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    Published on: March 19, 2008

    Forbes has a story in which it looks at the “central role” that the Internet may play during the current recession.

    “The Internet was around during the shallow recession of 2001, and almost 50% of Americans were using it,” Forbes writes. “But it was not yet embedded in our way of life, largely because broadband penetration was, at the time, only about 20%. Today, more than 70% of the population is online, with more than 80% of these Internet users having high-speed access.

    “The Internet has empowered consumers as never before, providing previously unknown and unimagined opportunities to make informed decisions with detailed information, product ratings, expert and user-generated reviews and price comparisons on anything from computers to coffee beans to cat food.

    “In good times, when consumers feel cash-rich and time-poor, they can afford to be less diligent about their spending. But as economic pressures mount, sentiment changes. People feel cash-poor and are more willing to invest time and effort in getting the best deal.

    “What sets the current recession apart is that, for the first time, consumers have a tool that empowers them to subject everyday buying decisions to the kind of scrutiny formerly reserved for big-ticket items and large business-to-business transactions. Marketers should anticipate this shift. They will not be able to rely on ads to pull the wool over consumers' eyes--or on imagery to wow them.”

    Forbes suggests that a number of factors will lead to consumers turning to online options – the price of gas, the lack of sales tax online, the plethora of shopper review sites that help consumers make more intelligent decisions, and the vast array of sites offering virtually every kind of product.

    And, the magazine suggests, “Virtually anyone selling anything should be online, with as much sophistication as they can afford or muster.”

    KC's View:
    Agreed.

    While there clearly are demographic pockets that will be an exception to the conclusions reached by Forbes, it seems to me that the article gets right to the heart of the matter. Most of us want greater access to more products, and if we can save money in the process – whether through a lower price on the actual item, or on other factors involved in the sale – that’s even better. Young people, becoming core shoppers, are even more attuned to the importance of the Internet.

    To ignore this reality is to risk irrelevance.

    It is worth repeating the line from the Forbes piece, with emphasis:

    “Virtually anyone selling anything should be online, with as much sophistication as they can afford or muster.”

    And one other thing. If, as some believe, we are not so much headed into a recession as we are enduring an economic transformation that will affect the nation in perpetuity, then embracing the Internet as a marketing and merchandising channel is even more important.

    Published on: March 19, 2008

    USA Today reports this morning that a new study says that “more than three in four Americans think the country is in a recession … reflecting a crisis of confidence that economists say could make the economy worse.”

    And the outlook is highly pessimistic, according to the story: “Asked if the nation could slip into a depression lasting several years, 59% said it was likely, and 79% said they were worried about it. A recession is an economic downturn that usually lasts at least six months; a depression is longer, deeper and more broadly dispersed.”

    KC's View:
    Read this, and suddenly the idea of an economic transformation seems a lot more desirable. As long as we deal with it in a forthright, intelligent, thoughtful and realistic way.

    Published on: March 19, 2008

    The Boston Globe this morning reports that “Massachusetts officials yesterday warned the Hannaford Bros. supermarket chain that state law requires companies to promptly notify them of security breaches, following Hannaford's disclosure Monday that a data breach potentially exposed 4.2 million credit and debit cards to fraud.” According to the story, “the state's consumer affairs office told Hannaford chief executive Ronald Hodge that the attorney general can sue companies that don't fulfill their obligation to notify state officials swiftly after a data breach.”

    The stories circulating yesterday suggested that the initial breach took place on December 7. The Globe this morning reports that the Massachusetts consumer affairs office has still not been officially informed about the security breach.

    According to the story, “Hannaford spokeswoman Carol Eleazer said the company disclosed the breach as soon as it had a full understanding of the situation. ‘In an abundance of caution and consistent with all applicable state laws, Hannaford announced this illegal data breach to get information to our customers in a timely manner,’ she said, when asked about the Massachusetts' officials concerns.”

    KC's View:
    When I saw the December date mentioned yesterday, I wondered if the delay might be used to track down the culprits. In other words, if you go public, they shut down their operations and you have less of an opportunity to catch the bad guys.

    I have no idea if this is the reason for the delay, but it was my first thought.

    It is, however, a question that Hannaford will have to answer.

    Published on: March 19, 2008

    Bloomberg reports that when Starbucks holds a shareholders meeting later today, during which CEO Howard Schultz is expected to announce his plans for reversing a declining sales trend, one of the initiatives expected to be advanced is some sort of loyalty program that will reward frequent shoppers.

    According to the story, the program is likely to either offer free coffee or discounts to people who use their Starbucks cards.

    Schultz already has said that he plans to cut back on US store openings, close underperforming stores, and ramp up the introduction of stores outside the US as he seeks a balance that will change the company’s declining fortunes.

    In an interview with USA Today Schultz only says that “Starbucks is going back to the future — but that's not enough. There will be a relentless focus on innovation … There will be a fundamental change in the taste and experience of going to Starbucks … The problems we are facing have been self-induced. That's why I think we'll be able to fix them."

    Schultz tells the paper “that Starbucks coffee will be made in smaller batches, and permitted holding time will be cut.” He says: "We'll spill out more coffee than most coffee shops sell. You won't be able to find a fresher cup of coffee on the planet.”

    Other expected changes – more grinding of coffee on location, the possibility of a social networking component to the stores, and the embracing of products that connect to coffee and the elimination of items that distract from the company’s core expertise and mission.

    KC's View:
    For Starbucks to make better use of its card program makes an awful lot of sense. It already makes me more loyal to Starbucks because I have money invested in it…and if there were other benefits, it just would become a no-brainer.

    Published on: March 19, 2008

    Ahold-owned Peapod.com announced yesterday that it “has developed and created its own software program that essentially reads the labels for its customers. Like a virtual nutritionist, NutriFilter sifts through all the products available online and highlights the ones that meet customers' unique nutritional needs, whether it's for gluten-free, peanut free or low-fat foods, or foods that meet other requirements, such as being Kosher, organic, high- (or low-) fiber, or even as specific as high in Vitamin A or calcium.

    “Customers have the option of using five pre-set plans (gluten-free, peanut-free, USDA good fiber, USDA low-fat, and USDA low-sodium), with more to be added in the future, or, they can create as many of their own custom plans as they'd like. Customers are presented a blank nutrition panel, like those seen on all packaged products, and they are able to select as few or as many nutritional criteria as are important to them. One can create a sort of dream label, specifying maximum calories, grams of fat, milligrams of potassium, and so on, and then activate that specific filter…”

    KC's View:
    Very smart. And yet another good reason to prefer online shopping.

    Published on: March 19, 2008

    The Wall Street Journal this morning has a story about drugstore chain Walgreen Co, noting that the company traditionally has grown sales and market share simply by “pushing out more prescriptions per year than any other chain.”

    But now, challenged by improved competition and a tough economy, Walgreen is taking a different tack, reshaping itself as a broad healthcare provider.

    This means opening more in-store and work site health clinics. It means opening pharmacies in non-traditional locations, such as factories and other such sites. And, the Journal writes, “It has dropped its longtime aversion to acquisitions and snapped up specialty pharmacies that are experts in infertility, cancer, AIDS and other conditions that are expensive to treat. It is opening pharmacies in hospitals and assisted living facilities. Last year, it quadrupled the number of pharmacists certified to give flu shots and other immunizations.”

    Walgreen has not, however, done what competitors Wal-Mart and CVS Caremark have done – get into the business of managing employer drug benefit programs. The company believes that it will fare better by being independent of such programs.

    KC's View:
    While I’m hardly an expert in this area, it seems to me that one of the ways that companies can survive in transformational times is by redefining the marketplace in which they operate. At a time when people clearly are more conscious of health-related matters, even if they don't always act like it, it makes sense for Walgreen to turn itself into a resource for information, not just a source of product. (It is the same argument that I make about supermarkets and food.)

    By “connecting the dots” more specifically between products/services and broad health concerns, it seems to me that Walgreen can change the way people think about such matters.

    By the way, this is why I think it is smart for Walgreen to broaden its food business…as long as it sells the right kinds of foods. But why the company also wants to sell some fashion items is beyond me.

    Published on: March 19, 2008

    The Arizona Republic has an interview with PetSmart CEO Phil Francis, who tells the paper that “he views his stores as a pet-centric version of Target: fun, reasonably priced, a place you can count on for deals on basics and for inexpensive versions of the latest fashions.”

    In addition, Francis tells the Republic, PetSmart is developing a new suite of services for pets, including American Kennel Club citizenship classes, breed-specific grooming and PetHotels where animals will be treated to bedtime stories and belly rubs.

    KC's View:
    Maybe there are people who would pay money to have someone run their pets’ bellies before they go to bed…but that’s a lot farther than I’m willing to go.

    When I shop at PetSmart, I walk in, grab the same big bag of dog food for Buffett (our uncommonly hungry, not terribly smart yellow lab), go through the checkouts (which always takes longer than expected because no matter how many people are on line, there usually is just one lane open), and get the hell out. No wandering, no browsing, no casual shopping…and if PetSmart wants to do something really smart, it should open more checkout lanes. (It’d be nice if the store manager actually hung out at the front end so that he’d know what is going on.)

    I also think that if PetSmart wants to be prescient, it should start figuring out the whole online ordering thing. Because while PetSmart does sell bags of dry dog food online, the cost of the shipping is almost as much as the cost of the dog food. At some point, I’m sure, Amazon (or another competitor) will get into this business…and they’ll offer some version of free shipping and even a subscription service that will eliminate any need for me to go to the store.

    And then my visits to PetSmart will, thankfully, vanish.

    Published on: March 19, 2008

    Terrific piece in the New York Times> this morning about the legion of food writers and bloggers who make up a community “where no food was too fatty and no field trip too extreme. Ferreting out the best place for an empanada or the perfect way to braise pork belly meant tasting countless versions, often in the same day. Being the first in the group to find it was golden.”

    The Times writes, “If 1960s Las Vegas had its Rat Pack and 1980s cinema its Brat Pack, early 21st century food has its Fat Pack … The journalists, bloggers, chefs and others who make up the Fat Pack combine an epicure’s appreciation for skillful cooking with a glutton’s bottomless-pit approach. Cramming more than three meals into a day, once the last resort of a food critic on deadline, has become a way of life. If the meals center on meat, so much the better.”

    The problem, of course, is that the members of the Fat Pack are getting older, their waistlines are growing, and their health is deteriorating. Some members of this community are responding by losing weight and getting more exercise, all the while remaining in love with food….they just seem to be doing a better job at moderating their intake and keeping meals in context. But others are in denial, even to the point where they are questioning whether conventional medical wisdom about nutrition and health is even accurate.

    KC's View:
    I love food and love to eat. But when I hear some of these guys questioning whether a fat-laden diet can cause heart disease, or whether diabetes is the national problem that doctors say it is…well, I lose my appetite.

    The smart guys – like chef and restaurateur Mario Batali – seem to understand that it makes more sense to have a lifelong love of food if you actually live a long time. And they are adjusting their personal diets…and even some of their offerings…to reflect this reality.

    By the way, the Times also has a piece on its website about a new book, “Eat This, Not That!” by Men’s Health editor-in-chief David Zinczenko. The book, the Times writes, “is filled with pictures of what not to eat and photos of better substitutes. It compares food choices at favorite restaurants, supermarkets and holiday items.”

    Among the worst foods in America, according to the book:

    Worst Fast Food Meal: McDonald’s Chicken Selects Premium Breast Strips with creamy ranch sauce. Chicken sounds healthy, but not at 830 calories.

    Worst Drink: Jamba Juice Chocolate Moo’d Power Smoothie. With 166 grams of sugar, you could have had eight servings of Ben & Jerry’s.

    Worst Supermarket Meal: Pepperidge Farm Roasted Chicken Pot Pie. It packs 64 grams of fat.

    Worst “Healthy” Burger: Ruby Tuesday Bella Turkey Burger. With 1,145 calories, not a very healthy choice.

    Worst Airport Snack: Cinnabon Classic Cinnamon Roll. Packed with 813 hot gooey calories and 5 grams of trans fats.

    Worst Kids’ Meal: Macaroni Grill Double Macaroni ‘n Cheese. With 62 fat grams, it’s the equivalent of 1.5 full boxes of Kraft Mac ‘n Cheese.

    Worst Salad: On the Border Grande Taco Salad with Taco Beef. A salad with 102 grams of fat and 2,410 mg of sodium.

    Worst Dessert: Chili’s Chocolate Chip Paradise Pie with Vanilla Ice Cream. At 1,600 calories, it’s like eating the caloric equivalent of three Big Macs.


    It is with great relief that I can report that I have never, ever had any of these items.

    Published on: March 19, 2008

    • Tesco’s Fresh & Easy Neighborhood Markets division in the US announced yesterday that it will expand its credit card acceptance to include the American Express Card.

    "We developed the Fresh & Easy concept by listening to what Americans wanted in a grocery market," said Fresh & Easy CMO Simon Uwins. "Our customers asked us to accept the American Express Card in our stores and we listened."

    KC's View:

    Published on: March 19, 2008

    • The Washington Post reports that the US Food and Drug Administration (FDA) is seeking approval from the Chinese government to put its own regulators on the ground in China, where they would be expected to monitor the production of food, drug and other nonfood products. Serious questions about the safety of Chinese exports have been raised over the past year, which recalls of a number of items – including toothpaste and pet food – announced by the US government.

    • Supervalu-owned Jewel-Osco reportedly plans to open a new 62,000 square foot supermarket on Chicago’s South Side, according to a story in Crain’s Chicago Business. The opening is part of a broader effort to bring mainstream shopping alternatives to a neighborhood long underserved by traditional retailers.

    • The Washington Post this morning reports that Safeway and Giant Food, both serving the DC/Baltimore marketplace, are in the midst of negotiations with the United Food and Commercial Workers (UFCW) for a new contract to replace the one that expires on March 30. The talks are characterized as slow going by the UFCW.

    Safeway and Giant reportedly are accepting applications for temporary employees in the event of a labor dispute. Four years ago, the negotiations were said to be contentious but the two sides managed to resolve their differences before a strike occurred.

    • The Chicago Tribune reports this morning that the likelihood that Wal-Mart will open a second store within the city’s borders “just got smaller,” as the city “declined a request to allow the world's largest retailer to build a store at the 50-acre Chatham Market on the South Side, a former steel plant site that the discount chain has been eyeing for at least four years.”

    • Delhaize Group has launched a initiative, the Delhaize Group Fund, which it says will be used to fund a series of diversity programs…initially in Belgium, but possibly to be expanded to other markets where Delhaize does business.

    KC's View:

    Published on: March 19, 2008

    Arthur C. Clarke, the science and science fiction writer, died this morning at his home in Sri Lanka. He was 90.

    The Los Angeles Times elegantly notes that Clarke “peered into the heavens with a homemade telescope as a boy and grew up to become a visionary titan of science-fiction writing.” He imagined such things as cell phones, moon landings, telecommunications satellites, the Internet and space stations before they became reality, and his works included “2001: A Space Odyssey,” which of course was turned into a landmark film by Stanley Kubrick.

    KC's View:

    Published on: March 19, 2008

    …will return.
    KC's View:

    Published on: March 19, 2008

    The Food Marketing Institute (FMI) has announced its closing keynote speakers for its 2008 Show – Michael Sansolo & Kevin Coupe of MorningNewsBeat.com.

    Join Coupe & Sansolo for a highly interactive session looking at the critical news and issues that are captivating the industry at the moment the session takes place. We can't tell you which issues will be discussed - events will determine that. But we can tell you that the analysis will be pointed and irreverent, the guests will be special, the audience will be involved, and that this rollicking hour will be hosted by two of the food business’s most insightful and entertaining analysts.

    There’s one other thing we can tell you: If you miss it, you’ll regret it, because everybody who is in the room will be talking about it.

    The 2008 FMI Show will take place in at the Mandalay Bay Convention Center in Las Vegas on May 4-7. For more information, go to:

    http://www.fmi.show.com /


    And, if you are interested in having Coupe and/or Sansolo speak at your event or conference, just contact them at kc@morningnewsbeat.com.

    KC's View: