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    Published on: November 26, 2007

    Bloomberg reports that even as store visits increased 4.8 percent, 147 million US shoppers “spent an average of 3.5 percent less during the post-Thanksgiving Day holiday weekend than a year earlier as retailers slashed prices to lure customers grappling with higher food and energy costs.”

    However, another survey, by ShopperTrak RCT Corp., said that retail sales just on Black Friday were up 8.3 percent over a year ago, and on Friday and Saturday combined rose 7.2 percent.

    • The Wall Street Journal reports that retail online sales today – known as “Cyber Monday” and said to have the same sort of juice as last week’s “Black Friday” sales did for brick-and-mortar retailers – have become increasingly important and more promotional than ever.

    According to the WSJ, “Many consumers shop in stores over the Thanksgiving weekend and then boot up their computers on Monday to do online research, compare prices and seek out deals. While it isn't the biggest online shopping day of the holiday season, the day brings the first increase in Web holiday spending. Last year, Cyber Monday Web sales hit $608 million, up 26% from the same day in 2005, according to comScore Inc., a Reston, Va., market-research company.

    “As a result, more merchants are rolling out new sales tactics this year on the Monday after Thanksgiving. Seventy-two percent of online merchants plan Cyber Monday specials this year, up from 43% two years ago…”

    • According to a Shop.org survey, 72.0 million consumers plan to shop online from home or at work on Cyber Monday, up from 60.7 million in 2006 and 59.0 million in 2005. The survey found that 31.9 percent of adults will shop on Cyber Monday, up 17.3 percent over last year (27.2%).

    • Meanwhile, the Conference Board has released a report saying that 73 million US households have discretionary income, up from 57 million just five years ago. According to the story, these are pretty significant dollars - $1.7 trillion in total.

    However, the news isn’t good for everyone. More than 75 percent of all discretionary income is held by households earning more than $100,000, and New England is the region of the country with the greatest number of households having discretionary income. Household discretionary income is lowest in the West North Central region, defined as Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota.

    Households with earnings under $50,000 account for just three percent of the nation’s discretionary income.

    KC's View:
    It is hard to imagine that the coming holiday shopping season is going to be any kind of noteworthy success, especially since Americans will be reminded of economic realities every time they go to the gas pump or pay the heating bills for their houses. Most people are going to be looking for deals wherever and whenever possible, and I suspect that this impulse will become stronger as he end of December grows closer. That means that retailers will be forced to cut prices and margins to get people into the stores to stave off disaster.

    Published on: November 26, 2007

    The Times of London reports on an interview with Tesco CEO Sir Terry Leahy in which he describes the company’s US expansion as just part of an ambitious global growth strategy, saying that within the next decade Tesco hopes to generate more than half of its annual revenue from non-UK operations. Currently, the UK represents 73 percent of Tesco’s volume.

    “We keep looking at everywhere,” Leahy said, noting that India and Russia remain possibilities for the company.

    KC's View:
    These sorts of goals shouldn’t be surprising, since Tesco’s UK expansion plans are pretty much limited. After all, the company already owns roughly a third of the retail market there, and is bumping up against the political resistance that is almost inevitable when you have that kind of dominance.

    Published on: November 26, 2007

    Unified Grocers, the retailer-owned cooperative that supplies some 2,800 independently-owned grocery stores in Washington, Oregon, California, Nevada, Arizona, Alaska and Hawaii, has been approved for membership in the IGA Alliance. IGA is the world's largest voluntary supermarket network with aggregate worldwide retail sales of more than $21 billion per year.
    KC's View:
    It has been a big year for Unified, having previously acquired Seattle-based Associated Grocers for $38.5 million. Clearly a company making some interesting moves…

    What also will be intriguing to watch will be how organizations like IGA respond to innovations like Tesco’s Fresh & Easy Neighborhood Markets, which are opening in Unified’s backyard. Tesco’s new US stores in many ways seem diametrically opposite the IGA ”hometown proud” model, and yet they have to be seen as yet more competition for independent retailers trying to survive – even thrive – in an environment that does not always treasure the qualities that make them unique and distinct.

    Published on: November 26, 2007

    • The Washington Post reports that Wal-Mart has gotten serious – extremely serious – about lobbying in Washington, DC.

    “The overarching goal is to improve the company's image so it can operate unhindered by the automatic opposition its reputation has inspired. It also had a specific legislative agenda spanning issues such as normal trade relations with China and the number of hours truck drivers are allowed to work. In its attempt to make its desires known, it has transformed its lobbying force from a humble two-man shop to a $2.5 million operation that employs some of K Street's heaviest hitters.

    “Campaign donations from Wal-Mart's political action committee to federal candidates jumped from $135,750 during the 1998 election cycle to $1.3 million in 2006 – the biggest increase and largest amount of any retailer or retail trade organization, according to the Center for Responsive Politics. It has added consultants ranging from a whitewater guide to a former presidential adviser to court the activist groups that have been Wal-Mart's most vocal opponents.”

    And yet, Wal-Mart can be outspent on lobbying. For example, during 2006 the retailer spent $2.5 million on total lobbying efforts, including $1.3 million on federal campaigns. During that same time, the Service Employees International Union (SEIU) and the United Food and Commercial Workers (UFCW) combined to spend $2.9 million on their lobbying efforts.

    • The Wall Street Journal reports that Wal-Mart has failed in its attempt to prevent future filings in a North Carolina tax dispute from being made public. The retailer, which is being scrutinized for its efforts to reduce its state tax exposure, had said that public access to its filings created "unreasonable and undue annoyance and oppression of a party that is attempting to litigate a serious dispute with a public agency."

    The North Carolina attorney general said that public access to court documents in the case served the public interest, and a state judge agreed.

    No word yet on whether Wal-Mart plans to appeal the ruling.

    KC's View:

    Published on: November 26, 2007

    Good piece in the Wall Street Journal about Chipotle Mexican Grill, which it reports “has arguably become the country's most successful fast-food chain in recent years by rejecting almost every major technique on which the industry was built. Not only does it not show the product (on billboards, where the burritos always appear wrapped), it doesn't advertise on television. It doesn't franchise. It has some of the highest ingredient costs in the industry. And its executives aren't especially concerned that customers wait as long as 10 minutes in lines that routinely stretch out the door.”

    One of the ways in which Chipotle has distinguished itself has been by trying to define itself as sort pf the Whole Foods of the fast food business, with high-quality and natural/organic ingredients whenever possible; it also works hard to keep its products affordable, so it is still seen as a reasonable alternative to burgers and fries.

    “Chipotle's shares have more than doubled in the past year, making it the best-performing publicly held U.S. restaurant chain,” the Journal writes. “And while traditional fast-food chains are posting same-store-sales growth in the low single digits, Chipotle has increased its same-store sales at a double-digit rate each year for almost a decade.”

    KC's View:
    Ultimately, the thing that makes Chipotle work so well, I think, is the fact that its food tastes good – not like the lowest common denominator products that are typical of most fast feeders. People respond to the quality of the product, because most people are aspirational – they may want fast food because it suits their schedules, but given a choice, most people will go for the better tasting product that is made from better quality ingredients.

    It ain’t brain surgery. And yet, too many food companies continue to reach for the lowest common denominator because they believe it adds up to higher sales. And, because it is easier.

    Published on: November 26, 2007

    The New York Times reports that he European Union is considering a ban on two types of genetically modified corn seed – manufactured by DuPont Pioneer, Dow Agrosciences and Syngenta – that its scientists have determined “could harm butterflies, affect food chains and disturb life in rivers and streams.”

    According to the Times, “A decision by the European Union to bar cultivation of the genetically modified crops would be the first of its kind in the trade bloc, and would intensify the continuing battle over genetically modified corn … setting it at odds with the United States and angering industries.”

    The Times goes on: “Since 1998, the commission has not approved any applications for the cultivation of genetically modified crops, but it has not actively rejected any applications, either, as would be the case with the genetically modified corn products.”

    A US government spokesman tells the Times that the EU “continues to lack a predictable, workable process for approving these products in a way that reflects scientific rather than political factors.”

    KC's View:
    That’s shocking, because we all know that the US government would never, ever make decisions based on political rather than scientific considerations.

    While clearly such a ban by the EU has some significant business implications, is it incorrect to suggest that just maybe the US government ought to have a little more respect for the sovereignty of the EU? One can only imagine what the reaction would be here in the US if the EU tried to tell us what to do, and to suggest that we were being political rather than scientific in our judgments.

    Published on: November 26, 2007

    Reuters reports that Ahold CEO John Rishton has told a press conference that the company “will continue to look for opportunities to acquire businesses in geographical regions we operate in.”

    And, according to the story, Belgium-based Delhaize continues “to be a good merger candidate.”
    KC's View:
    I keep hearing that at last when it comes to the US, Ahold is more interested in selling than buying. And I continue to love the idea of Delhaize acquiring Ahold’s US businesses, mostly because Delhaize is doing such interesting and innovative work up and down the east coast.

    Published on: November 26, 2007

    The New Jersey State Assembly is considering a bill that would ban the use of plastic bags by retailers larger than 10,000 square feet, effective December 31, 2010. If the bill passes, it would require that the use of such bags be cut in half a year earlier.
    KC's View:
    Best I can tell, if plastic bags are an environmental threat, it doesn’t matter the size of the store that hands them out. Bans ought to be total or not at all.

    Published on: November 26, 2007

    • Target Corp. is testing the sale of used electronics – such as iPods, televisions and video game consoles – on its website. The company has characterized the initiative as a test, and has not said whether it will continue the strategy.

    • HE Butt reportedly will launch its own proprietary discount prescription drug program, offering 500 brand name medications for $50 or less and 90-day supplies of generic medications for $9.99. Consumers have to pay $5 to apply for the program.

    • BJ’s Wholesale Club reportedly has relaunched its e-commerce site.

    MSNBC reports that “while Americans are spending less overall on presents, sales of food gifts grew almost 50 percent to nearly $16 billion from 2004 to 2006…”

    • Kroger reportedly plans to open a 552,000 square foot distribution center near Los Angeles, which will be used as a logistics hub by its Ralphs and Food 4 Less chains.

    Bloomberg reports that Wisconsin-based American Foods Group has recalled more than 95,000 pounds of ground beef – already sent to retailers and distributors in Indiana, Kentucky, Maryland, Ohio, Tennessee, Wisconsin and Virginia – that is suspected of being contaminated with E. coli. Two people who ate the meat got sick, according to the US Department of Agriculture (USDA).

    KC's View:

    Published on: November 26, 2007

    MNB reported last week on a National Public Radio story saying that climate change experts are eyeing the Mata Atlantica rainforest in eastern Brazil as possibly holding one key to the reduction of global warming. As the rainforest has been destroyed, more carbon gets released into the atmosphere, which warms the planet. So, experts are trying to do is give farmers an incentive to save the rainforest, in part by replanting trees there. Preferably cacao trees — the source of chocolate. Studies are being done to see if cacao tree farming actually can have an impact on global warming, which, if successful, could lead to all sorts of environmentally driven financial benefits for the farmers. In other words, eat chocolate – at last, the right chocolate – and you can help save the planet.

    I commented: It isn’t hard to imagine that some chocolate companies will be pushing “save the planet chocolate bars” before this whole thing is done. Which is fine by me.

    Of course, I suppose there will be some people who will suggest that rainforests are overrated, and who will be skeptical about the whole thing. They’ll say that such moves can’t even move the needle on global warming, which isn’t really a problem anyway, and therefore people shouldn't even bother.

    But I’ve always believed in the small gesture, the tiny and almost unnoticed effort that can, when duplicated over and over and over, change the world. So put me down for some of that “save the world chocolate” right now.


    One MNB user responded:

    OK, so today you reached a level I thought you were incapable of...whining. I can't interpret today's comment that "Of course, I suppose there will be some people who will suggest that rain forests are overrated, and who will be skeptical about the whole thing. They'll say that such moves can't even move the needle on global warming, which isn't really a problem anyway, and therefore people shouldn't even bother." as anything other than whining, and not falling far from the Henny Penny camp. And this after yesterday's admonition to have a full, open, and honest debate.

    I have to admit that I am not convinced by the "science" behind the "man caused" global warming that is now the rage. I do agree that the earth (and other planets it seems) are gradually getting warmer, have been doing so for some time, and will continue to do so for some time. Having said that, I am squarely in the camp of being good stewards of our resources, because being good stewards is what we are called to do (I imagine the Jesuits imparted some of this philosophy on you, as well).

    I personally think that kind of an approach is much more sustainable (let’s just say I'm not going to be very shocked if the climatologists and meteorologists come back in the not too distant future and revise their forecasts, but being a good steward will never go away) and also more likely to engage folks of a different mindset (as an example, members of Ducks Unlimited and the NRA, most of whom are not liberals, have pretty strong thoughts about habitat conversation, open space conservation, etc.).


    To be honest, I am perfectly capable of whining. But I didn’t think that’s what I was doing. I thought I was just anticipating the opposing argument.

    Another MNB user wrote:

    There are already some chocolate producers who are using sustainability and preservation of the rainforest as part of their core equity. Check out Dagoba chocolate. Part of their value system is maintaining sustainability with respect to ecology as well as creating a positive impact for producers. I have seen some other brands in the organic section for chocolate that make similar claims as part of their brand identification.




    Another comment on the estate tax debate, this one from MNB user Alan Burris:

    I have been appalled by the lack of moral reasoning in your readers’ comments about the estate tax. If someone has earned money by honest labor, it is their property and their right to give it to others by gift while alive or by gift by will after death. Confiscation from recipients of all or part of gifts is robbery which cannot be justified by communist redistribution, social engineering or envy.

    Some who have argued for the estate tax have suggested that to not have one is to widen the gap between the rich and poor in this country. To which one MNB user responds:

    Many keep saying the gap between the haves and have nots is widening in the U.S. is widening. Not true! Big study of IRS data over the past 25 years proves just the opposite – 5% of those in the lowest quintile moved to the top quintile! The lower quintiles income growth is at a rate greater than the upper quintiles. In fact there is no real wealthy class; it is constantly rotating with people going in and out of the top quintile.

    I’m not familiar with this study, but I would have to dispute the suggestion that there is no “wealthy class” in America. Some of the members may change, but it is clear and distinct and privileged.

    Not that there’s anything wrong with that…




    Regarding the debate over whether eco-manufacturer Seventh Generation should supply Wal-Mart – while they may both share environmental concerns, there are some real cultural differences between the two companies – one MNB user wrote:

    Kevin – come on with Wal-Mart and price pressure on 7th Generation. If 7th Generation has been able to not sell to Wal-Mart and continue to grow their business what makes you think that they would have to knuckle under to price pressure. They get the same price pressure with their current mix of buyers I am sure. As you know, Wal-Mart margins are lower. They do not need better deals than their competitors to sell below their competitor’s prices. I have sold grocery products to Wal-Mart for years and have never been pressured for anything different than every other retailer. They all want more, ALL. In addition, Wal-Mart personnel have always been professional, courteous and punctual whether saying yes or no to a product, which is more than one can say for a large group of buyers out there. We use 7th Generation products at home and anyone who would want to not increase the usage of “greener” products would be doing a disservice to the world. The point of supply is certainly a legitimate and should be the only issue in selling to Wal-Mart or any other customer.

    Was I arguing against Seventh Generation selling to Wal-Mart? That wasn't my intention…rather, I was just trying to point out the realities that confront manufacturers that do business with Wal-Mart. I’d be surprised if anyone argued that selling to Wal-Mart isn’t a transformational experience for any business…

    MNB user Glen Syvertsen wrote:

    How can any company regardless of size become an environmentally and socially responsible retailer if environmentally and socially responsible manufacturers refuse to supply them. If Seventh Generation won't sell to Wal-Mart they are defeating their own purpose assuming their mission is at least in part to get the world to use safe, environmentally sound, recyclable products . With each sale, Seventh Generation benefits the environment. By increasing their sales exponentially, it follows that the environmental benefit would be proportional. If Seventh Generation wants to have any influence on Wal-Mart policy it would be more effective as a partner than an antagonist.

    KC's View:

    Published on: November 26, 2007

    In Week Twelve of National Football League action…

    New Orleans 31
    Carolina 6

    Houston 17
    Cleveland 27

    Oakland 20
    Kansas City 17

    Seattle 24
    St. Louis 19

    San Francisco 37
    Arizona 31

    Baltimore 14
    San Diego 32

    Tennessee 6
    Cincinnati 35

    Buffalo 14
    Jacksonville 36

    Minnesota 41
    NY Giants 17

    Washington 13
    Tampa Bay 19

    Denver 34
    Chicago 37

    Philadelphia 28
    New England 31

    Green Bay 37
    Detroit 26

    NY Jets 3
    Dallas 34

    Indianapolis 31
    Atlanta 13

    KC's View: