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    Published on: March 6, 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:

    There was a terrific piece in Business Week the other day that ought to be required reading for anyone who deals with customers.

    The piece concerns what Business Week calls “consumer vigilantes” – people who essentially have decided to take the law into their own hands when it comes to getting satisfaction from the companies with which they deal.

    Some examples:

    • A 76-year-old woman who got ticked off at her local cable company when it didn’t install her service properly, and then left her waiting in a hallway for two hours waiting for attention from customer service. Her solution – she went out and got a sledge hammer, smashed a computer keyboard and a telephone, and then yelled, “Have I got your attention now?”

    • Or there was the guy who just lost it when Apple Computer didn’t give him the kind of customer service he thought he deserved…so he produced a video in which he destroyed the laptop – also with a sledgehammer, which seems to the weapon of choice for angry shoppers. The guy posted the video on YouTube, and more than a quarter of a million people watched it in short order.

    • Yet another guy used the Internet to find the names and email addresses of senior executives employed by a cable company that he found to be lacking, and he unleashed what he called a “carpet bombing” campaign to get their attention.

    While the people working for the targeted companies almost certainly were annoyed by the ways in which these customers registered their protests, it is worth mentioning that each of these customers got a measure of satisfaction from the companies.

    And if I were you, I’d be worried. Because as Business Week reports, “Even if they're not all wielding hammers, many shoppers are arming themselves with video cameras, computer keyboards, and mobile devices to launch their own personal forms of insurrection. Frustrated by the usual fix-it options … more consumers are rebelling against company-prescribed service channels.”

    I honestly don’t think that most retailers and manufacturers are prepared for this kind of civil – or uncivil - disobedience. I’ll give you an example of how unprepared. I walk into many stores, and they have signs near the front advising people not to use video or still cameras while on the premises. But, needless to say, almost every shopper comes equipped with both…because they are built into their cell phones! You make a mistake, and they are going to be there to record it…and then post it on YouTube, where it will exist for posterity.

    I think customers are angry because so many companies take them for granted, paying attention to their own needs and priorities rather than those of the consumer. Even if you’re in the retail business, I’m sure you’ve had a moment when you just wanted to pop the guy behind the counter, or walked away grumbling, or sat there on hold while you waited for the next available operator. The problem is that these occurrences tend to mount up, and customers get angrier and angrier and angrier and finally they just can't take it anymore and they explode…and they might even end up taking out their frustrations on a retailer that hardly was the worst offender but happened to be in the wrong place at the wrong time.

    And I suspect that an economy in turmoil may make things worse, not better.

    I’m not sure what to do about this, except to say that if you have customers in your business, you may want to redouble your service efforts and raise your standards. Make sure every complaint is answered by the end of business, and create an environment in which employees feel empowered to satisfy the shopper.

    Oh, yeah…you may want to start frisking people at the front door for sledgehammers.

    Just a thought.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: March 6, 2008

    Interesting piece in USA Today noting that there is a new trend in take-out meals…that travelers returning from trips are bringing food home from the airport. “With the eradication of in-flight meals, many passengers are carrying their own food aboard airplanes and many airport concessions are now offering prepackaged meals and snacks for just this purpose,” the paper reports. “But many travelers are also taking those same prepackaged foods home at the conclusion of their trip.”

    In fact, “While most new airport food concessions are being constructed ‘airside,’ past security lines and close to gates, HMS Host is also installing kiosks and eateries in airport baggage claim areas specifically catering to travelers leaving the airport. In the United Airlines baggage claim area at O'Hare, HMS Host operates a Starbucks and Ciao Gourmet Market, an upscale American version of Ciao Ristorante, a Milan-based eatery with more than 155 locations primarily in Southern Europe. Ciao offers prepackaged, high-end healthy items including a tempting array of salads, sandwiches, fruits and vegetables, and gluten-free snacks as well as a tempting display of dessert treats … HMS Host also operates a 24-hour Tim Horton's restaurant in the arrivals area at the Edmonton Airport and recently opened Yan Can, a Chinese cuisine eatery, adjacent to the baggage claim in Terminal 1 at San Diego International Airport.”

    KC's View:
    The columnist writing the story makes one observation that should be chilling to many supermarkets – that he chooses such options because after a long trip, he is “loathe to wend his way through the supermarket aisles” to look for food.

    I had a chance to moderate and speak at the Information Resources Convenience Retailing Forum yesterday, which was part of IRI’s annual Summit in Orlando, Florida. And one of the things you hear from the convenience channel is that they have their eyes firmly on this target – the food-to-go sector, which many of the people in the c-store business seem to feel is their ticket to ride in a declining economy.

    Which just means that the supermarket industry will continue to get more and more competition.

    Published on: March 6, 2008

    The Wall Street Journal reports that a significant amount of the recalled 143 million pounds of beef has not yet been tracked down, according to an official with the US Department of Agriculture (USDA).

    According to the story, “While the department has worked with other agencies and groups on the recall, it has faced several challenges to track down the more than 50 million pounds of beef supplied to the National School Lunch Program from Hallmark/Westland Meat Packing Co. in Chino, Calif., said Kate J. Houston, deputy undersecretary at USDA's Food, Nutrition and Consumer Services. More schools may have bought beef from Hallmark/Westland commercially.

    “The USDA relies on states to tell it where the meat went after they got the meat from the USDA, and states in turn are relying on schools to give them that information. Ms. Houston said schools haven't finalized reports on the recall.”

    The beef recall was triggered by the Westland/Hallmark Meat Co. after the Humane Society released a video of employees torturing so-called “downer cattle” so that they could be slaughtered for food. Downer cattle are believed to be higher at risk for bovine spongiform encephalopathy (BSE), better known as mad cow disease, and federal law prohibits them from being processed into the food supply.

    The government says that the possibility of anyone getting sick from the meat is extremely unlikely.

    USA Today also reports, by the way, that the House of Representatives Energy and Commerce Subcommittee has subpoenaed Westland/Hallmark CEO Steven Mendell to appear at a hearing next week. The subpoena was issued after Mendell was invited to appear voluntarily but did not show up.

    KC's View:
    This is the kind of stuff that erodes consumer confidence over time. And I just hope that the USDA is right about the likelihood of people getting sick…

    Published on: March 6, 2008

    The Hartford Courant has a story about the importance of sampling to the food marketing experience, citing a 2006 study showing that “92 percent of in-store consumers would rather be offered a free sample than a coupon; 70 percent will try a sample offered to them; close to 40 percent buy the product they've sampled. Sales of foods being sampled spike as much as 300 percent on the day samples are offered, the study found.”

    The Courant uses the new Stew Leonard’s store in Newington, Connecticut, as an example: “No question, the celebration concept is hard at work at Stew Leonard's. By the front entrance, staffers are offering tiny cups of chicken chili, New England clam chowder or lobster bisque. Near the coffee bar, folks line up for chunks of hot doughnuts. In the produce department, shoppers down shots of fresh-squeezed orange juice, then go on to cookies in the bakery, salmon spread and crackers in the deli, fresh mozzarella in the cheese aisle, meatballs and sweet potato chips by the prepared-foods bar and sorbet near the frozen foods. ”

    “We want people to feel like they're at a party,” Stew Leonard Jr. tells the paper. “Handing out samples helps create that atmosphere. It's an expensive form of advertising, because of the extra labor and staff involved. But it's also good business. It allows us to introduce folks to our products. We usually double or triple sales of featured products. And you can't even measure the effects sampling has on the return customer and what they might buy next time they visit.”

    KC's View:
    I’m always amazed how many supermarkets you can go into and find absolutely no samples being handed out. None. And in these same places, you also generally can't smell any of the great aromas that go with food and there isn’t very good visual merchandising.

    I’ve been spending a lot of time in Florida this winter, and I’ve been consistently impressed with the sampling done by Publix. I love it when it is done by Costco and Trader Joe’s. Even Fresh & Easy does a good job.

    Why some folks don't get this is beyond me.

    Published on: March 6, 2008

    The Boston Globe reports that “Au Bon Pain, the Boston bakery chain, is serving up the latest in meal control: Portions, a line of 14 dishes all 200 calories and under.” According to the story, “The portions concept addresses a growing consumer demand for smaller, lower calorie meals.”

    And, the Globe writes, “The portions may be small, but the price isn't: Au Bon Pain says two or three Portions dishes, which each retail for $3.49 with meat and $2.99 without, makes a meal. That amounts to $5.98 to $10.47. This compares to about $6 for an average sandwich or salad at Au Bon Pain.”

    KC's View:
    Like the concept. The price, not so much. That may not be the best pricing strategy in a declining economy.

    Published on: March 6, 2008

    Good piece in the Chicago Sun Times about how a cooking community is springing up on, where people are sharing recipes and cooking techniques and using the video technology to educate themselves and educate others.

    There are some drawbacks – some of the recipes are either incorrect or aren’t very good, and some of the production values are, shall we say, lacking. But the point seems to be that this is a relatively new use for, and people are catching on.

    KC's View:
    Seems to me that this is an interesting opportunity for retailers to connect with shoppers in a whole new way, and they ought to check it out.

    Published on: March 6, 2008

    The Wall Street Journal reports this morning that “French luxury-goods titan Bernard Arnault and U.S. private-equity firm Colony Capital are poised to become the largest shareholders in Carrefour SA, as the French company's founding family took steps to reduce its stake, raising questions over the future direction of the world's second-largest retailer.”

    Now that the Halley family is stepping back from the company, it is expected that the new majority owners will push aggressively for changes in Carrefour. According to the story, “Carrefour would be a difficult candidate for an outright acquisition because of its size and because it could be viewed by the French government as a national champion and a company to protect against foreign ownership. Carrefour has been trying to rein in its sprawling operations and operate more efficiently so it can lower prices to compete better with rivals, particularly in France.”

    KC's View:

    Published on: March 6, 2008

    • It is reported that Tesco plans to open 10 new Fresh & Easy Neighborhood Markets in the Phoenix metropolitan area, which will give it a total of 37 units in the region.
    KC's View:

    Published on: March 6, 2008

    Business First of Buffalo reports that Tops Markets has completed the final conversion of a Martin’s Super Food store to the Tops Markets banner.

    When Ahold sold Tops last year to Morgan Stanley Private Equity, one of the first thing that the new owners did was move to convert the four Martin’s stores back to the Tops name.

    Forbes reports that Ahold CEO John Rishton is saying that while he has not met with executives from either Delhaize or Casino about possible mergers or acquisitions, he remains interested in making a deal if the terms are right.
    KC's View:

    Published on: March 6, 2008

    • Hershey Co. named Charlene Binder to be its chief people officer, succeeding the retiring Marcella Arline. Binder formerly was vice president of human resources at Dannon Co.
    KC's View:

    Published on: March 6, 2008

    • Longs Drug Stores Corp. reported that its fourth-quarter profit climbed 38 percent, to $37.2 million, from $26.9 million in the prior-year quarter. Revenue rose 11 percent to $1.45 billion from $1.31 billion in the fourth quarter of 2007, on same-store sales that were down 0.6 percent.

    For the full year, Longs’ net income rose 29 percent to $96.2 million, from $74.5 million, in the prior year. Revenue grew six percent to $5.26 billion from $4.97 billion.
    KC's View:

    Published on: March 6, 2008

    Responding to the story yesterday about state governments pushing for the mandatory labeling of meat and milk from cloned animals or the progeny of cloned animals, MNB user Glen Syvertsen wrote:

    Why do Big Ag and Bio-tech feel it's so important to produce the 'Super Cow' they want us to eat when regular cow is just fine? Cloning seems expensive and full of questions and dangers, like why do so many clones not survive? If they can't live on their own how can you say they are identical to the host? It's like another type of downer cow.

    For me the more unlabeled cloned based meat and dairy in the market the more likely I am to say "pass the veggies". I'm sure that genetic engineering, irradiation and cloning are common in the produce department too but at least I know I can buy (or grow) the organic alternative.

    Labeling is crucial in my mind as is 'counter labeling' that tells me when a steak is not a product of the offspring of a clone.

    Another MNB user wrote:

    Let’s say all fifty states, or even half of them produce similar labeling laws for products using cloned meat & poultry – imagine the time, energy, tax-payer’s money – drafting, discussing, rewriting, defending the bills – when they could be spending their time on “other” stuff – when all of that time, energy and money could be made moot and unnecessary with a swift movement of someone’s pen at the FDA – if only the FDA cared about Americans as much as they care about American companies!!!

    Regarding Michel Sansolo’s screed against the credit card companies earlier this week, MNB user Greg Cummings responded:

    I don't understand the fuss. I pay by credit card whenever possible. Not only is it convenient, but I accrue award points, I get purchase protection from defective or poor merchandise and services, and I get a record of everything I buy. At the end of the month my purchases are deducted from my checking account so I never pay interest and I get the benefit of the float between purchase date and actual payment date. And I don't have to keep going to ATMs and dealing with the cash.

    And I know there are many consumers who do the same.

    Sure there are people who get in over there heads with credit card debt, but the credit card companies are pretty up front about fees and interest rates.

    And you'll need to explain that IRS exemption... I read it a few times
    and do not understand the meaning.

    Michael Sansolo replies:

    The IRS exemption is the transaction fee being paid by retailers on every card purchase. On tax returns, the tax payer foots the bill. In short, it's an invisible fee. In addition, it's had to make an argument about the credit card companies being transparent on fees. That's why you haven't heard of transaction fees, but ask any merchant about them. And the fees differ by industry and in different nations, many of whom have less expensive fees than the US.

    One last point, the cash back programs are great...if you have them. But where does the money come from?

    Another MNB user wrote:

    Seems to me that the VISA/MasterCard fee concerns should be separated into two very different and separate issues - anti-trust and fees. First, anti-trust concerns are a concern for everyone, so investigating and resolving an issue like that makes sense. The second one is fees. Seems that this should be resolved by free market forces instead of government regulations. It seems a little disingenuous for retailers to complain about the fees and still accept the card. Retailers want the sales, but grovel to get "fair" fee regulations against VISA/MasterCard. Funny how businesses whine about government regulations that apply to their company, but are only too happy to support regulations against other companies when it fits their need.

    Sam's Club only takes Discover Card. Costco only takes American Express. They seem to be doing OK. If retailers don't like the fees, DON'T TAKE VISA/MASTERCARD.

    Problem is none of them have the guts to make that choice and lead a free market fight. It's just less painful ($$$) to ask the government to intervene. Be careful what you ask for. Your company could be next!!

    On the subject of gift cards, one MNB user wrote:

    I think the shopper is looking for “something to gift” vs. “something to eat” here, but the indicated actions for the food retailer should be the same: instead of (or in addition to) gift cards, make it easy for shoppers to buy gifts at your store, and position yourself as delivering an fun, memorable experience in addition to being a place to buy quality products.

    Gifting is more than selling flowers, balloons, fruit-baskets, wrapping paper and greeting cards – those items are necessary, but not sufficient. Gift cards include a flexibility component of value to the recipient that a fruit-basket doesn’t have - though they are at risk of being less personal. I think restaurant gift cards are an attractive gift choice because they can deliver “a fun, memorable experience,” more so than “a place to eat food.”

    Too few retailers are positioning themselves as being able to deliver “fun, memorable experience.”

    Like on so many dimensions, I think Wegmans is best-in-class here.

    MNB user Louis A. Scudere wrote:

    The reason that Safeway has been so successful in marketing gift cards to their competitors is that they invested the time and effort into putting in place a very good supporting system infrastructure (both technologically and from a marketing standpoint) which made the system close to a turn key operation. Thus, making the "make or buy" decision vis-à-vis gift cards a simple one for most retailers. While I understand and agree with your "share of stomach" philosophy, gift cards are almost the equivalent of found money for many retailers, but not so lucrative as to siphon off valuable system development and marketing resources to recreate the wheel. Whether it was done with malice and forethought or they just got lucky, Safeway had the right program in place at the right time and, more importantly, the foresight to exploit the opportunity as it presented itself.

    Boy, apparently I have drunk the Kool-Aid on this one.

    MNB user David M. Metz wrote:

    I for one believe in gift cards, it allows you to help out someone in need especially during the holidays. Many of us out there have relatives where money just burns a whole in their pocket for one reason or another. Providing them with a gift card, at least gets them into the grocery store where they are enticed to buy Food for the family/kids. It also allows companies to give its employees a gift during the holidays contributing to the employees meal thus being part of their wellbeing during the holidays and is always appreciated. I hope this helps your viewpoint.

    One MNB user sent the following email:

    I would have thought that another reader would have commented by now on the Northwestern study you cited regarding caffeine, but maybe not. If you read through the entirety of the report it points out that the alarming rise of caffeine overdose was achieved by ingesting caffeine tablets and supplements, not common drinks like coffee and tea.

    To be clear, too much of a good thing is exactly that...too much. But the study I looked at clearly pointed out that there are benefits to moderate amounts of caffeine.

    So, I say have at your morning cup of Joe, it's the second (or more likely the 3rd or 4th) that will head you down the path of danger.


    MNB ran a piece yesterday about an Ad Age column suggesting that innovation “is not a strategy, and companies that depend on a constant flow of new, innovative products will someday find themselves in deep trouble.” The piece argued that a relentless focus on innovation can distract people from focusing on core competencies.

    One MNB user responded:

    Innovation as a strategy is dependent on the category. If you are selling green beans there’s nothing really new to innovate except whether or not the cans nest together in a stack (and they should). But look at Air Care, that category is built on innovation either in the scent development, or scent delivery.

    Too often I feel, Innovation is used as a weapon. Using the 80/20 rule, let’s say you have the brand doing 80% of the sales volume. You might use your brand strength (of likely a select few items) to justify an innovation strategy yet in reality you might be using “Innovation” as a weapon to capture more shelf space by keep your competition from having it. I’ve seen this play out all too often. And who wants to be the retailer that doesn’t carry a new item when a customer comes in with a coupon from last Sunday’s paper?

    Likewise there is the Premium vs. Value warfare where the brand selling the most dollars justifies their space when very good value oriented brands may actually be out selling them in terms of unit or volume movement.

    Warehouses and retailers unfortunately rarely have a consistent approach to item assortment leaving a lot of power in the hands of persuasive manufacturers armed with charts and graphs with which to sell their wares. These battles are waged every day and my personal feeling is that warehouses and retailers should be taking care of the customer first. Using a customer first approach, I would argue that unit movement is of higher importance in matters of shelf allocation. Do that and the profits will follow!

    Of course, throw in slotting fees and all bets are off.

    MNB user Mike Spindler chimed in:

    I am not sure that the pursuit of innovation and the pursuit of building a dominant brand (very different definition these days than ‘twas in the last century) are at all in conflict.

    Building the brand, be it product, service or …publication….represents the basic value proposition of the company. Without Tide, Crest, Charmin…Procter & Gamble is value-less. I cannot think of a brand that doesn’t increase its chances for survival, meaning growth, without using innovation as a tool.

    Innovation can apply to product, process, or underlying support functions such as sales, supply chain, costs, or a variety of other functions that can help a brand. In some cases, innovation applied to these other areas can grow into a brand of sorts... HP and IBM for instance, are running HR and other internal functions for companies such as P&G, lower costs and increase effectiveness…..thus helping P&G’s brands with additional available capital etc. Those functions at HP or IBM were internally focused activities that grew into core competencies, which then grew into part of their respective service offerings or “brands”.

    I am hard pressed to think of a brand, or company that would be poorly served by focusing at least some resources on innovation as long as it isn’t for innovation’s sake alone.

    Finally, MNB had a story yesterday about a Financial Times report saying that would be getting into the wine business, which I said I thought was a good idea.

    Which led one MNB user to write:

    In today’s column, you labeled Amazon's decision to carry wine "smart".

    In previous columns, you have applauded retailers who cease to sell tobacco products.

    Where does one distinguish between these two items as far as damaging to one's health? One could go to the extreme and argue that alcohol and tobacco products are nothing but legalized drugs. Especially alcohol, with its prohibition history.

    In the end it all boils down to personal responsibility, but if one has an addictive personality, any of these three products - drugs, alcohol, or tobacco can lead to a downward spiral with many side effects negatively affecting friends, family, relationships, careers, etc.., Is it wise to offer wine home delivery, thus making it easier to obtain, for an item which has over the years proven to be so damaging to many a home?

    I just see a contradiction to praise one merchant for adding wine sales and at the same time praising another for discontinuing tobacco sales. Where does a retailer draw the line?

    Here’s the essential difference, in my mind. There are no circumstances under which tobacco is good for you. None. It is designed to addict and eventually kill you. When retailers looking to connect with the consumer using health and wellness and key strategies decide that tobacco doesn’t fit, that makes sense to me.

    Wine, on the other hand, has health benefits. Lots of them. In many cultures, it is celebrated as a food, not as an alcoholic beverage.

    To me, there is a huge difference,. Besides, ordering wine from Amazon won’t necessarily be easier or faster than running down to the store and buying a bottle … it’ll depend on the circumstance and the customer.

    The FT story noted that Amazon was looking to hire a senior level wine buyer who will be responsible for “the acquisition of a massive new product selection for its site.”

    Which led several MNB user to send in similar emails.

    One wrote:

    Well, are you going to take the job?

    And another wrote:

    Sounds like the perfect position for you, a wine enthusiast and a tireless Amazon booster! We would miss you terribly, however.

    Thanks, but I’m not going anywhere. I have no experience as a buyer, and, quite frankly, I’m having too much fun doing what I’m doing.

    The Seattle location is tempting, though…
    KC's View: