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    Published on: February 21, 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 sponsored by Webstop, experts in the art of retail website design.

    When Roy Scheider died recently, many of us remembered his most-famous line from “Jaws,” in which, after seeing the great white shark for the first time, he says to Quint, “You’re gonna need a bigger boat.” That’s a great metaphor for business, especially the business of retailing. Very often, in a world where the competitors seem to always be getting bigger and stronger and seemingly insurmountable, the simple fact is that you need a bigger boat. Or, if you can’t afford a bigger boat, you almost certainly need one that is more nimble, maneuverable, and able to do things the competition cannot.

    But there was another piece of dialog from “Jaws,” as several friends reminded me, that was almost as memorable.

    At one point, Richard Dreyfuss’s character, Matt Hooper, says to Scheider’s police chief, “It doesn’t make much sense for a guy who hates the water to live on an island.” And Scheider responds: “It’s only an island if you look at it from the water.”

    In other words, it is all about perspective.

    This is a sentiment that strikes me as extremely applicable to many of our business lives. If we act as if only our perspective makes sense – developed over years of experience and held with iron-clad certainty that this is the way business should be done - we all run the risk of missing out on important, transformational trends and even becoming irrelevant to a changing customer base.

    Last week, while attending the CIES Global Food Safety Conference in Amsterdam, there were a number of instances when I became aware of how my vision can be too parochial…and how I need to take a broader view and remain open to other perspectives.

    For example, I was moderating one workshop and Lisbeth Kohls, senior vice president of consumer and quality affairs at ICA in Sweden, talked in detail about a meat scandal that hit the company late last year. Several stores were exposed on national television as having repackaged out-of-date meat, and while the problems were limited to just a few stores, it threatened the company’s national reputation.

    Well, I was working on two assumptions going into the session – that the company’s biggest exposure would be on the legal side as litigation against the company would hit new highs, and that Internet “chatter” would make it extremely difficult for ICA to recover from the scandal.

    Well, I was wrong on both counts. Lisbeth Kohls told us that, in fact, not a single lawsuit has been filed against the company, and that bloggers have not been a factor in how the company has been perceived. I guess they’re just nicer over there. In any case, I brought an American perspective to the discussion, and that was a mistake. Not everybody behaves like we do…and in the case of ICA, that will probably help its recovery efforts.

    There also was a fascinating discussion by Serban Teodoresco, managing director of JohnsonDiversey’s SafeKey Group, in which he drew a thick, straight line between food safety and brand equity. Now, his basic premise wasn't earth shattering – that a company’s brand equity, whether it happens to be a retailer or manufacturer, establishes its basic value in the marketplace, for both consumers and investors. But he then took it a step further, arguing that food safety is not a cost, but an investment While many companies would tell you that food safety is difficult to market against, Teodoresco suggested that in some ways it is the ultimate marketing tool, because it is at the heart of a food company’s value…not to mention its values. Again, I hadn’t thought of it in quite those financial terms before; I tend to emphasize the values side of the equation, but the notion of financial value clearly is critical to corporate decision-making.

    In another session that I moderated, one of the panelists was John Hanlin, the new vice president of food safety at Supervalu. I asked him at one point what was the single most important thing he said in his job interview that got him hired, and he didn’t even hesitate. John said that he firmly believes that retailers such as Supervalu need to be at the forefront of setting standards…setting the bar higher than the government suggests, and really taking the lead when it comes to implementing and communicating food safety standards. In other words, not to react to other people’s expectations, but to be in the business of setting expectations.

    Buy, do I think that’s right on. And I applaud John…and Supervalu…for taking such a progressive and aggressive stance. By doing so, they may be able to change consumer perspectives on food safety, and get them to see the retailer as both the best line of defense against food safety issues and the best source of information for an increasingly confused public.

    In other words, to paraphrase Roy Scheider’s Chief Martin Brody, change the way people view the island.

    One other thing. I’ve mentioned on MorningNewsBeat that I produced a video for the CIES Global Food Safety Conference that consists of a series of interviews with influential senior executives on both the retail and supplier sides, offering unique and provocative views on this critical issue. I’ve gotten a couple of requests for copies of this DVD and the folks at JohnsonDiversey, who underwrote the video, tell me that they have a limited supply of DVDs left over from the conference.

    So, if you'd like a copy, here’s what you have to do. Send me an email in which you clearly request the DVD, and make sure you give me your name, title, company, and street address, and I’ll forward the email on to JohnsonDiversey. But do it soon, because as they say on TV, supplies are limited.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: February 21, 2008

    Think of it as a necessary – if unfortunate – lesson in tolerance and appropriate discourse.

    The Associated Press reports that Wal-Mart has issued an official apology to a Muslim woman who said she was insulted by an employee in one of the retailer’s Utah stores.

    The insult, according to reports, came when the cashier looked at the woman, who was wearing a face veil, and said, “Please don't stick me up.”

    Wal-Mart promised that the employee would undergo sensitivity training, and the Council on American-Islamic Relations applauded the retailer for taking “appropriate action.”

    KC's View:
    It is important not to take this incident out of context, but also to use this event as an object lesson. In today’s world, greater sensitivity is called for by all parties … as well as tolerance when people make mistakes. Even dumb mistakes.

    Published on: February 21, 2008

    Good piece on about PepsiCo CEO Indra Nooyi, looking at how her view of the world affects – and is reflected in – her leadership of the company.


    • “Indra Nooyi is an entirely different kind of CEO, a product of her native India as well as of PepsiCo's family-values approach to grooming CEOs. She is not hung up on pay. She's not shy about asking for help when she needs it. She's 52 years old and does not plan for this job to be her last. Her friend Henry Kissinger predicts that it's only a matter of time before she is plucked for a big Washington post, possibly a cabinet job, and Nooyi acknowledges that at some point, she'd like that. She's cosmopolitan, rigorously educated, and a strategic thinker - her background is Boston Consulting Group - much more interested in the burgeoning markets in Russia and China than in the noisy U.S. cola wars. A dinner gathering at her house is as likely to include Tony Blair and government ministers from India or Mexico as traditional pinstriped business types. As a vegetarian who for years has been talking about the importance of ‘gut health,’ she's not who you'd think would be leading a maker of sugary soda and salty snacks - but that's why she's taking the company in a different direction. She sings karaoke; she plays electric guitar. Her South Asian heritage gives her a wide-angle view on the world.”

    • “Since becoming CEO, she has reorganized PepsiCo to make it less fixated on the U.S. and broadened the power structure by doubling her executive team to 29. She has installed an Italian native, Massimo d'Amore, atop the division that includes the troublesome U.S. soft drink business, and recruited a former Mayo Clinic endocrinologist to head up R&D. Last year she spent $1.3 billion on acquisitions like Naked Juice, a California maker of soy drinks and organic juice. She has created a motto – ‘Performance With Purpose’ - that puts a positive spin on how she wants PepsiCo to do business both at home and abroad.”

    • “It essentially boils down to balancing the profit motive with making healthier snacks, striving for a net-zero impact on the environment, and taking care of your workforce. ‘If all you want is to screw this company down tight and get double-digit earnings growth and nothing else, then I'm the wrong person,’ she says. ‘Companies today are bigger than many economies. We are little republics. We are engines of efficiency. If companies don't do [responsible] things, who is going to? Why not start making change now?’”

    • “Her fluency in the global arena is increasingly critical to the business. With the U.S. marketplace in slow-growth mode even in the best of times, the biggest opportunities are overseas. PepsiCo's international business grew 22% last year, triple the rate of domestic sales, and now contributes 40% of total revenue ($39 billion last year). And a CEO had better be taking the moral high road. There is no longer a free pass for the ugly American company: Should Baked Lays fail to live up to its health claims, it'll get bounced off the store shelf by regulators in Britain. And if you are just the next greedy American corporation, you don't stand a chance in China's tight labor market. Set too ambitious a profit target in India, and there will be hell to pay if your bottling company drains the water table.”

    KC's View:
    Being a child of the sixties and the anti-war movement, I don't often find myself quoting Henry Kissinger. But there’s a great quote from Kissinger in the CNN piece: “If you look at the job entirely from the American perspective, then it becomes impossible to run a global business … You have to relate your interests to the interests of other parts of the world - to be relevant in their societies. Indra seems to understand this instinctively.”

    Think of this in the context of the Wal-Mart employee who insulted the Muslim woman, however inadvertently. And consider the ever-evolving challenges of operating in the modern world.

    Wide angle, indeed.

    Published on: February 21, 2008

    KING-TV Newsin Seattle reports that “Costco has teamed with a dozen pharmaceutical companies that manufacture some 7,000 drugs, pitting them against each other to provide the lowest price for Costco customers,” especially the some 47 million Americans without health insurance. “If you take a prescription to Costco, the pharmacist searches those 7,000 drugs to find one that has the same effects but costs less.”

    According to the story, “Costco charges the uninsured $50 a year to take part in the plan. Since the quiet rollout last July, the company has already seen 30,000 to 40,000 people enroll, giving Costco an important head start in a lucrative segment of the market that has been widely ignored.”

    KING-TV also reports on how Costco's program rate against other retailers, and the station compared Costco's prices for five popular drugs - Diovan, Lunesta, Prevacid, Furosemide and Fluoxetine to four other pharmacies. “In every case, Costco was cheaper by hundreds of dollars - nearly a $500 difference between Costco and the most expensive retailer, Rite Aid.”

    KC's View:
    If my math is correct, $50 times 30,000 people is $1.5 million…not a bad chunk of change for a program that also has the advantage of helping to take care of people who actually need it. And that doesn’t even count the amount of money that people are saving by using the program.

    Published on: February 21, 2008

    The Wall Street Journal reports that Anheuser-Busch and Miller Coors are being targeted by attorneys general from a number of states – including New York, Maine, Maryland and Arizona – in investigations looking into whether the companies have been targeting underage drinkers with ads for caffeinated alcoholic beverages.

    No charges have been filed against either company, and both Anheuser-Busch and Miller Coors have maintained that they only are selling legal beverages to legal drinkers.

    According to the WSJ story, the new probes “mark the latest moves by state attorneys general to crack down on the makers of drinks that contain alcohol and caffeine. Last August, attorneys general from roughly 30 states sent a letter to the federal Alcohol and Tobacco Tax and Trade Bureau, asking officials to examine what they claimed to be misleading marketing of the drinks … If attorneys general find evidence of wrongdoing, they could file civil lawsuits charging the companies with violating laws barring unfair and deceptive trade practices.

    “A number of consumer-advocacy groups have criticized makers of caffeinated alcohol drinks, saying they fail to make clear to consumers that combining alcohol and caffeine could have negative consequences.”

    KC's View:

    Published on: February 21, 2008

    Forbes reports that yesterday’s announcement by Wal-Mart’s Asda Group of a store expansion program that will result in the hiring of more than 9,000 people is just the latest but of jousting between Wal-Mart and its arch-rival, Tesco.

    “ The timing of these plans - which Asda describes as its ‘biggest jobs program this decade’ - may seem rather odd, given the outlook for the market,” Forbes writes. “Though the British economy isn't expected to take as much of a hit from the subprime crisis as the U.S., growth is expected to slow, as the latest data on consumer spending and house prices reveals. But strategically it’s a stroke of genius, catching its larger British competitor, Tesco, at a time of vulnerability. While Tesco dismayed investors with sales figures that were far short of expectations and revealed its vulnerability on its home territory last month, Wal-Mart reported health earnings for the fourth-quarter of 2007, despite difficult trading conditions.”

    • The Northwest Arkansas Morning News reports that Wal-Mart is disputing the study released earlier this week that questioned the retailer’s ability to satisfy customers.

    In that study, the University of Michigan’s American Customer Satisfaction Index (ACSI), Wal-Mart was described as having dropped to “the bottom of the industry” in terms of shopper satisfaction. However, the Morning News writes that Wal-Mart says that “its survey of 2 million customers each quarter shows customers are increasingly satisfied with their store experience.”

    KC's View:

    Published on: February 21, 2008

    • There is a report from Agence France Presse this morning saying that Wal-Mart and Carrefour “are battling it out for market share in China with aggressive expansion plans aimed at opening ever more stores. Last year the heavyweight retailers broke their own records, with the French giant opening 23 new hypermarkets in China and US-based Wal-Mart cutting the ribbon at nearly 30.

    The story notes that the two companies are opening stores in both major cities and secondary markets, and continue to face significant competition from local retailers that remain “extremely powerful.”

    • Harris Teeter announced yesterday that it will embark on a new animal welfare program, which will include giving purchasing preference to suppliers that use or switch to controlled atmosphere systems, that phase our “gestation crates” that confine pregnant pigs, and introducing a new line of private label cage-free eggs.

    • The St Louis Post Dispatch reports that Schnucks Markets plans to open a new downtown store in St. Louis late this year or in early 2009, a “20,800 square foot space (that) will contain a full service store that will include a pharmacy, fresh and specialty foods including natural and organics.

    “There also will be a floral shop, Kaldi’s Coffee bar, meat and seafood departments and prepared foods stations including a salad bar, Asian hot-food bar, barbecue bar, pizza station and made-to-order sandwiches. There will be an overhead 6,303 square foot mezzanine holding a wine department with a tapas tasting area and seating space.”

    Dow Jones reports that Coca-Cola is testing a new aluminum contoured bottle for its Coke, Coke Zero and Diet Coke brands. According to the story, Coke said that “the success of the pilot programs would be one of the factors the company would consider before deciding if it wants to launch the new bottles nationally. He declined to say what the other determining factors would be.”

    • The Cincinnati Enquirer reports that “seven Save-A-Lot stores in Greater Cincinnati and Northern Kentucky have been sold to Houchens Industries of Bowling Green, Ky., by Freedom Foods, a Dry Ridge-based food retailer.
    KC's View:

    Published on: February 21, 2008

    • Price Chopper Supermarkets yesterday announced that Jerry Golub, the company’s senior vice president of sales and merchandising, has been named executive vice president and COO.

    Joseph Kelly, previously vice president of merchandising, has been named vice president, sales and merchandising.

    • Weis Markets announced yesterday that it has hired David J. Hepfinger to be its new president and chief operating officer, succeeding Norman S. Rich, who remains as the company’s CEO. Hepfinger is a veteran of Price Chopper Supermarkets, where he most recently was senior vice president of retailing and administration.

    KC's View:

    Published on: February 21, 2008

    Yesterday, MNB reported that in the wake of Starbucks’ decision 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, Stew Leonard’s, the four-store fresh foods retailer with stores in Connecticut and New York, announced that during the hours that Starbucks is closed, it will offer free coffee, espressos and cappuccinos in all of its stores.

    My comment was that this is smart, competitive retailing on Stew Leonards’ part.

    To which MNB user Jim Donegan replied:

    I can’t wait to see the e-mails you get for thinking that 4 grocery stores will somehow “compete” with all of the Starbucks in the Tri- State area during a few hours in one afternoon. Unless you live down the street from a Stew Leonard’s (like you do) this story is not worth your time as a national writer. Just because you shop there doesn’t mean it’s news to the rest of the country. As a baseball fan, you are showing your “homer” tendencies.

    You are missing the point. Of course Stew’s isn’t going to compete with all the Starbucks in he metro NY area...but what they are doing is a) being competitive, b) taking advantage of an opportunity, c) turning another company’s situation into an event that benefits the store.

    I’m a huge Starbucks fan, but it seems to me that February 26 is a date upon which a lot of companies will have the chance to take a shot at the nation’s biggest and most successful coffee chain. Some will do, and some will let the moment pass. I’m a bigger fan of companies that do it....and the reason I mentioned it on MorningNewsBeat was to suggest to other retailers that here is a really good marketing idea. (And I would have written about it regardless of where the retailer was that did it – Connecticut, Seattle, Mississippi or Montana.)

    That said, you can reasonably question why I made it yesterday’s top story. The reason is simple – too often, the lead story is controversial, provocative, or focused on “bad news.” This struck me as a “good news” story that could give other retailers ideas…and so I decided to lead with it.

    I also got the following criticism on yesterday’s piece about the beef recall that is related to animal cruelty charges:

    I wish you would occasionally voice some concern for the animals themselves. Food safety is an important issue, but it isn’t the only issue.

    Good point. I’ll try to be more sensitive…
    KC's View: