meijer Inc., told a meeting of the Battle Creek Economic Club that the company would thrive through “a continued focus on value pricing and reinvestment.”

    Murray said, "We continue to grow at a modest rate. We open five to 10 stores a year. We've done that for years. We'll continue to do that for years."

    And other thing: Murray said that Meijer is not for sale.

    • As part of its just-completed acquisition of Associated Grocers, Unified Grocers’ board of directors voted last week voted to expand its size from 16 to 19 in order to accommodate three new directors who operate retail grocery stores in the state of Washington. The new members are Terry Halverson, president and chief executive officer, Metropolitan Market, Paul Kapioski, president and owner, CAP Food Services Co., and Michael S. (Mike) Trask, president and owner, Stanlar Foods, Inc.

    • In the UK, the Sunday Times reported over the weekend that the British Competition Commission – without making any specific recommendations – plans to offer a preliminary look at a report that will criticize supermarket chains there for demanding lump-sum slotting allowances and promotional fees for the placement of new and existing products. Tesco and Asda have both denied doing anything wrong, though they have handed over millions of emails to the commission as it has looked to make its case against the retailers. Both chains now have the opportunity to respond to the preliminary report before the Competition Commission makes a final report and recommendations.

    • It is expected, based on reports in the UK, that the board of directors at Sainsbury is expected to recommend that the company’s shareholders accept a revised bid from Delta Two, the investment arm of the Qatari royal family, to acquire the company.
    KC's View:

    Published on: October 8, 2007

    • Hormel Foods announced that Donald Kremnin has been promoted from being director of the company’s Wal-Mart business team to being vice president of Wal-Mart sales.
    KC's View:

    Published on: October 8, 2007

    One MNB user thought I was a little harsh in my assessment of Stop & Shop’s value-oriented promotional program last week:

    While visiting family on the east coast (Connecticut) I stopped at my old Super Stop and Shop. I still remain impressed with those grand stores, layout, ease of shopping, and now, organic selection and self serve check out! And I am the typical “health food store shopper” demographic by every description….yet I love those Super Stop and Shops that I grew up with (we didn’t have a Stew Leonard’s close to us, and Whole Foods didn’t exist when I lived there).

    On the subject of whether the Wal-Mart era could be ending, as suggested by the Wall Street Journal, one MNB user wrote:

    When a company (or a nation for that matter) becomes the largest and most powerful in the world, that company must act like it and accept not only its responsibilities to shareholders, but also its responsibilities to the world it serves if it is to last more than a brief time.

    If it accepts these responsibilities well and governs well, it will be loved and cherished by most of its customers (or citizens) but if not well those that loved it so will see to it that it perishes from the earth.

    And another MNB user wrote:

    Looking back, when it wasn't Wal-Mart, it was the Great Atlantic and Pacific Tea Company that dominated as much as 80% of the grocery retail sales, looking forward- you better not disregard Tesco... bottom line is that there is always going to be competition possibilities of Wal-Mart proportions. Staying ahead of the curve, understanding what the next value proposition is, and being "me first" as opposed to "me too", is what is going to make you a relevant retailer 10 years from today.

    Take a look at Giant Eagle's new fresh and easy format that opened in the spring, visit the NexStore Market in Boca Raton or Miami, Wegmans' new approach to food solutions "Take it. Make it", Whole Foods "Market Hall"- these are the companies that understand what I am talking about.

    We wrote last week about McDonald’s launching a new coffee program that it hopes will help it compete with Starbucks more effectively. I was skeptical, to say the least, being a devoted Starbucks customer.

    One MNB user wrote:

    I am a die-hard Starbucks fan and will not be switching either, yet my kids had to go to McDonalds yesterday because they wanted to get in on the new Monopoly game. This was a remodeled store with a new counter shape that obviously was built with the new coffee program in mind. I began to look around at the regulars and the families. It appears to me that a large part of their customer base is families with kids that might not normally eat at the finer dining establishments and/or normally go to Starbucks.

    I think some people will switch from Starbucks, but the new program is successful it will be because they are offering something for the kids’ parents that is a convenience and maybe a large portion of these parents just don't go to Starbucks yet would like a latte while they watch their kids play in a germ filled playground.

    On another note, I couldn't help noticing a obese mother and her two obese kids sitting at one of the larger tables eating fatty foods while their homework is spread all about the table. Hmmm.

    Noisy, germ-filled playgrounds and fatty foods all over the table. That’s exactly where I want my kids doing their homework.

    (Then again, it also could describe a lot of elementary school cafeterias…)

    Which leads nicely into an email about responsibility when dealing with the obesity epidemic:

    While individual responsibility is a key to this dilemma, making choices must be made easier through businesses making responsible choices in the kinds of chemicals and additives they put in our food, e.g., high fructose corn syrups, artificial flavors and coloring, etc. and through truthful, full disclosure labels. Citizens and companies are in this together and are equally responsible.

    I agree.

    We spend so much time arguing about responsibility that opportunities for fundamental change often are lost in the cacophony.

    And, regarding the rising price of boutique beers, one MNB user wrote:

    Sad news. I'd like to go home and drown my sorrows with a couple of Ballard Bitters but the price of drowning sorrows has gone up too much. I may turn to some of those wines with the screw top.

    Say it ain’t so…
    KC's View:

    Published on: October 8, 2007

    In Week Five of National Football League action…

    Miami 19
    Houston 22

    Cleveland 17
    New England 34

    NY Jets 24
    NY Giants 35

    Arizona 34
    St. Louis 31

    Detroit 3
    Washington 34

    San Diego 41
    Denver 3

    Chicago 27
    Green Bay 20

    Jacksonville 17
    Kansas City 7

    Carolina 16
    New Orleans 13

    Seattle 0
    Pittsburgh 21

    Atlanta 13
    Tennessee 20

    Tampa 14
    Indianapolis 33

    Baltimore 9
    San Francisco 7

    And, the Major League Baseball playoffs continue…

    In the American League Divisional Series, the Boston Red Sox completed a three-game sweep of the Los Angeles Angels in a best-of-five series, and move on to the AL Championship Series. And the Cleveland Indians lead the NY Yankees 2-1 in their best-of-five series, as the Yankees got a win on Sunday night to save their season (and, if you believe the press reports, manager Joe Torre’s job).

    In the National League Divisional Series, the Arizona Diamondbacks completed their three-game sweep of the Chicago Cubs, and the Colorado Rockies finished off the Philadelphia Phillies in three games. The Diamondbacks will now face the Rockies in the NL Championship Series.
    KC's View: