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    Published on: February 20, 2008

    It was reported last week that Starbucks plans to close all of its US owned-and-operated stores on February 26 between 5:30 and 8:30 pm (local times) so that its employees can be retrained in the company’s coffee culture … part of what the company says is a renewed focus on its core business.

    Stew Leonard’s, the four-store fresh foods retailer with stores in Connecticut and New York, has decided to take advantage of the moment, announcing that during that hours that Starbucks is closed, it will offer free coffee, espressos and cappuccinos in all of its stores.

    "We know what it's like when you need your java jolt, so while Starbucks is turning customers away, we'll be welcoming them with open arms and a free cup," said company CEO Stew Leonard, Jr. "We actually got this idea from Mike Perry, owner of Coffee Klatch Roasting in southern California, who was visiting our stores the other day. His coffee shops have been recognized as serving the 'Best Espresso in the World' at the 2007 World Barista Championship in Tokyo, Japan."

    Stew Leonard’s offers full-service coffee bars and in-house coffee roasters. In addition to fresh-roasted coffee in all of its stores, and also makes authentic espresso and cappuccino drinks on traditional machines.

    KC's View:
    When I read this announcement, I just had to smile.

    Compete is a verb!

    Good for Stew Leonard’s. Not only do they see an opportunity and grab it, but they then give a pat on the back and full credit to another retailer for actually coming up with the idea.

    Smart moves. And the kind of moves that make Stew Leonard’s a terrific retailer. (And the food store, I don't mind admitting, where I have spent more than one hundred bucks a week virtually every week for the past 24 years.)

    Published on: February 20, 2008

    The New York Times writes this morning that in an age of mass production, many shoppers are having “aha moments” when they taste “a burgeoning variety of fresh dairy products made in small batches on little farms and in small creameries. And it’s worth the extra money.

    “These artisanal operations are turning cow, goat or sheep milk into simple, straightforward foods like crème fraîche, butter, buttermilk, ice cream, puddings, custards, yogurt, yogurt-based sauces and yogurt drinks. Many of these dairies also sell unhomogenized, and in a few cases even unpasteurized, milk with an old-fashioned farmhouse flavor … Chalk it up to a lucky confluence of events. Most small dairy farmers cannot keep afloat selling milk to large processors at commodity prices, so those who are trying to survive are looking for alternatives. At the same time there is an increasingly sophisticated public that appreciates the difference between mass-produced dumbed-down food and the handiwork of a small dairy that has learned to produce exceptional butter or yogurt or ice cream by doing it the way it was done before World War II, when there was a creamery in every town.”

    KC's View:
    This is a real opportunity for retailers that want to try something different…offering small batches of unique products that will help differentiate their stores in the eyes of consumers.

    While I am in favor of such artisanal products, I have to admit that I don't get the appeal of dairy products that are not homogenized or pasteurized. I thought these were good processes, not things to be avoided.

    Published on: February 20, 2008

    The San Francisco Chronicle reports this morning that a California man has been arrested and taken into custody on charges related to the animal cruelty case that has resulted in the nation’s largest beef recall.

    The recall by Westland Hallmark Meat Company is part of what the New York Times has called a widening animal abuse scandal. Late last month, the Humane Society of the United States released a video showing workers “kicking sick cows and using forklifts to force them to walk.

    “The video raised questions about the safety of the meat, because cows that cannot walk, called downer cows, pose an added risk of diseases including mad cow disease. The federal government has banned downer cows from the food supply.”

    According to the Chronicle, Daniel Ugarte Navarro, a pen manager at the slaughterhouse, was taken into custody and then released on $7,500 bail after being charged with five felony counts of animal abuse and three misdemeanor counts of illegal movement of a non-ambulatory animal. If convicted, he could face up to 5 years and 8 months in prison.

    Another slaughterhouse employee, Luis Sanchez, has been charged with three misdemeanor counts and remained at large.

    The Chronicle notes that officials estimate that about 55 million pounds of the 143 million pounds of recalled beef went to USDA nutrition programs, the bulk of it for schools; no resultant illnesses have been reported.

    Even as the USDA promises to increase its oversight of the nation’s slaughterhouses while maintaining that this is an isolated incident, Rep. Rosa L. DeLauro (D-Connecticut), who chairs the House subcommittee responsible for USDA funding, called for the department to be stripped of its oversight responsibility. She said that the agency's twin mandates of promoting the nation's agriculture and monitoring it for safety have become blurred.

    KC's View:
    I would agree that the USDA would appear to have conflicting mandates, and that it would seem to have been doing a poor job on the food safety oversight side.

    But I would also make one observation about Daniel Ugarte Navarro, the arrested pen manager. The Chronicle notes that he will be assigned a public defender during his arraignment…which makes me think that this guy could end up being a scapegoat for a much bigger problem. I’m not suggesting he isn’t guilty or culpable…but if they try to lay the whole thing at the feet of a couple of guys who can't even afford a lawyer, I’m going to be very, very suspicious.

    Published on: February 20, 2008 has a fascinating piece written by a doctor, Rahul K. Parikh, M.D., in which he notes that most physicians seem to be opposed to the in-store medical clinics that have become popular in retailers across America: “Their basic argument is that retail clinics run counter to the concept of ‘a medical home,’ a place where patients receive care for any and all of their problems. They worry that patients will have no sensible place to follow up their test results, and that putting a clinic in a mall or a Wal-Mart could expose shoppers to people with a contagious illness.

    “The medical community needs a second opinion. Retail clinics are good for American healthcare. By giving doctors a run for their money, they force us to do something we don't do well: innovate. At their best, retail clinics can make doctors look like smart entrepreneurs instead of a self-interest group futilely trying to protect archaic ways of doing business.”

    Essentially, Parikh makes the following points:

    • Traditional medical practices “must measure success in terms of access, quality and cost,” but don't fare well in any of these areas. Access is a problem simply because most practices can't or won’t offer round-the-clock service or even extended hours. . “Costs keep rising and being shifted to consumers in the form of higher premiums, deductibles and co-pays,” he writes. And despite all the chest-beating about the superiority of the US health care system, there clearly are problems.

    “Despite having the brightest medical minds and therapies, basic medical quality in America remains poor,” Parikh writes. “According to a 2004 report by the Government Accountability Office about Medicare preventive services, 30 percent of people over age 65 did not receive a flu vaccine and 37 percent had never had a pneumonia vaccine. Another example: In 2000, Medicare estimated that 6.6 million beneficiaries were never told by their doctor that they had high blood pressure.”

    • “On the other hand,” Parikh writes, “retail clinics are thriving. They provide excellent access. After all, what's more convenient than showing up any day, night or weekend to have your sore throat checked? No telephone time spent on hold trying to make an appointment, no shuffling your personal schedule to get there.

    “Then there's cost. Retail clinics operate on a fee-for-service basis and don't accept insurance. Most charge a maximum of $50, which is significantly cheaper than the $100 plus your insurance company (or you, if you carry an increasingly popular high deductible insurance plan) will pay when see your doctor for the same concern. That relative savings makes retail clinics a great place to go if you're uninsured and have a minor medical problem. This desire to pay out of pocket is a not-so-subtle sign that consumers are asserting their purchasing power in the health sector, just as they would with other goods and services.”

    The quality of care, Parikh suggests, may actually improve because of health clinics: “Retail clinics don't do everything. Literally, a customer has to choose what he or she wants from a menu of choices posted on a marquee. Choices are limited to simple, easy-to-handle medical problems like sore throats, allergies and cold sores or a request for routine flu or pneumonia vaccinations. No acute medical problems, like injuries or asthma, are addressed. All decisions are made using very strict decision trees, leaving no room to treat issues beyond or outside of them.”

    In addition, given the state of technology today, it isn’t hard for these clinics to communicate with family doctors and medical practitioners … and, in fact, electronic medical records systems are making this easier all the time.

    “Most important, by relegating minor complaints to the walk-in clinic, a doctor can be a doctor,” Parikh writes. “Many of us didn't get into this job to become ‘diaper-rash doctors,’ the kind who pack their day seeing patients with minor complaints to pay the bills. Yet after years of training and preparation, too many of us become just that. We simultaneously complain that we don't have the time to address the challenges that come with complex, chronic health issues, like obesity or childhood asthma. Adopting the retail model in-house could change the way we spend our time, allowing us to get back to practicing challenging and more satisfying medicine.”

    KC's View:
    Parikh concedes that at some point in the development of this new medical model, there will be a stumble – someone will get treated for the wrong thing, or be given the wrong medicine, and the media will trumpet the problems with in-store clinics instead of the advantages. And, quite frankly, it will be up to the media to look at such an event in context, and not go for the easy headline. (Never easy…trust me.)

    In addition, Parikh suggests, there is another advantage to the in-store clinic model. It is forcing doctors to get in touch with their inner entrepreneurs, to find new ways to innovate in their own practices.

    This is very smart. I would actually encourage retailers that are housing such clinics to work with local physicians, to find a ay to integrate their health care expertise into the food store experience, perhaps through seminars or even online Q&A sessions for shoppers. It’s a great way to be holistic about taking better care of one’s body, and for drawing what I keep referring to as the thick, straight line between food and health & wellness.

    Published on: February 20, 2008

    Advertising Age reports that “college students, increasingly concerned about the source and quality of food they're eating, are demanding that schools purchase regional produce. That's forced major food-service companies to scramble for grass-roots alternatives -- and allowed some nimble regional rivals with good local connections to elbow their way into the $5 billion on-campus-dining market.”

    However, as Ad Age writes, there has been an adjustment period. “The catch … is while students are demanding organic and local fare, they aren't always sure what that means -- or how it tastes.” Which means that the cafeteria operators are having to educate their staffs and the students about why organic milk tastes different from traditional milk, for example, or why free range meats can sometimes be gamier than the usual kind.

    KC's View:
    Well, these are college campuses, after all. A little education … even in the cafeteria … isn’t really out of place. Is it?

    The implication for retailers, by the way, is this: if college kids can be taught about better-for-you foods and develop an appreciation for them while on campus, there may be an even greater demand for them when these kids hit the workforce and become wage earners and consumers.

    Published on: February 20, 2008

    The advertising business – or, at least, the business of measuring how people respond to advertising – increasingly is going high-tech.

    In the past year, Ad Week reports, “several high-tech firms, including EmSense, NeuroFocus, and OTX Research and Innerscope, have introduced portable, less intrusive and more affordable measurement devices to track and measure both brain waves and biologic data. Not surprisingly, a growing number of marketers and agencies are taking note, experimenting with the new devices in hopes that the resulting metrics will provide insights on ads appearing on any and all platforms … such techniques help marketers more accurately decipher consumers' feelings because they measure physical and emotional responses as they occur, as opposed to having people remember or interpret their feelings after the fact when doing things like surveys and focus groups.”

    And, Ad Week writes: “Although marketers have pondered for years how much time, energy and resources they should devote to measuring emotional responses to their ad messages, recent research suggests they should take the leap. A March 2007 report from a joint task force of the American Association of Advertising Agencies and the Advertising Research Foundation concluded that the traditional ‘think-feel-do model of how advertising works is incorrect,’ given new insights about the human brain's decision-making processes. ‘Emotional reactions not only come first, they facilitate memory and influence actions,’ the report said.”

    KC's View:
    Forgive me, but when I read about these devices, I immediately think of Malcolm McDowell’s Alex DeLarge in Stanley Kubrick’s film version of Anthony Burgess’s “A Clockwork Orange” … being tortured by the government through aversion therapy that forces him to watch scenes of violence.

    Published on: February 20, 2008

    Budwey’s Supermarkets, a small, two-store family supermarket company in western New York, announced that it is getting out of the tobacco business.

    “First of all, we've been thinking about it for about six months. Wegmans made the move to do it, and we followed. I have some family members who have cancer and it's just not a good thing,” owner Frank Budwey tells WGRZ News. “The profitability is not there anymore. Many people are going to Indian reservations. The sales have dropped over the past 15 years.”

    KC's View:
    For the most part, the chains making this decision are small, family-owned companies. It’ll be interesting to see if some bigger companies start coming to the same decision.

    Published on: February 20, 2008

    • Wal-Mart’s Asda Group in the UK announced that it will open “between 10 and 12 new superstores, 10 Living stores and 12 extensions to existing outlets” over the next 2 months, creating more than 9,000 jobs in the UK. The company is investing the equivalent of more than $750 million (US) in the store expansion program.

    • The Wall Street Journal reports that Wal-Mart plans to open 10-15 cash-and-carry stores in India as part of its joint venture there with Bharti Enterprises.

    The stores will sell mainly to other retailers and manufacturers. “A typical facility will stand between 50,000 and 100,000 square feet and sell a wide range of fruits and vegetables, groceries and staples, stationary, footwear, clothing, consumer durables and other general merchandize items to retailers," Wal-Mart said in a statement.
    KC's View:

    Published on: February 20, 2008

    • Roundy’s Supermarkets is suing Nash Finch, saying that the wholesaler owes it $7.9 million. According to news reports, the suit is related to a 2005 agreement that had Nash Finch buying two warehouse facilities, and a “purchase price adjustment” of $7.9 million that Roundy’s says it is owed.

    At the same time, Nash Finch reportedly is countersuing Roundy’s for $18 million, charging the company with breach of contract and misrepresentation.

    USA Today reports this morning that “packaged-food giants from Quaker to Kraft have discovered that calorie-conscious snackers who turned 100-calorie packs into a $200 million annual gold mine are getting bored with 100. So the bar is falling. Quaker is making 90 the new 100 (and) has rolled out a slew of 90-calorie treats.”

    Not everyone is impressed, though. Nutritionist Marion Nestle tells USA Today, "They're having a calorie war. Let's see who can put the most junk food in a package with the least amount of calories."

    • The Chicago Sun Times reports this morning from the Consumer Analyst Group of New York Conference, currently taking place in Boca Raton, Fla., where the general theme is the increased price of groceries in the US. Virtually every major manufacturer represented at the conference is said to be raising prices in response to increased energy and commodity costs, which means that consumers will either spend more at the supermarket or ratchet back their consumption.

    The latter, of course, would not bode well for a US economy that many people already think is in recession.

    USA Today reports this morning that “the European Commission has asked for information on pricing practices by candymakers, a signal that regulators across the globe are taking a broader look into allegations of an industrywide price-fixing scheme.” Not only are EU officials looking into price-fixing allegations, but US and Canadian regulators also reportedly are looking into the candy industry.

    KC's View:

    Published on: February 20, 2008

    • Whole Foods announced that its Q1 net profit dropped 27 percent from $53.8 million to $39.1 million, which the company attributed to costs related to its acquisition of Wild Oats. Q1 sales reached $2.46 billion, up 32 percent from a year ago, on same-store sales that were up seven percent.

    • Winn-Dixie announced that for the second quarter, its earnings were $4.1 million…an enormous drop from the year-ago Q2 earnings of $286.8 million. However, the company noted that last year’s numbers were skewed by non-cash gains stemming from the company's financial restructuring.

    Adjusted second-quarter earnings totaled $21.6 million, up from $500,000 a year ago, the company said. Net sales for the quarter rose to $2.25 billion from $2.23 billion a year ago, with same-store sales up 0.5 percent.

    KC's View:

    Published on: February 20, 2008

    There has been a lot of discussion on MNB the last few months about plastic bags, with me generally taking the position that getting rid of disposable bags – especially the plastic variety – and using cloth reusable bags is the best environmental option.

    But not everyone agrees with me. Which is okay, because I start to worry when I find myself agreeing with popular opinion. But this particular email took great pains to address the issues I’ve raised:

    HEB is one of the larger grocery chains that truly understands the environmental impact of their grocery bags and have been doing something about it for many years. Their recycling program is one of the best in the country and is a model for others to follow. Using an alternative bag, cloth, etc… is fine for a small percentage of customers but they are not the answer. Cloth bags, for example, need to be washed regularly or germs can permeate the material, plus they usually end up in land fills when they wear out or when people get tired of them, because they keep forgetting to put them in the trunk of their car. HEB understands what the public wants, and is trying to offer them a choice. And, if you were to go to the majority of the grocery chains, you would see that most people want plastic bags, for their strength and convenience. The average person does not shop at Whole Foods. There is no comparison between Whole Foods and HEB when it comes to the environment…HEB is light years ahead… and interestingly they did not have to “ban” a product to get there. Plastic uses less energy to make, they can be reused, or recycled in to new products like decking and fencing materials, park benches and bleacher seating, flower pots, trash bags and liner materials for the garden. The list continues to grow every year. You claim we are a throw away society….yes we seem to be, but guess what KC? The number one product in landfills in the USA is not plastic….it’s paper.

    It is very disturbing to me that there are so many people in the media that could care less about what is truth and care more about what is hype. Plastic bags are not the problem here… this is about litter and always has been from the beginning. The fact is that people do not dispose of these bags properly, when in today’s world there are many opportunities to recycle these bags. Plastic bags are 100% recyclable, and if key people in the media are truly the environmentalist they confess to be, then they should know this, and support the many recycling programs, by helping to educate and getting the correct message out, which is “reduce, reuse, recycle”. Not by running down a product that has already proven to be the consumer’s first choice. Chain stores like HEB, Wal-Mart, and others, offer recycling bins that not only can take the grocery bags, but also, dry cleaning plastic, bread bags, water overwrap, newspaper bags, along with other polyethylene products. All stores are very willing to help you understand what you can bring in to have recycled.

    Here are some facts I am sure you do not understand about plastic grocery bags….

    • Plastic bags require 40% less energy to produce
    • Takes 91% less energy to recycle a pound of plastic vs. a pound of paper
    • 2,000 plastic bags weigh 30 lbs, vs. 2,000 paper bags weigh 280 lbs., cloth bags are even heavier and more bulky. Of all the products, plastic takes less space in landfills if they end up there…
    • Plastic grocery bags make up a tiny fraction (less than 0.5 percent) of the U.S. Municipal Solid Waste stream.
    • Plastic bags generate only 40% of greenhouse gas (GHG) emissions of non-composted paper bags and only 21% of the GHG emissions of composted paper bags
    • Paper bags generate 70% more air emissions than plastic (Way to go Whole Foods!)
    • Plastic bags are 100% recyclable and unlike paper do not require more virgin feedstock when recycled. Paper still has to cut down new trees to get recycled material.
    • High demand for plastic to be recycled, industry is growing because the demand for material to recycle exceeds availability because many consumers are not aware of the collection programs available. (Think maybe the media could help get the word out?)
    • Banning recyclable plastic will not reduce society’s dependence on oil since feedstock is natural gas….not oil.
    • 65% of Americans reuse their grocery bags for trash disposal, lunch bags, pet droppings, etc…which mean they are not buying more plastic garbage bags which do go into landfills.

    There is obviously so much more, but getting too long…. Don’t even get me started on the Cloth or Alternative bags which almost always end up in landfills when done. Again, I suggest the media investigate the facts and not the hype….It is interesting that I see big SUV’s in the Whole Foods parking lot and yet most people do not understand that they would serve the environment 100 times better if they change out the car vs. what they think they are doing by supporting a ban on a product that is much more environmental friendly than the media leads them to believe.

    Enough said….be glad to supply more information upon request. I know I am wasting my time with this follow up, but who knows, maybe I can get you to at least report the facts….

    First of all, I’d be curious to know exactly what it was that convinced you that by sharing all this information, you'd be wasting your time? I try to be assiduous about posting emails that take positions different from mine…mostly because I’m always willing to be convinced.

    That said, I will first respond by saying I have neither the background nor the research to agree or disagree with any of the “facts” you raised. So I’ll accept them on faith…though I suspect that people not pro-plastic bags would offer alternative “facts.” I’m trying to think like a consumer here, and just use common sense.

    I like the idea of cotton/canvas reusable bags because, at least so far, mine have never ended up in a landfill. I use them for every trip possible, have them in both of our cars, and have trained both my wife and daughter to use them as well. Sure, most customers still prefer plastic…but that’s because they’ve been trained to like it over a long period of time. And, we use small canvas sacks for lunch bags as well.

    My feeling is this. In general, the less crap we throw into landfills, the better off the planet will be. Just as the less gasoline we use, the more lights we turn off, and the less energy we expend in general, the better off the planet will be. And I’m not a radical environmentalist, not by any means. I’m just trying to do what makes common sense, trying to be a smart consumer whenever and wherever possible, without making myself crazy about carbon footprints and the like.

    Interestingly, MNB user Mark Beuerman had a relevant observation on our commentary:

    I appreciate all of your efforts to bring to the forefront the issue of plastic grocery bags and the effect their usage has on our environment. I just wonder when and if your focus will shift to all of those disposable Starbucks cups and lids I see lying on the ground.

    While I have never – not once – thrown any coffee cup or lid on the ground, you make an excellent point. When I’m going to the Starbucks near my home or office, I ought to do a better job of bringing in my own cup instead of using one of the disposable paper cups. Again, it is a matter of me not being lazy and working to retrain myself.

    MNB user Dan Brady wrote:

    Why in the world cannot we just have biodegradable bags? I understand that they cost no more and would solve the problem completely!

    According to the person who wrote in above, plastic bags are recyclable…it is all a matter of being willing to do so.

    KC's View: