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    Published on: February 1, 2008

    The Financial Times this morning that Wal-Mart is endeavoring to “emulate” Amazon.com’s online supremacy with “an international e-commerce initiative aimed at securing billions of dollars of additional sales in countries including China, Japan and Brazil … A new global unit at Wal-Mart's international division will oversee the creation of an -e-commerce platform that could sell groceries, general merchandise and digital products while linking its stores with call -centres.”

    According to FT, Wal-Mart already generates $2 billion a year in online sales in the US, and also has strong e-commerce operations in the UK and Mexico. The Times of London reports this morning that Wal-Mart’s Asda Group in the UK plans to expand its Internet operations by putting more than 750,000 nonfood products for sale online, hoping to generate $1.99 billion (US) in sales by 2011.

    But the new initiative is aimed at generating new sales at a time when Wal-Mart’s US operations have been experiencing slower growth.

    “The retailer is now recruiting software architects and engineers to build what it calls a ‘globally scaleble’ system that would essentially act as a kit of online parts – with elements such as data mining and customer analysis - that could be readily deployed in different markets,” FT writes. “Tesco, the UK retailer, has taken a similar approach in the international expansion of its physical stores, using a set of software applications nicknamed ‘Tesco in a box’ that are adapted to different locations.”

    And, FT notes, Wal-Mart’s “move reflects growing interest among US retailers in the international possibilities of e-commerce, after an initial focus on expanding the US market. Online now accounts for about 13 per cent of total US retail sales excluding cars and groceries, according to Forrester Research.”

    KC's View:
    It probably was only a matter of time before Wal-Mart would look at Amazon’s business as a ripe target and decide to broaden its online initiatives…especially because it potentially represents incremental sales that would help offset areas in which it has been experiencing problems.

    What I don't know is whether Wal-Mart will be able to replicate what I believe is Amazon’s impressive approach to creating a community around its offerings. (I am a frequent and longtime Amazon customer in a wide variety of categories, and made my first purchase from Amazon on March 16, 1997; I have only infrequently bought from Wal-Mart’s online site.) It isn’t overt, but once people sort of get hooked into the Amazon system, it is hard to use the competition – Amazon anticipates so many questions and decisions, and has such superior customer service (at least in my experience), that to shop elsewhere seems counterintuitive.

    That will be hard for Wal-Mart or anyone else to achieve. Though it certainly makes sense to try.

    Published on: February 1, 2008

    Too often, television commercials for supermarket chains feature either pretty pictures and/or hot prices, but don't take advantage of the opportunity to carve out a specific and unique image for the company, its people, and its products.

    But Roundy’s delightful new commercial campaign, launched this week on television, radio and in print, uses its chairman, Bob Mariano, to create a distinct persona for the company and its own-label products.

    In the ads, Mariano is cast as “Chairman Bob,” who travels to orange groves, potato chip factories and ice cream freezers to test and give his imprimatur to specific private label products. He’s accompanied by actors playing corporate toadies, attending to his every need as he relentlessly searches out the best products to sell in the company’s Pick 'n Save, Copps and Rainbow food stores. The music is great, the commercials are well-directed, and Mariano is absolutely terrific with tongue firmly in cheek as he parodies the image of the demanding CEO.

    Even better, all the commercials can be seen online at www.meetchairmanbob.com, as well as interviews with Mariano as he talks about the campaign, and some pretty funny “outtakes.” (There is one hysterical “interview” with one of the corporate toadies who says she is in charge of food safety, and who grazes a cafeteria snack table, taking a nibble of cookies and crackers and then putting them back on the plates. Not sure if consumers will find it as funny as I did, but it is refreshing to see a campaign in which the company doesn’t take itself too seriously.)

    Kudos to Roundy’s for commissioning this new campaign, and for simultaneously taking private label very seriously while being willing to poke fun at itself.

    KC's View:

    Published on: February 1, 2008

    A story aired yesterday on ABC’s “Good Morning America” suggested that the presidential candidate Senator Hillary Clinton (D-New York) - when she was a working lawyer, first lady of the state of Arkansas and a member of Wal-Mart’s board of directors – “remained silent as the world's largest retailer waged a major campaign against labor unions seeking to represent store workers.”

    According to a story posted on ABC’s website, “Wal-Mart's anti-union efforts were headed by one of Clinton's fellow board members, John Tate, a Wal-Mart executive vice president who also served on the board with Clinton for four of her six years.

    “Tate was fond of repeating, as he did at a managers meeting in 2004 after his retirement, what he said was his favorite phrase, ‘Labor unions are nothing but blood sucking parasites living off the productive labor of people who work for a living’ … An ABC News analysis of the videotapes of at least four stockholder meetings where Clinton appeared shows she never once rose to defend the role of American labor unions.”

    The videotapes do show Clinton being more active in terms of talking about women’s issues and the environment.

    This could be a problem for Clinton, since her presidential campaign has been endorsed by more than a dozen unions. ABC notes that Clinton’s campaign website makes no mention of her Wal-Mart tenure, and she now says that she “no longer shares Wal-Mart’s values.” However, she would not agree to be interviewed by ABC about the story.

    ABC writes that in an effort to distance herself from Wal-Mart, Clinton’s “Senate campaign returned a $5,000 contribution from a Wal-Mart Political Action Committee, although ABCNews.com discovered another $20,000 in contributions from Wal-Mart executives and lobbyists.”

    KC's View:
    No comment.

    Published on: February 1, 2008

    Advertising Age reports that Costco is preparing to roll out a line of private label beers.

    According to the story, “The retailer has filed label applications with the federal Tax and Trade Bureau for a Kirkland Signature Hefeweizen, amber ale and pale ale. The beers will be brewed by San Francisco-area craft brewer Gordon Biersch, which also brews private-label beers for the Trader Joe's supermarket chain.”

    Costco has been selling private label wines in states that allow wine sales for some time.

    And, Ad Age notes, “Big-box stores such as Costco have been a lucrative source of case sales for brewers and any additional competition in the channel will not be appreciated at a time when those brewers are struggling to increase sales.”

    KC's View:
    There’s no discussion of price points in the story, but it would not be out of character for Costco to actually price its private label beer higher than the equivalent national brands…and to be very successful doing so. That’s what it does with its own-label tuna fish, and people buy it in the belief that it is superior to the national brands.

    That’s what you call brand equity. That’s what you call brand power.

    Published on: February 1, 2008

    • In the UK, Wal-Mart’s Asda Group has instituted a new marketing program called “Green Rollbacks,” in which it has committed that its efforts to reduce packaging sizes and energy costs will directly result in lowered costs for consumers.

    “Asda believes that going green should reduce the cost of living not increase it, and so every penny of the £10 million saved as a result of this programme will be passed back to our customers,” says Asda CEO Andy Bond. “Our in-house packaging team will review every product in Asda's range, tracking by line the amount and type of packaging used across our entire range. Products that have had packaging reduced will be entitled to a Green Rollback which will ultimately lower the cost of living for our customers.”

    KC's View:

    Published on: February 1, 2008

    • Anheuser-Busch reported that its fourth quarter net sales rose to $3.69 billion, from $3.43 billion a year ago. Q4 net income increased to $214.1 million, from $190.7 million a year ago.

    • Harris Teeter reported that its first quarter sales increased by 12.6 percent to $896.6 million, compared to sales of $796.3 million in the first quarter of fiscal 2007. Operating profit at Harris Teeter increased by 24.8 percent to $44.2 million in the first quarter of fiscal 2008 as compared to $35.4 million in the first quarter of fiscal 2007.

    • CVS Caremark Corp. reported that its Q4 sales were up 82 percent to $21.94 billion from $12.07 billion a year prior.

    • Procter & Gamble reported Q2 net income of $3.27 billion, versus $2.86 billion a year earlier. Revenue climbed 9 percent to $21.58 billion.

    • Colgate-Palmolive reported Q4 earnings of $414.9 million, compared with $401.2 million a year ago. Sales rose 13% to $3.64 billion.

    KC's View:

    Published on: February 1, 2008

    Responding to yesterday’s radio commentary about baby boomers and the second acts in many of their lives, one MNB user wrote:

    I totally agree with you regarding the baby boomers.

    I’m 58 and don’t want to hear about baby boomers becoming old and having limitations, and getting retired.

    With this in mind, 2 years ago, I created Seniosphere, a strategy and marketing consulting group specialized on the 55+ market in Europe. Among our customers, we have a large European retail chain that decided that the 55+ deserved to be better served, and that they needed to be at the centre of their strategy.

    As you said, the needs evolve and we don’t want to ignore them. But we want to do that in a positive and fun way. We want to give the customers the means to evolve and live a fulfilling life.

    The hypermarkets are improved so that customers have an easier access to products. The products are designed in such a way that they are easy to open and read. Everything is in details. But, once again, the most important is the spirit in which everything is done – Let’s be positive.


    I agree…except that I have to say that I hate the word “senior.”

    The same way that I simply refuse to even open envelopes from AARP.

    It may be irrational. But I am resolute.

    And we got another email from an MNB user in Italy, Beatrice Orlandini:

    I agree. Never give up. Just this morning I was speaking with a friend about
    mid-life crisis.

    The ones that are most severely hit are those who have created no alternative in their life. By alternative I don't necessarily mean a career. I mean a passion. A fire that burns within you and you feel you could spend the rest of your life doing it and it still wouldn't be enough.

    It can't be accumulating the latest and hottest "thing". Or going to the coolest place. Once that experience is over you're as empty as before. It can be wanting to learn and realizing that one lifetime will never be enough; wanting to serve; wanting to experiment; wanting to be alive!

    Aren't you the ones that say "It ain't over till it's over?"


    Yes, we are. And, FYI, it was an Italian-American, Lawrence Peter Berra, who coined the phrase.

    Along the same lines, I like the speech that Winston Churchill gave at The HarrowSchool in 1941:

    "This is the lesson: never give in, never give in, never, never, never, never—in nothing, great or small, large or petty—never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy."

    The enemy being lethargy.




    MNB had a story yesterday about some of the changes being made at Starbucks, one of which is the elimination of breakfast sandwiches because CEO Howard Schultz believes that the smell of the sandwiches interferes with the aroma of fresh coffee. I noted that I’m going to miss the low-fat turkey bacon sandwiches…and the most remarkable thing happened.

    MNB user Kristi Verkovod wrote:

    I absolutely adore the Starbucks turkey bacon sandwich. I feel better about making that part of my diet than one of the pastries. I have never had my “aroma of fresh coffee” interfered with by the sandwiches. I think it’s a mistake for Starbucks to drop a key element that allows them to compete with McDonald’s and Dunkin Donuts on the food front, especially with those chains stepping up the competition on the beverage front.

    Another MNB user wrote:

    The Breakfast Sandwiches are the best available!

    MNB user Tony Zuazo wrote:

    I also enjoy the reduced fat turkey bacon sandwich. A sad day for breakfast. In addition the dollars they will have to make up at the register could be tough unless it was a major shrink contributor. I would rather see them stop selling sandwiches and keep breakfast.

    And there were several other emails along the same lines.

    Now, I know this isn’t a scientific sample. But I didn’t get one email from anyone saying that getting rid of the sandwiches was a good idea.

    It just makes me wonder.




    Finally, to return to the subject of Starbucks for a moment, I noted yesterday that I am sure that I will start getting emails from people complaining that I am spending too much time writing about Starbucks. (I would disagree, believing that this is a compelling story about culture and commerce.)

    One MNB user agrees with me:

    I am watching Starbucks very carefully. Starbucks uses the branding model very successfully and has hired many key-NIKE people with exceptional branding experience.

    If Starbucks can't make branding work as it redefines itself nobody can.


    It also led to a great email from MNB user Lisa Malmarowski:

    'Start' spending too much time on Starbucks? We enjoy passing the 'Starbucks' tote board around to those of us that subscribe to your blog.

    The winner who comes closest to guessing how many times you mention Starbucks in a given week gets a free cuppa joe from our awesome local coffee roaster, Alterra.

    I kid because I love! 😉


    How great is that! It is almost like MNB has its own drinking game, albeit one that takes place in the morning.

    Wonder what the over-under was for this week?

    KC's View:

    Published on: February 1, 2008

    Sometimes I am truly amazed at what Amazon knows…and how it can interpret that information.

    For example, Amazon said this week that it conducted an extensive analysis of its customers’ purchasing habits to see where the people who bought romance novels, relationship and sex books live … and where they do not.

    By this measure, the nation’s most romantic cities – or, at least, the cities where people like or need to read about romance and its various iterations, are, in order:

    1. Alexandria, Va.
    2. Cambridge, Mass.
    3. Miami, Fla.
    4. Irvine, Calif.
    5. Ann Arbor, Mich.
    6. Orlando, Fla.
    7. Berkeley, Calif.
    8. Arlington, Va.
    9. Atlanta, Ga.
    10. Washington, D.C.
    11. Pasadena, Calif.
    12. Bellevue, Wash.
    13. Seattle, Wash
    14. San Francisco, Calif.
    15. Columbia, S.C.
    16. Tallahassee, Fla.
    17. .Scottsdale, Ariz.
    18. Austin, Texas
    19. Richmond, Va.
    20. Knoxville, Tenn.

    According to the analysis, Ann Arbor, Mich. is the Sexiest City in America with 24% of its romantic Amazon purchases coming from books about sex. Cambridge, Mass. is the Most Relationship Savvy City in America with 58% of its romantic Amazon purchases coming from books about relationships. Which may say something about the differences between people who live in Ann Arbor and Cambridge – two college towns – that I don't really want to speculate about.

    And here’s the bad news. At the bottom of the list are Pomona, Calif., El Monte, Calif. and Salt Lake City, Utah, the cities least interested in romance coming in with the fewest number of romance, relationship and sex book purchases, on a per capita basis, out of 236 cities.

    I’m just sort of glad my town didn’t make the list. Though I remain impressed with Amazon’s analysis…and the fact that it seems to know things about its customers that few brick-and-mortar retailers do.




    Speaking of what the Internet is capable of…

    Did you see the story about the woman who used CraigsList.com to find a hit man to murder the wife of a man with whom she had an affair?

    According to the stories, she used CraigsList.com – which is used by a lot of people to create friendships, buy cars, rent apartments and the like – to offer interested parties $5,000 to kill the woman. In the ad, she called it an “eradication task.”

    Here’s what’s interesting. The woman who wanted to hire the hit man lives in Grand Rapids, Michigan…just two hours from Ann Arbor.

    Coincidence? I think not.




    As I was posting MNB this morning, the news hit the wires – that Microsoft has offered by buy Yahoo! for about $44.6 billion in a mix of cash and stock. And, as the New York Times reports, “If consummated, the deal would redraw the competitive landscape of the Internet consumer services business, where both Microsoft and Yahoo have struggled to compete with Google.”

    Yikes!




    The other story that broke this morning was that Exxon Mobil reported that its fourth-quarter profit rose 14 percent to a record $11.7 billion, even as crude prices and the cost at the gas pumps increased.

    Think that’s going to outrage an American public sick of taking out second mortgages to fill up their SUVs?




    On another subject…

    One of the great things about having Michael Sansolo around is that it gives the chance – and the rationale – to compare notes constantly about a wide variety of subjects – the Mets, politics, religion, our kids, etc…not to mention things like great retailing and terrific customer service, both of which intrigue us on those occasions when we actually encounter them.

    So I thought I’d share with you this email that I got from Michael this week, filed as he was sitting in the airport in Las Vegas waiting for a flight:

    “Supermarket shopping may rank as a boring chore for most consumers, but nothing could possibly rank below drudgery of the security lines in airports these days. At every airport an annoying video loop of messages plays constantly and it's hard to believe than any one ever pays attention.

    “Except at McCarran Airport in Las Vegas. The security tape there features actors from various shows preparing to go through the screening machines. Klingon warriors from ‘Star Trek’ have to unload their ‘weapons,’ showgirls have to lose extra clothing items and occasionally celebrities (like Rita Rudner) join the fun. In short, it turns the tape into an amazing moment--in fact, people actually enjoy waiting in line.

    “McCarran airport's customer service friendliness doesn't end there. I will never understand why I pay premium rates to connect to the Internet in the nicest hotels, while the cheaper varieties provide it free and by wireless. Most airports are no better offering their cheapest rates for 24 hours periods--an amount of time no one wants to spend in an airport. Only a handful, like McCarran, provide free wireless Internet.

    “What happens in Vegas...is customer service.”

    (Okay, he could have sent me an email about a show he saw, or a meal he had…)




    My wine of the week: the 2005 Decembrino Chianti Classico, which is absolutely delicious with Italian food…and only goes for about 12 bucks. Good stuff.




    I think that beating the New England Patriots this weekend is an almost impossible task for the New York Giants. But while I’m a Jets fan, I’ll be rooting for the Giants, in part because I’m a native New Yorker, and in part because I went to Iona Preparatory School in New Rochelle, NY, with Giants co-owner John Mara. (We weren’t friends and I haven't seen him since graduation in 1972…but I’ve enjoyed reading, watching and hearing interviews with him. He just seems like a decent, nice guy who is enjoying is success without the slightest bit of narcissism. I hope he wins.

    The Pats are a 12-point favorite. If I were a betting man, I’d take the Giants. To win. 37-34.




    That’s it for this week. Have a great weekend…and I’ll see you Monday.

    Sláinte!!

    KC's View: