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    Published on: November 27, 2007

    by Michael Sansolo

    In all the world of terrible commercials, there is nothing quite like those hawking mattresses. I don’t know what it is, but they make the whole notion of buying a mattress seem worse than it actually is, which is saying something since buying a bed can be such a terrible experience.

    Yet I’m shocked to admit, there is one commercial that sends a message we should all consider.

    The story line is stupid and the mere fact that I cannot recall the name of the retailer or the mattress demonstrates how badly the ad fails. Yet it tackles the value equation in a way food retailers rarely do.

    The commercial begins with a restless wife trying to sleep while her giddy husband happily changes channels on his new flat screen television. Finally she sits up and asks how much he spent on the television. “$4,000” he proclaims. Then she asks, “How much did we spend on this mattress?” In other words, why is the television so much more valuable than the bed on which they are sleeping?

    Linger on that for a second and the problem we all have in setting value becomes crystal clear. Why exactly are some things so much more valued than others?

    This is a great question for the food retail industry to ponder as we move past yet another Thanksgiving holiday with its own interesting question on value. I don’t have to ask it because MNB reader Jeff Antil of Bozzuto’s put it so well in a recent e-mail.

    Antil wrote, “Why is it the grocery industry lowers prices on items everyone is going to buy, like turkeys during Thanksgiving, hams during Easter, prime rib during Christmas? Other industries like restaurants have special menus for holidays increasing prices on food upwards to 50-75% higher?

    “During peak holidays airlines increase prices 200-300%. Hotel and motels increase prices when rooms fill up. Imagine if grocery industry charged 50% more for food during a snowstorm or holiday just because other industries can? Sad part is we're the turkeys.”

    Well, yes and no. It does seem counterintuitive somehow that food retail, among all industries finds a way to buck the basic laws and supply and demand and cuts prices for products that are most in demand. It’s not like the airline, restaurant or hotel businesses lack competition. But somehow their value calculus is very different than ours.

    There are powerful historic reasons why supermarkets behave the way they do at holidays, and not all are wrong. Building relationships with shoppers requires thinking beyond just the price of a single product and looking into the total spending that shopper may do over the year and years to come.

    But we should question the basic nature of value every now and again. After all, food is special. Food is the staff of life. And good food is something to be, well, valued.

    Yet that’s rarely how it’s presented in most supermarkets. If mattress ads are poor, supermarkets would be hard pressed to insult them. Most circulars still hawk price, price and more price. Most frequent shopper programs have become another mechanism for delivering price specials. The value conversation begins and ends too often right there.

    Perhaps, there are other ways to start this conversation by talking about taste and quality and delivering on shopper needs. Perhaps we can talk about the importance of making that most important holiday meal of the year something everyone will remember and not because of the price of the turkey. (How many of us sit around the Thanksgiving table discussing the price of turkey after all? If the meal is bad, does anyone actually say, “Well at least it was cheap.”)

    It’s happening already in stores that have turned holidays into the time to serve customer needs like never before. Maybe it’s time for a whole new debate about values. Heck, we can learn from the mattress stores this once.

    Michael Sansolo can be reached via email at .

    KC's View:

    Published on: November 27, 2007

    In London, the Times reports that the three major supermarket chains not named Tesco are ganging up on the UK’s dominant retailer as a way of slowing down its continued market share growth.

    According to the story, Sainsbury, Wal-Mart-owned Asda and William Morrison Supermarkets are all preparing to submit responses to a report released by the government Competition Commission two months ago. That preliminary report said that there were 110 sites described as “landbanked,” or stockpiled by various retailers in order to block competitors from getting a foothold in certain markets. Tesco is believed to control about half the sites being criticized by the commission, though the other retailers could be vulnerable to sanctions imposed by the government.

    The Times story says that while all three retailers agree on their opposition to Tesco, they differ on what the government should do. Asda, for example, is said to favor planning regulations that would give preferential treatment to retailers that don’t have stores in new markets, and that it could support moves to force Tesco to sell off some landbanked properties and perhaps even some stores. Sainsbury is said to favor a less radical approach, in part because it does not want to become the victim of remedies that it recommends.

    Not surprisingly, the Times writes, “Tesco is expected to insist there is no need for tough remedies because the grocery sector is already extremely competitive. It will fiercely oppose the introduction of a competition test or store and land sales.”

    KC's View:
    One cannot help but enjoy the irony of Wal-Mart-owned Asda arguing that Tesco has become too strong, too powerful, too dominant…and that government intervention is required. Granted, the UK is different from the US, and the market conditions are not the same. Still, one can only imagine what the reaction would be here if similar legislative relief were sought by Wal-Mart’s competitors.

    Published on: November 27, 2007

    The Los Angeles Times this morning reports that a meeting in Santa Monica hosted by Tesco with US and British institutional investors was disrupted by protests by about 100 activists from area community groups. The meeting was scheduled to update the financial types on Tesco’s plans for its Fresh & Easy Neighborhood Market chain of supermarkets, now being rolled out in Southern California, Arizona and Nevada.

    According to the Times, “The Alliance for Healthy and Responsible Grocery Stores, which comprises 25 community groups, was protesting Fresh & Easy's refusal to meet to discuss a proposed ‘community benefits agreement.’ It sought to bind the food retailer to certain wage levels, affordable health benefits and greenhouse gas reduction.

    “The coalition also has questioned Fresh & Easy's commitment to open stores in under served and low-income neighborhoods.”

    Tesco’s workforce at the moment is non-union, and the retailer has said that it will be up to the employees to decide if they want outside representation…while clearly hoping that its wages and benefits will be enough to persuade workers not to organize. At the same time, Tesco has said that it plans to open stores in all sorts of neighborhoods – including low-income Compton, where a store currently is being built – and it has made much of its community and environmental commitments, while refusing to meet with the activist groups.

    KC's View:
    No reason at this point to think that Tesco isn’t sincere about its commitments…so my inclination is to agree with the strategy of not engaging with the activists. While ignoring them can be risky from a public relations perspective, Tesco must feel that its format and approach are strong enough to carry it past such protests. Besides, if Tesco were to create even the illusion that it wanted or needed their approval, it could be a long and slippery slope.

    Published on: November 27, 2007

    • Published reports say that the US Attorney’s office in Arkansas has decided to put off the re-sentencing hearing for former Wal-Mart vice chairman Tom Coughlin until after the US Supreme Court rules on a similar case that could affect sentencing guidelines in the Coughlin case.

    Coughlin – convicted on felony wire-fraud and tax-evasion charges related to his embezzlement of roughly a half-million dollars worth of cash, gift cards and merchandise from Wal-Mart - originally was sentenced to 27 months of home confinement because of what his lawyers called health issues. But an appeals court said that the sentence was too lenient and unreasonable, and called for a new sentencing hearing. Coughlin wanted that ruling overturned, but failed – and now experts suggest that it seems likely that he will spend at least some time in jail.

    KC's View:

    Published on: November 27, 2007

    • All the numbers aren’t in yet, but was saying yesterday that “traffic on, a one-stop shop for consumers looking for Cyber Monday deals, is tracking three times higher than traffic on Cyber Monday last year, according to Mall Networks, which powers the site. By 1:00 p.m. EST today, the site had more than one million visitors. The site offers promotions and special deals from more than 550 online retailers.”

    Expectations are this year that some 72 million consumers planned to shop online during Cyber Monday, which in the US is the first Monday after the Thanksgiving holiday weekend.

    KC's View:

    Published on: November 27, 2007

    • The Washington Post reports that Safeway, having reached the point where 1,000 of its stores have been converted to the “Lifestyle” format, is saying that all of its 1,738 units will have been converted by 2010,

    And, the Post notes, “Safeway has slowly gained market share in the Washington region, though it remains second in both sales and number of stores to longtime leader Giant Food. But as Giant struggles with remote management, low employee morale and sluggish sales, Safeway has invested heavily in renovating its stores in the area.”

    • The Great Atlantic & Pacific Tea Co. (A&P) said yesterday that it has sold all of its 11.7 million shares of Metro Inc. supermarket chain for $347 million as part of its financing to buy Pathmark Stores for about $679 million. Canada’s Metro Inc. is buying 1.5 million of the A&P shares.

    Business Week reports that “the Food & Drug Administration is planning hearings on Nov. 29 that will reopen a long-dormant debate over whether stricter limits on salt in processed foods are needed. The move has snackmakers and food companies scrambling to fend off the prospect of rules and labeling requirements that could scare consumers and potentially take a bite out of the billions Americans spend on food each year.

    “ Americans on average ingest 3,400 milligrams of sodium a day--about 1 ½ teaspoons' worth, well above the recommended level of 2,300 mg.”

    USA Today reports on what it describes as one of the nation’s hottest food trends – macaroni and cheese.

    “In an age of better-for-you eating, calorie- and carb-heavy macaroni and cheese is making a comeback. It's now sold in restaurants from fast-food and casual-dining to chi-chi establishments. Even packaged-food giants are cashing in as folks seek sensory comfort in the tastes and smells of their youth.

    “Sonic Drive-In started selling it as a snack this month. Kraft has introduced an organic version. Cheesecake Factory sells it as an appetizer. And at two trendy New York eateries, it's the only entrée.”

    • Whole Foods announced that it will launch a bi-monthly consumer magazine – called, predictably enough, “Whole Foods Market Magazine” – early next year. Published by Active Interest Media, the magazine will “feature the latest in health and wellness news, food and environmental issues and trends, a wine column, the latest in beauty and self-care products, and more. The magazine will also feature the best natural, organic and gourmet foods as well as healthy and delicious recipes,” according to a statement released by the company.

    • The Food Marketing Institute (FMI) said yesterday that it supports granting the Food and Drug Administration (FDA) and the US Department of Agriculture (USDA) the authority to mandate a recall when a company refuses or delays to voluntarily recall a product that FDA and/or USDA have determined poses an imminent and substantial risk of serious adverse health consequences or death to humans or animals. This authority should be used to enhance systems currently in place and foster clear and accurate communication.

    According to the statement, the FMI Board of Directors approved the position at a meeting two weeks ago.

    KC's View:

    Published on: November 27, 2007

    …will return.
    KC's View:

    Published on: November 27, 2007

    In Monday Night Football action, the Pittsburgh Steelers beat the Miami Dolphins 3-0.
    KC's View: