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    Published on: October 17, 2007

    The Wall Street Journal this morning reports that a number of American food manufacturers – including Perdue Farms, Sara Lee and ConAgra – “are under scrutiny in a federal probe of possible fraud and corruption in the military's food-supply operations for the Iraq war.” The investigation is looking into deals made by these companies to provide products to the military.

    According to the Journal story, “The inquiry is focused on whether the food companies set excessively high prices when they sold their goods to the Army's primary food contractor for the war zone, a Kuwaiti firm called Public Warehousing Co. A related question is whether Public Warehousing improperly pocketed for itself refunds it received from these suppliers. Public Warehousing bought vast amounts of meat, vegetables and bakery items from the food companies, and delivered them to U.S. troops.”

    The probe is also looking into the role that Army officials played in selecting these manufacturers.
    KC's View:
    If these allegations are true, I’m trying to think of what the penalty should be for companies found guilty. Because a simple fine wouldn’t seem to be appropriate, or enough.

    I’m thinking that maybe some of these executives should be forced to live in Iraq for a month or so and serve food to the soldiers based there. Let them live through the same horror that these soldiers live with every day.

    Published on: October 17, 2007

    The Dayton Daily News uses current store building trends in Ohio to suggest that even as supercenters and other big box formats continue to capture consumers’ imaginations, smaller stores are beginning to be seen by some shoppers – and retailers – as a necessary and even desirable option.

    Part of the issue seems to be that aging baby boomers may not want to spend the time on their feet that a supercenter demands. And part of it seems to be that a smaller shopping experience can also be a more convenient, targeted and attractive alternative. (There’s also the community resistance to big box stores that seems to crop up with increasing regularity.)

    “In the Pittsburgh area,” the Daily News writes, “Giant Eagle recently opened one of its trendy new Express stores — a mere 14,000 square feet, but packed with fresh produce, a deli, a drive-thru pharmacy, a free Wi-Fi cafe, a DVD rental machine, a prepared foods area with heat-and-serve meals and a bakery that can do birthday cakes. Of Kroger's total 2,468 supermarkets as of 2006, most (88 percent) were mid-sized combination food and drug stores, followed by discount warehouse stores (6 percent), multi-department stores (5 percent) and the newer giant Marketplace locations (1 percent).”
    KC's View:
    Clearly, this is what Tesco is banking on with the opening of its first Fresh & Easy Neighborhood Market stores on the west coast early next month. And if it could figure out the ROI and how to get it near to supercenter levels, Wal-Mart would certainly have more of its Neighborhood Market stores.

    I think we’re going to see a lot more examples of this kind of innovative thinking in the next few years. It isn’t just about having larger stores or smaller stores. It is about coming up with unique and differentiated solutions to consumers’ various problems and needs, understanding that one size doesn’t fit all.

    Published on: October 17, 2007

    Last week, MNB reported that numerous publications had quoted Mark Price, managing director of Waitrose in the UK, as saying that Britain’s Competition Commission should slow Tesco’s growth and dominance there, lest the nation become “Tescoland.” Price accuses Tesco of using its marketing and financial muscle to capture virtually every decent site in the UK, and that proximity – rather than choice – dictates why so many consumers decide to shop at Tesco.

    Forbes now reports that Tesco CEO Sir Terry Leahy is furious at Price, and sent him a letter asking for a public retraction. And Price reportedly stood by his comments. There also are reports that both side have been talking to their lawyers, so there may be litigation before this all is over.
    KC's View:
    I wonder if Sir Terry ever thinks to himself, ‘Y’know, since I’m a knight and Price is not, maybe I ought to just have him beheaded.”

    Not that he could behead him. But just that it might seem like an attractive option.

    Published on: October 17, 2007

    • Harriet Hentges, described by Business Week as “a former nun and conflict resolution expert” who at various times in her career helped mediate conflicts in Iraq and the Balkans, and who was hired by Wal-Mart last year to help it connect better with environmental groups and critics, is leaving the retailer’s employ, effective immediately.

    The company said that Hentges is leaving for “personal reasons,” but would not elaborate.

    Wal-Mart said that it is seeking a replacement.
    KC's View:

    Published on: October 17, 2007

    The Evansville Courier-Press reports that Buehler’s in launching a new prescription medication program, “begin offering 500 generic prescriptions at $5 for a 30-day supply.” The company says that this list goes beyond the more than 300 items that Wal-Mart is offering for $4 for a monthly supply. And, according to Buehler's Pharmacy Operations Manager Glen Millikan, the company will also offer discounts on some brand name and generic products not on the list.

    Buehler’s also said that it will provide a free glucose meter for a first-time diabetic prescription patients, free health screenings and access to health and wellness information.
    KC's View:
    It all is about creating a relationship with the customer, not just filling prescriptions. That’s why in the long-term, glucose meters and health screenings may be as important as discounts on generics.

    The next step ought to be helping patients with diseases such as diabetes to make better choices in the grocery aisles – not just with signage and shelf tags, but with pro-active shopping tours that connect the food and pharmacy experiences.

    Published on: October 17, 2007

    The Los Angeles Times suggests that a low-calorie “tangy frozen treat” marketed under the brand name Pinkberry could be the next big sensation. While there are just 33 Pinkberry stores at the moment – 28 in LA, five in NY, and all but three of them franchised – a venture capital firm called Maveron has invested $27.5 million in the company as a way of helping it grow.

    One of the owners of Maveron is a guy who knows something about retail growth – Howard Schultz, chairman of Starbucks.

    "Pinkberry has an opportunity to build a national and a global footprint," Schultz tells the Times. "It's very rare to see a retail company, so early on, create the kind of customer loyalty and emotional attachment that they've been able to create. In 30 years, I can count on one hand the number of time I've witnessed it."
    KC's View:
    Praise from Caesar. Good enough for me.

    Published on: October 17, 2007

    • The Cornucopia Institute announced yesterday that it is filing class action suits against Aurora Dairy Corp., accruing the company of “consumer fraud, negligence, and unjust enrichment concerning the sale of organic milk by the company. The institute said it is basing the lawsuits on “multiple and ‘willful’ violations of federal organic law” in Aurora’s operations that were found by federal investigators.

    USA Today reports that the Los Angeles City Council is about to begin debate about a proposal that would deny building and zoning permits to fast food restaurants looking to operate in the city’s poor South LA section. The proposal was made after studies suggested that these restaurants were contributing to the obesity epidemic that was sweeping through poorer neighborhoods, and local officials started to wonder if they could influence food choices through tighter zoning restrictions.

    • The Boston Business Journal reports that Ahold-owned Stop & Shop is switching from low-oxygen modified atmosphere packaging used for meat to high-oxygen packaging, which it says “is FDA and USDA approved, is leak-proof, and easier for customers to identify ground beef freshness.”

    • Coca-Cola reportedly is working with illycaffe, the Italian coffee company, to develop a ready-to-drink coffee beverage that will allow them to compete with Pepsi’s Starbucks-branded beverages.

    • The Federal Communications Commission (FCC) reportedly has fined Kroger-owned Fred Meyer Stores $24,000 for not including consumer alert labels with their products of analog-only televisions. Analog broadcasts will end in February 2009, and the FCC mandated that all analog television sets sold from now on had to include warning labels to that effect.
    KC's View:

    Published on: October 17, 2007

    • Supervalu reported that its Q2 net income was $148 million, up 12 percent from $132 million a year earlier. Revenue fell 5% to $10.16 billion from $ 10.67 billion, but same-store sales growth was up 0.5 percent.
    KC's View:

    Published on: October 17, 2007

    …will return.
    KC's View:

    Published on: October 17, 2007

    The Cleveland Indians defeated the Boston Red Sox 7-3 last night to take a 3-1 game lead in the best-of-seven American League Championship Series. One more win by the Indians, and they will go to the World Series to face off against the National League Champion Colorado Rockies.

    KC's View: