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    Published on: February 4, 2008

    The New York Times reports that a remarkable thing has happened in Ireland, where in 2002 the government imposed a 33 cent tax on each plastic bag given out in the checkout lines of that nation’s stores. The tax wasn't created in a vacuum; the Times notes that the government also did a public service campaign to explain to the citizenry what had been done, and why.

    “And then something happened that was bigger than the sum of these parts,” the Times writes. “Within weeks, plastic bag use dropped 94 percent. Within a year, nearly everyone had bought reusable cloth bags, keeping them in offices and in the backs of cars. Plastic bags were not outlawed, but carrying them became socially unacceptable — on a par with wearing a fur coat or not cleaning up after one’s dog.”

    Something else has changed, too. Ireland’s retailers have not only accepted the change, but are enthusiastic about it.

    “I spent many months arguing against this tax with the minister; I thought customers wouldn’t accept it,” Feargal Quinn, founder of Superquinn and a member of the Irish Senate, tells the Times “But I have become a big, big enthusiast.”

    The Times also notes that in his role as president of EuroCommerce, a trade group representing six million EU retailers, Quinn has encouraged – largely unsuccessfully - a similar tax in other countries, believing that it could have much the same impact as in Ireland.

    “They say: ‘Oh, no, no. It wouldn’t work. It wouldn’t be acceptable in our country,’” Quinn tells the Times.

    And Quinn notes that the acceptance of the bag tax marks a real sea change in terms of public attitudes. He tells the Times “that when his Superquinn stores tried a decade ago to charge 1 cent for plastic bags, customers rebelled. He found himself standing at the cash register buying bags for customers with change from his own pocket to prevent them from going elsewhere.”

    The paper also reports on the larger problem: “In January almost 42 billion plastic bags were used worldwide, according to reusablebags.com; the figure increases by more than half a million bags every minute. A vast majority are not reused, ending up as waste — in landfills or as litter. Because plastic bags are light and compressible, they constitute only 2 percent of landfill, but since most are not biodegradable, they will remain there.

    “In a few countries, including Germany, grocers have long charged a nominal fee for plastic bags, and cloth carrier bags are common. But they are the exception.

    “In the past few months, several countries have announced plans to eliminate the bags. Bangladesh and some African nations have sought to ban them because they clog fragile sewerage systems, creating a health hazard. Starting this summer, China will prohibit sellers from handing out free plastic shopping bags, but the price they should charge is not specified, and there is little capacity for enforcement. Australia says it wants to end free plastic bags by the end of the year, but has not decided how.

    “Efforts to tax plastic bags have failed in many places because of heated opposition from manufacturers as well as from merchants, who have said a tax would be bad for business. In Britain, Los Angeles and San Francisco, proposed taxes failed to gain political approval, though San Francisco passed a ban last year. Some countries, like Italy, have settled for voluntary participation.”

    And, of course, Whole Foods has announced that it will no longer hand out plastic bags as of Earth Day, April 22, 2008.

    KC's View:
    It was interesting that over the weekend, the South Florida Sun-Sentinel ran a letter from a reader who objected to a quote in the paper from a Publix spokesperson saying that the company has “no plans” to ban plastic bags in the same way that Whole Foods has. The letter essentially accuses Publix of hypocrisy, saying that “if Publix is going to sell Publix GreenWise products and open Publix GreenWise markets, they should step up to the plate like the Whole Foods grocers” and ban plastic bags.

    I think that hypocrisy is a little strong, but I also think that this letter probably reflects a feeling by an expanding number of consumers – that if stores are going to sell natural and organic foods and take an approach to the marketplaces that stresses the “green,” then they have to be consistent. And this means that at some point, taxing and/or banning plastic bags probably is going to happen.

    Companies need to be preparing sooner – rather than later – for that eventuality.

    Published on: February 4, 2008

    Fascinating analysis in the New York Times about how Wal-Mart seems to be redefining itself.

    “After years of running afoul of the United States government on labor and environmental issues,” the Times writes, “Wal-Mart now aspires to be like the government, bursting through political logjams and offering big-picture solutions to intractable problems.

    As the federal government debates how to wean the country from its addiction to oil, Wal-Mart just announced it would require suppliers to make major appliances that use 25 percent less energy within the next three years.

    “While Congress wrings its hands over higher health care costs, Wal-Mart vowed to save companies $100 million this year by processing their prescription drug claims. (It already sells generic versions of prescription drugs for just $4, well below the national average.)”

    And, the Times continues, “The company’s transformation from a laggard to a leader on issues like health care and the environment can arguably be traced to two epiphanies. The first was that a wave of negative publicity threatened to alienate consumers and block the opening of new stores … The second epiphany? Wal-Mart, the nation’s largest retailer, discovered that doing good was, in fact, good for business. That was the lesson of Hurricane Katrina. Wal-Mart’s rapid response — truckloads of water and food, much of it reaching residents before federal supplies — won it widespread admiration.

    “All of this encouraged Wal-Mart to think bigger. If the company was such an effective problem solver — more effective, at times, than the federal government — why not tackle the big issues of the day?”

    KC's View:
    There will, of course, be some cynicism about Wal-Mart’s apparent new role, and certainly some of it is deserved; some will argue that a leopard cannot change its spots, and that Wal-Mart is only interested in profits and world retail domination.

    It certainly is fair to say that Wal-Mart’s primary concern has to be the bottom line – that’s what investors expect and what analysts expect. But as was argued here on MNB more than a month ago, it is good business for retailers to get ahead of the government on many issues, rather than whining about government intervention and legislation that they believe to be oppressive.

    Published on: February 4, 2008

    The Los Angeles Times reports that “the California Department of Education on Thursday urged all schools in the state to temporarily strike from the menu any item containing ground beef, as the U.S. Department of Agriculture investigated claims that Hallmark Meat Packing butchered so-called downer cattle that are too weak to walk.

    “A video released Wednesday by the Humane Society of the United States showed workers at Hallmark dragging downed animals by their legs or using forklifts and water hoses to force weak cattle to their feet, prompting the federal investigation.

    “The USDA banned "non-ambulatory" cattle from the human food supply last year because inability to walk may be a sign of bovine spongiform encephalopathy, commonly known as mad cow disease.”

    KC's View:
    It is shocking to think that there could be more cases of mad cow disease out there than the government has said there are.

    The big victim in this, as always, will be consumer confidence.

    Published on: February 4, 2008

    The Wall Street Journal reports that investors and market analysts will be watching as the Coca-Cola Co. and PepsiCo fine financial reports over the next few weeks – not just because they may have ownership stakes in the two soft drink giants, but because they think that the reports could indicate the seriousness of the nation’s economic condition.

    The Journal writes: “Beverage executives often paint their industry as less vulnerable to economic downturns than some other businesses, on the theory that penny-pinching consumers still allow themselves little indulgences like a Coke or a Gatorade as they are forced to cut back on buying new clothes and bigger-ticket items.

    “But weak traffic recently at McDonald’s Corp. restaurants -- a major Coke customer and a bellwether of consumer spending -- shows the extent to which consumers are scaling back even on inexpensive purchases. Higher gas prices are keeping more people out of convenience stores, a highly profitable sales channel for the beverage industry, where consumers pay top dollar for cold drinks they might find more cheaply in 12 packs at the grocery store. And a continued rise in commodity prices is forcing companies to raise prices on their products and stepping up the pressure on them to find ways to absorb the extra costs.”

    KC's View:
    I was reading the other day how Stew Leonard told Fortune that he can always tell when an economic downturn is coming.

    "I look for the mashed-potato effect," he said. “If customers are buying our freshly prepared mashed potatoes instead of whole potatoes, then the economy is doing well. Lately, bulk potato sales have been up, so there's a concern about where the economy is going."

    Starbucks’ Howard Schultz said it last week: “The consumer is in a recession,” he said…essentially saying that it almost doesn’t matter what the economists and politicians say.

    I agree. And previously recession-proof industries may find that the current economic downturn may not be as forgiving.

    Published on: February 4, 2008

    Tom Coughlin, the former vice chairman of Wal-Mart and a protégé of company founder Sam Walton who was convicted of stealing more than $500,000 worth of gift cards from the company, will not have to go to jail after all.

    Coughlin pleaded guilty to the charges and was sentenced to 27 months of house arrest in addition to five years' probation, a $50,000 fine and $400,000 restitution. However, the government challenged the leniency of the sentence and appealed it, asking that Coughlin be forced to serve at least some prison time. The defense said that Coughlin’s health was enough of an issue to keep him out of jail, and while the government asked that he be examined by an outside doctor, the courts said that such an exam was unreasonable.

    Last Friday, the judge in the case ruled that while he would add 1,500 hours of community service to Coughlin’s sentence, he would not require the former executive to serve any jail time.

    The government said it has not decided whether to appeal the new decision.

    KC's View:
    If the person who stole the gift cards had been a store employee, or even a store manager, would the judge have been as lenient? It’s doubtful. In fact, if a lower level employee had stolen far less from the company, I suspect that he would have been sent up the river, even if he had some health problems.

    Published on: February 4, 2008

    The Seattle Times reports that at Costco’s annual meeting last week, CEO Jim Sinegal told attendees that “to reduce energy consumption, Costco is installing skylights and solar panels in its massive warehouse clubs. Six stores in California and Hawaii have the solar panels, and seven additional stores are to get them this year.

    “The installer of the Hawaii panels, California-based REC Solar, says the installations at Costco's Kauai and Kona stores are Hawaii's two largest solar arrays.

    “The panels cost about $745,000 per store, and Costco typically doesn't make that money back for three to five years. But Sinegal said they're a sign of the times: ‘We recognize, like all businesses, that we must continue to conserve and save the planet’.”

    According to the story, “Sinegal said Costco is doing other things to reduce its drain on natural resources — for instance, switching from round to rectangular tubs of cashews. (The rectangular tubs mean 400 fewer truckloads shipped to stores annually because they can be stacked more efficiently than the round ones.)

    “Sinegal also said Costco is expanding sales of fruits and vegetables grown in a clean, pesticide-free environment and trying to increase organic food offerings under the Kirkland Signature banner.”

    KC's View:

    Published on: February 4, 2008

    Great piece in the Washington Post this morning about Sally Dickerson, who works in a checkout lane at a Safeway store in Silver Spring, Maryland.

    The reason for the piece? Dickerson is 85 years old, and has been working for Safeway since September 12, 1955. “Dickerson is the oldest of Safeway's roughly 200,000 full time employees across the country and has been working for the company for more than half a century,” the Post writes. Not has she worked with generations of employees, but she has seen generations of customers walk through her checkout lanes.

    The Post writes: “Dickerson wakes up each morning at 2:30 to get ready for work. She has breakfast, then drives from her home in Bowie to the store in Silver Spring. From the start of her shift at 5 a.m. until it ends at 1:30 p.m., Dickerson is on her feet. She doesn't stop to eat and hates taking lunch breaks. The lull puts her to sleep, she said. She needs to keep moving.

    “On a recent afternoon, she stood watch over checkout lane No. 1, the express line. Her hands flew over the register -- bananas, code 4011 -- and she bagged groceries in seconds. She drummed her fingers when another employee was slow to bring bus passes to one of her customers, slowing down the line … Dickerson worked so quickly that soon there was no one left to ring up. So she started teasing her co-workers with her famous razor-sharp tongue. Knight said the one thing that hasn't changed about Dickerson over the years is her wit. Whenever he broaches touchy subjects like slowing down or buying a hearing aid, she quickly dismisses him.”

    Retirement, Dickerson tells the Post, isn’t on the schedule. She’s too busy even to think about it.

    KC's View:

    Published on: February 4, 2008

    • More than 70 percent of United Food and Commercial Workers (UFCW) members employed by 11 Kroger stores in mid-Michigan have voted to approve a new four-year contract. The contract, which was agreed to nine months before the expiration of thee previous agreement, reportedly provides the unionized employees with wage and benefits increases.

    Newsday reports that The Penn Traffic Co. is closing five supermarkets that it describes as “underperforming,” including include P&C supermarkets in Plattsburgh and Horseheads and three BiLo supermarkets in the Pennsylvania cities of Erie, Somerset, and Altoona.

    Forbes reports that Capital Research and Management Company, a fund management firm, has acquired a 5.14 percent stake in Royal Ahold.

    • In the UK, the Sunday Telegraph reports that some suppliers are complaining that Tesco has told them not to raise their prices until the end of its financial year, because the retailer does not want to raise its prices even in a time of inflation.

    However, while a Tesco spokesperson concedes that the company is looking to maintain price stability wherever possible, there is no formal initiative nor has there been a sweeping edict forbidding manufacturers from increasing their prices.

    • In Australia, the Daily Telegraph reports that “scientists have created a ‘tear-free’ onion using Australian-developed biotechnology to switch off the gene behind the enzyme that makes us cry.”

    KC's View:

    Published on: February 4, 2008

    • Kevin Swint, who was running Wal-Mart’s digital media business, is leaving the retailer to work for Apple Inc. running its international movies and TV business. Wal-Mart recently closed its online movie service and cut back on its digital music service.
    KC's View:

    Published on: February 4, 2008

    MNB reported last week on an ABC News story about how 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.”

    One MNB user wrote:

    What reason was this story run? We have not been enlightened by any fresh news. It has been well known about Wal-Mart's nefarious anti-union campaigns before, during and after Clinton was a board member. We are all aware that while with the infamous Rose Law Firm, Hillary was interested in making all the right "power" moves and political connections that could be advantageous to herself and her husband.

    The only possible new information that can be inferred from the "news" is that Hilary does not want to be seen as "laying in bed" with the Wal-Mart regime.


    If the question is why ABC ran the story, it seems pretty clear to me that it is news when a presidential candidate relying on union support can be shown to have been less than active on behalf of unions…especially where is video to support the story.

    If the question is why MNB ran the story, the answer is simple. I saw the story on ABC, and I thought it was interesting. Which is really the only criteria I use in selecting stories for inclusion here.

    Another MNB user thought that I should have been more courageous and forthright in criticizing Clinton, rather than just writing “no comment” in KC’s Views

    To be honest, when I wrote “no comment,” I wasn’t actually saying “no comment.” It was a not-so-clever way of saying that I thought the story spoke for itself and did not require elaboration...and I thought (obviously mistakenly) that it registered a certain disapproval of Hillary’s lack of consistency.

    That’s what I get for trying to be clever.




    Responding to our note about Microsoft trying to buy Yahoo!, one MNB user wrote:

    So how is this different than Whole Foods buying Wild Oats?

    I think one central difference would be that Whole Foods and Wild Oats are essentially in the same business, while the Yahoo! business model is markedly different from Microsoft’s. But I wasn't taking a position on whether the acquisition is a good thing or not…my instinct is to be leery, but I don't know enough yet.




    MNB user John Tatum had some thoughts about Wal-Mart’s new Internet strategy, which has it imitating – and perhaps competing more effectively – with Amazon:

    Money talks – in competition with Amazon the long-term key question will be weather Amazon can keep up with value Wal-Mart is likely to drive through to the customer. Amazon may well find themselves as the local mom & pop store in the e commerce neighborhood, offering great service at an un-competitive price.

    Not sure I’d agree. I find Amazon to be extremely competitive with Wal-Mart, and I can't imagine ever describing it as the equivalent of a “mom and pop” store.




    Responding to last week’s email about a kind of MNB drinking game that has broken out at one company (people bet on the number of times I use the word “Starbucks” in any given week), another MNB user wrote:

    MNB drinking game, that’s funny. Reminds me of an interview with Jay Leno when Kiefer Sutherland (Jack Bauer in 24) learned of a college drinking game based on every time he said “damn it.” Of course the next taping Kiefer indulged Jack Bauer in short tirade. STARBUCKS!




    Finally, responding to our story about how Amazon has determined the most romantic cities in the country based on their purchases of certain kinds of literature, several MNB users came to the same conclusion, summed up best in this email:

    I have a different take on the stats: If people are reading about it, they probably aren't having any...

    Point taken.

    KC's View:

    Published on: February 4, 2008

    In Super Bowl XVII, which was both extraordinary and unbelievable, the underdog New York Giants defeated the New England Patriots 17-14, ending the Pats’ dreams of an undefeated season.
    KC's View:
    I got the score wrong but the result right. Not bad, if I do say so myself.

    A couple of other notes about the game…

    It is amazing – or maybe not - how much better major CPG companies are at advertising their wares than some small companies. They all spend the same kind of money – more than $2 million for thirty seconds of Super Bowl ad time.

    I loved most of the Budweiser and Bud Light commercials, especially the “Rocky” themed ad with the Clydesdale being trained. I liked the Coke ad with James Carville and former Sen. Bill Frist, and I enjoyed the Diet Pepsi Max commercial with the bobbing heads. The Bridgestone Tire ad with the screaming animals was petty funny. And I really liked Audi’s “Godfather” parody.

    But the rest of them were instantly forgettable.

    One other note. I loved the reading of the Declaration of Independence, by football players past and present, that preceded the game. It was stirring…especially because it is a document that most of us don't read nearly often enough. Good show.