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    Published on: January 31, 2008

    Now available on iTunes…

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, available on iTunes and brought to you by Webstop, your first stop for retail website design services.

    F. Scott Fitzgerald famously said that there are no second acts in American lives. But Fitzgerald lived a long time ago, and I’m not sure he’d make that statement today.

    There was a piece on MSNBC this week about how the oldest baby boomers are turning 62 this year and how this puts them in a place where they have to start worrying about Social Security and retirement benefits.

    Now, this probably is good information to have, because there probably are plenty of people out there who don't know what they rights and obligations are as they get older. So in that sense, good work by MSNBC.

    On the other hand, it seems to me that every year we are treated to stories that use the phrase “aging baby boomers” as a theme. Two years ago, it as that the oldest baby boomers were turning 60. In 2001, they were turning 55. In 2011, they’ll be turning 65. And on and on and on.

    Now, I’m a 53-year-old baby boomer, and I have to say that I’m really getting tired of the discussions about how old we all are getting. I’d much rather read or see stories about how people in their fifties, sixties and even seventies are reinventing themselves, refusing to accept the limitations of age, starting new careers and challenging themselves in new ways. I love it when George H.W. Bush keeps jumping out of airplanes…it speaks volumes about vitality of spirit.

    Or, they continue to be productive in their old careers. Two of my favorite authors are Robert B. Parker and Elmore Leonard. Leonard is 82, and he continues to turn out about a novel a year. Parker is 75, and he publishes an astounding three or four novels a year, and even is trying new forms with westerns and young adult novels. I admire that…because they are doing what they do, and they have no plans to stop.

    I’m forever writing about being responsive and relevant to the younger generation of shoppers and shoppers-to-be, but that doesn’t mean ignoring the evolving needs of those of us who are getting a little older. Because the key word here is “evolving” – many of us are ignoring the whole idea of age limitation…we’re traveling to places we’ve never been to, trying to use technologies somewhat foreign to us, tasting new foods that are available to us, and trying to continue to evolve and grow as people. Smart retailers, at least those who have these kinds of people as customers, will figure out new and interesting ways to cater to and challenge them. And the benefits will be mutual.

    Speaking of “second acts,” I would like to draw your attention to a piece that was in the Boston Globe a few days ago about an organization called the Literary Ventures Fund, a nonprofit foundation that was created to publish books from unknown authors that are deemed promising.

    According to the story, “What LVF does is work with publishers to push a book it finds worthy. It draws up a marketing plan that includes promotion strategy for new and old ones alike. It may hire a publicist, it targets book clubs, interested groups and social networks like MySpace and Facebook.”

    In the past three years LVF has helped publish or repackage 11 books of fiction, nonfiction, and poetry. And they’ve all made at least some money.

    Now, LVF is run by a guy that the Globe describes as “a small-bore philanthropist with the DNA of a venture capitalist. He provides seed money to a bunch of things he cares about, including the Addiction Recovery Management Service at the Massachusetts General Hospital.”

    And this guy is named Jim Bildner.

    Now, some of you may recall that name, because about 20 years ago, he began a small chain of gourmet food stores called J. Bildner & Sons that was celebrated in places like Newsweek as the ultimate yuppie destination, loaded with fresh and prepared meals and big on customer service in mostly urban locations. For a while, J. Bildner & Sons was white hot, but then it flamed out almost as quickly, a victim of eighties-style over-expansion and probably more ambition than the infrastructure could support.

    I think of Jim Bildner a lot when I visit stores around the country, because in many ways what he did – even though it failed as a business – presaged areas now common in many supermarkets. And, quite frankly, not everybody does it as well as he did. And I remember him because I was just starting to write about the industry then, and he was uncommonly kind to me, especially considering that I didn’t really know what I was writing about.

    The Globe story makes clear that it hasn’t been a life devoid of tragedy; the failure of the company no doubt pales next to the fact that one of his sons died of a heroin overdose, an event that I’m sure informs his work with the Addiction Recovery Management Service.

    But it is a life, a life of different acts, and obviously one that continues to be creative and energetic.

    In the end, a life is only what we make of it. No matter how old we are.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: January 31, 2008

    The Wall Street Journal reports that even though US Congressional Democrats plan to push for increased funding for the Food and Drug Administration (FDA), saying that high-profile recalls and safety issues point to an agency unable to do its job, the new budget slated to be submitted by the Bush administration is not likely to call for anything close to a dramatic increase. According to the Journal, “the FDA may not get a substantially larger appropriation, because of a squeeze from the Iraq war and economic-stimulus efforts, among other costs.”
    KC's View:
    : It is all about priorities. I hope to see that the issue of food safety gets a fair hearing during the coming presidential campaign.

    Though to be honest, I’m not confident.

    Interestingly, the Washington Post reports this week on consumers’ growing desire for increased food security.

    Listen to the Post:

    “In the past year, food scares, scandals and labeling battles regularly have made headlines. Topps Meat recalled 21.7 million pounds of ground beef after the meat tested positive for a deadly strain of E. coli bacteria. Dozens of shipments of Chinese seafood were halted by the Food and Drug Administration due to contamination. In a much-publicized case, the Pennsylvania Department of Agriculture tried to ban producers from advertising that their milk was hormone-free. This month the FDA ruled that cloned meat is safe to eat and could be sold without special labeling, though it may be years before it ends up on store shelves.

    “Such news always has worried a certain segment of society. But the drumbeat of bad news has spread unease from the farmers market crowd to mainstream shoppers. In 2007, the Food Marketing Institute, a trade group of food retailers and wholesalers, reported that the number of shoppers confident that food at the grocery store was safe had dropped to 66 percent from 82 percent the previous year.”

    What this means is that consumers increasingly have to become their own inspectors, looking to assure themselves that their foods are safe. Which is at least one of the reasons that natural and organic labels have become more important, because they give shoppers a sense of security. And it underlines the role that retailers should play in helping consumers feel informed and reassured about their food choices.

    However, at least some studies suggest that retailers are not the most trusted source of information. Again, from the Post:

    “When the GfK Roper survey asked consumers who they thought had their best interests in mind when it comes to food choices, advocates and activist groups led the list of responses, at 64 percent. Retail grocers were second, at 62 percent, and food manufacturers were third, at 53 percent. The U.S. government ranked fourth at 47 percent, ahead of fast-food companies at 26 percent.

    “In the end, shoppers are learning that it's up to them to balance concerns of food safety, sustainability, cost and convenience, and to make the necessary trade-offs.”

    I think that second and third place should be utterly unacceptable to food retailers and manufacturers.

    Published on: January 31, 2008

    The San Francisco Chronicle reports that the city’s Board of Supervisors “voted unanimously to institute a voluntary program in which restaurants that pledge to cook without trans fats will receive a decal that can be displayed to let customers know their food is being prepared without partially hydrogenated vegetable oils.” It is expected that the board eventually will vote on – and approve – a mandatory ban on trans fats.

    According to the story, “The Golden Gate Restaurant Association, the trade group that represents some 800 of the city's restaurants, bars and caterers, backs the voluntary measure and would back a mandatory ban, said Kevin Westlye, executive director of the association. "Since there are reasonable alternatives, there is no reason for restaurants to continue using trans fats," Westlye said.

    Another food-oriented piece of legislation is expected to be on the board’s agenda soon – a proposal that will “require chain restaurants with more than 14 outlets in the state to post the content of food on menu boards and food tags, including the number of calories and the amount of saturated fat, sodium and carbohydrates,” according to the Chronicle.

    KC's View:

    Published on: January 31, 2008

    The Wall Street Journal reports that Starbucks CEO Howard Schultz announced yesterday that the company would stop selling breakfast sandwiches by the end of the year because of concerns that they interfere with the aroma of fresh coffee; the sandwiches were introduced two years ago as a way of driving up transaction sizes.

    At the same time, Schultz said that Starbucks will only open 1,175 new stores in the US this year, rather than the original projection of 1,600; the company also said it would close 100 stores this year.

    In an interview with the Seattle Times, Schultz said that the closings are “six times the normal rate. There's no doubt that we have a head wind in terms of the consumer issues and the macro environment, the likes of which we have not seen in many, many years. ... I don't think the near-term environment is going to get any better and could very well get worse, so we want to be very conservative and very careful as we go forward this year.”

    However, Schultz also said that the company would open 975 new stores outside the US, up from the original projection of 900.

    Also, while saying that “the consumer is in a recession” and that Starbucks is testing a $1 cup of coffee and free refills in Seattle, Schultz said that Starbucks will not “get into any price value discounting that would dilute the premium place we occupy.” As the Journal notes, “the company is looking at creating ‘segmentation’ that would allow an entry point for new customers the way that Mercedes-Benz has done with its C-Class and Ralph Lauren has done with its Chaps brand.”

    The New York Times this morning reports that, “Adopting a risky tactic that may alienate Wall Street, Mr. Schultz said the company would no longer provide same store sales numbers, at least temporarily, as he moves forward with his turnaround plan. He said the company’s decisions had been too driven by improving same-store sales rather than consumer needs and that same-store sales numbers would be “erratic” during the transformation.”

    However, as the NY Times notes, a similar decision by Robert Nardelli in 2006 when he was CEO of Home Depot “turned out to be the beginning of the end of Mr. Nardelli’s reign.”

    In the Seattle Timesinterview, Schultz went out of his way to take the blame for what he sees as missteps. “I'm not sure we've grown too quickly,” he said. “I think that growth sometimes can cover up mistakes, and as I assess some of the issues we're facing, I strongly believe that a lot of it is self-induced.

    “I honestly believe that competition is not the issue for us, that we control our own destiny … I take full responsibility whether I was engaged in a decision or not. I'm not looking backward. I'm looking forward. I know in my heart that the decision to take the sandwiches out, the decision to reinvest in training in a big way … these are the things that are so vitally important to the emotional connection we have with our people and our customers.

    KC's View:
    I figure that at some point I’m going to start getting email from a few people suggesting that MNB is spending too much time on the Starbucks story, but I don't think so. It is a classic story about a retailer in search of its own soul, of grappling with challenges both internal and external, and of trying to remain true to its cultural imperatives while satisfying the demands of the public markets. In short, a compelling American story that will teach all of us lessons about success and failure.

    Too bad about those breakfast sandwiches, though. I really like the low-fat turkey bacon version.

    Published on: January 31, 2008

    • The San Francisco Business Times reports that Tesco’s US Fresh & Easy Neighborhood Market operation has identified 18 Northern California locations where it will open stores, stretching “from San Francisco to Walnut Creek and from San Jose to Napa. Three will open in Oakland and two in San Francisco.

    “Tesco, the third-largest retailer in the world, began peppering Southern California, Arizona and Las Vegas with these stores just 12 weeks ago, and 37 are already open with hundreds more locations announced.”

    KC's View:

    Published on: January 31, 2008

    Business First of Buffalo reports that western New York’s Tops Markets, recently sold to Morgan Stanley Private Equity, has decided to convert its four Martins Super Food Stores back to the Tops banner. The move follows through on a pledge made by CEO Frank Curci when he took the top job at Tops late last year.
    KC's View:

    Published on: January 31, 2008

    • Ingles Markets said that its first quarter profit rose 14 percent to $12.7 million, from $11.2 million during the same period a year ago. Revenue rose 13 percent to $777.1 million from $685.7 million.

    • Kraft Foods reported that fourth quarter net income fell to $585 million, down from $624 million during the same period last year. Revenue rose 11 percent, to $10.40 billion, from $9.37 billion in the fourth quarter of 2006.

    For the full year, Kraft’s profit fell 15 percent, to $2.6 billion, down from $3.06 billion in 2006. Full-year revenue climbed 8.4 percent, to $37.2 billion, from $34.4 billion in 2006.

    • Kellogg Co. reported Q4 net income of $176 million, down 3.3 percent from $182 million during the same period a year ago. Revenue for the period was up 8.1 percent to $2.79 billion.

    • announced that its fourth quarter net income rose to $207 million, or 48, up from $98 million a year earlier. Net sales grew to $5.67 billion from $3.99 billion a year earlier.

    For fiscal 2007, the online retailer reported net income of $476 million, compared to $190 million in 2006. Sales rose to $14.84 billion for the year, up from $10.7 billion in 2006.
    KC's View:

    Published on: January 31, 2008

    MNB reported yesterday that Associated Wholesale Grocers will acquire four Dillon stores, in Kansas and Missouri, from Kroger. The deal is expectedly to close next month. At the same time, there are published reports that Dillon may acquire five Homeland stores owned by AWG in Wichita, Kansas.

    However, I misspoke. Three of the five stores being acquired are in Wichita, Kansas, and the other two are Price Chopper units in Topeka.

    KC's View:

    Published on: January 31, 2008

    MNB had a story yesterday about what the Wall Street Journal described as the hot new food trend – ice chewing.

    This prompted a lot of emails…many of them along the same lines. Among them:

    DON’T DO IT! I have cracked teeth due to my love of ice chewing at a young age. The crowns I have to show for it are not inexpensive!

    Chewing ice is REALLY bad for your teeth. I do it all the time and every dentist I have ever known has lambasted me for it. I have tried to quit but it is a difficult habit to break.

    Hopefully Wegmans will spearhead to movement to stop selling chewable ice, before the epidemic spreads. Of course, I say this with tongue (and ice) firmly in cheek.

    “Ruins your teeth! As a former ice chewer with the dental bills to prove it I know. My dentist (a new one) finally straightened me out.”

    Along other lines, MNB user Jack Acree wrote:

    This is not a new phenomenon in terms of consumer demand. There is even an ice chewers bulletin board. Craving ice chewing is associated mainly with low iron levels. It can also be an indicator of other deficiencies. Those that crave ice would do well to look into why they do it as opposed to doing more of it.

    Go figure.

    Another MNB user wrote:

    Maybe the next breakthrough will be putting ice in little paper cones and pouring flavored syrup on it.

    Yet another MNB user wrote:

    And 20 years ago, no one would have ever dreamed that bottled water would be the industry it is today.

    So, are you ready to start a joint franchise in "Flavored Ice"? I would not suggest that you start in Massachusetts, however, Orlando or San Diego would seem to be able to generate a warmer reception to this "Idea".

    And MNB user Dana Wise wrote:

    I am not a compulsive ice eater, but I know quite a few who are, and currently Sonic has THE BEST ice available. Also, once I found out that they sell it by the bag, I haven't gone anywhere else.

    See? On MNB, not only do you get wine recommendations as well as restaurant, book and movie reviews…but you also can find out where to get the best chewable ice.

    You’re on your own when it comes to finding a dentist, though…

    KC's View: