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    Published on: March 25, 2008

    by Michael Sansolo

    It would seem there is a problem at PetSmart.

    Judging from the reader reaction to a story Kevin ran last week, many MNB readers view a visit to PetSmart as a terrible chore. It’s cold and dismal, an experience to be avoided whenever possible. One reader suggested to Kevin he should start doubling up his dog food purchases to reduce his trips to PetSmart by half.

    Brutal stuff, but honestly, I can’t disagree. As readers of this column know, I have a rather strained relationship with my beagle, Hunter. He has me extremely well trained, while I don’t have much luck with him.

    Until recently, we purchased dog food for Hunter at PetSmart’s main rival, PetCo. (PetSmart lost our business a few years back.) At both stores, we saw all the problems readers reported at PetSmart. Each time I went it was a cold, empty transaction. Walking through the aisles of the pet superstore, there was something that always occurred to me: Many of the employees didn’t seem to care much about pets. In essence, they were simply selling boxes, bags, cans and the occasional salamander.

    So we switched (well, actually, my wife switched.) She went to a store where Hunter—my personal canine garbage disposal—could be fed a more gentle diet for his aging system. (Why this is necessary for a dog that eats wood chips is beyond me, but my wife believes.)

    PetCo probably didn’t notice us leaving and I’m doubt Hunter really cared. But let’s try to ponder this for a second in a more literary light.

    Consider Robert Burns’ old Scottish poem, which translated into English says: “Oh would some power the gift give us, to see ourselves as others see us.” In other words, it’s so easy for us to comment on the failings of PetSmart, but what would others say about us?

    For instance, consider the comment that PetSmart is a dismal trip and a chore to be avoided. I don’t know about you, but that’s a complaint I’ve heard about supermarkets quite often. If PetSmart is a trip to be avoided by stacking up purchases, is there some parallel with research that shows shoppers reducing their weekly trips to the food store? Maybe it isn’t all about gasoline prices.

    I can’t tell you how many times I’ve been in a supermarket where I’ve wondered if the workers cared about food. Or were they simply moving boxes, bags and cans, just like the folks in my nearby PetCo. And will shoppers simply move those purchases elsewhere, just like my wife and I did with our dog.

    Complicating matters, the choices keep getting easier for shoppers. If the store experience is no longer special, what keeps someone from giving up and moving food purchases on line, for example. It might seem like a remote idea today, but lots of remote ideas grow into big problems when not addressed. Especially when gas prices keep increasing and shoppers keep looking for ways to cut out some trips.

    Phil Francis of PetSmart, who used to run Shaw’s Supermarkets, is a better retailer than I would ever be and I wouldn’t bet against him in his goal to reinvigorate his company. Check out the PetSmart website for the corporate officers. Nearly every one is photographed with a pet, including one officer holding a goldfish bowl.

    Now check out a typical supermarket website. How often are the executives photographed in a kitchen or a store holding their favorite food or recipe?

    Sure, PetSmart has problems. But are they really alone? Instead of criticizing them, maybe it’s time to pull out a mirror and look at ourselves.

    Michael Sansolo can be reached via email at .

    KC's View:

    Published on: March 25, 2008

    The Cincinnati Enquirer reports that Kroger wants to inform shoppers that its own-label milk is free of an artificial hormone called rBST that is manufactured by Monsanto under the name Posilac, and that can increase milk production when it is injected into cows. Kroger says it wants to make the statement on milk labels because it has been getting calls from consumers concerned about the issue.

    Monsanto, however, is fighting Kroger on a state-by-state basis, claiming that if Kroger puts the information on its labels, Monsanto has no ability to rebut the claim with information that rBST is safe. Posilac has been approved for use in the US by the Food and Drug Administration (FDA).

    According to the Enquirer, “The fight has already forced Kroger to change plans for millions of proposed milk labels after Gov. Ted Strickland on Feb. 7 issued an emergency order to prevent the Cincinnati-based retailer from using the label.

    “Kroger notified dairies last summer that by February 2008, it would not sell milk from cows that had been given rBST.

    “The retailer had proposed a two-part label: one line in the notification said that the milk came from cows that were not treated with artificial bovine growth hormone and in smaller print was an explanation that the FDA had found that the hormone rBST - also known as rBGH - was safe. The smaller print became an issue of contention as Ohio regulators told Kroger it could not proceed with the label and had to make changes.

    “Ohio is not the first state where this issue has played out. Pennsylvania banned the labels, known in the food industry as ‘absence labels’ on Jan. 1, but that prohibition was later altered to allow milk to be labeled as from cows that were not treated with rBST.”

    One possible solution has been to allow Kroger to make the claim, provided that it also includes information about the FDA approval of rBST. But that would amount to forcing Kroger to have a longer disclaimer than its actual claim.

    KC's View:
    This is patently absurd. There would be no reason for Kroger to want these labels if consumers were not demanding them, and it strikes me as ridiculous that the government is backing up Monsanto’s desire to obscure basic information that shoppers are demanding. (I suspect that the officials backing up Monsanto define “doing the people’s business” as “cashing the biggest checks,” though that is only a guess.)

    I understand that rBST has been approved by the FDA, and that proponents maintain that it is virtually the same as a naturally occurring hormone that exists in cattle. But they are giving it to cattle, and they are only doing so to increase milk production…and if consumers would prefer to drink milk from cows not getting those shots, they ought to be able to do so.

    Kroger is acting as the agent for the consumer, which is precisely the right thing to do. It does Monsanto no good to be defined by what it does not want consumers to know.

    Published on: March 25, 2008

    CMS, the coupon processing house, has released a new study saying that consumers redeemed 2.6 billion coupons in 2007 – the same number that were redeemed in 2006, and the first time in 16 years that coupon redemption has not dropped.

    Still, coupon redemption ain’t what it used to be. In 1992, CMS notes, consumers redeemed 7.9 billion coupons.

    CMS says that “marketers issued 302 billion coupons in 2007, a 6% increase over the previous year. However, that increase belies the fact that manufacturers reduced the number of promotional offers by over 8% while increasing the circulation of those offers by nearly 5% … New products and competitive messages require richer offerings to get the attention of potentially less receptive audiences. Therefore, the broader messaging brought a significant increase in coupon values. Average values increased 10 cents per coupon to $1.28, marking the highest level seen to date. At a nearly 9% increase, 2007 also saw coupon values outpace price increases for the first time since 2004.”

    Not surprisingly, among the economic factors leading consumers to redeem coupons are the increase in unemployment and hikes in food prices, CMS reports.

    KC's View:
    It is hard to imagine that any business in which 302 billion coupons are issued and 3.2 billion are redeemed can be considered to be successful. I know how many coupons I throw out each week – coupons that come either in the mail or in the Sunday New York Times. Almost all of them. At least 99 percent of them.

    And why? Because virtually every coupon I get – with rare exceptions – is irrelevant to my life and needs.

    Betcha I’m not alone.

    Fix that problem, and maybe coupon redemption will actually go up. And will mean something.

    Published on: March 25, 2008

    In Orangeburg, South Carolina, the Times and Democrat reports that next week, Piggly Wiggly Carolina Co. will open what is described as “the nation’s first completely restructured grocery store model designed to fit how people intuitively shop. It’s a big leap, but store owners and designers believe it could have a big impact on the industry – especially now that record-high food prices and soaring energy costs are forcing companies to find new and inventive ways to lure discerning customers. ”

    According to the story, “Rather than placing food staples around the building’s perimeter – a common tactic used to get customers to stay longer and spend more money – this one uses advanced technologies to arrange them in a flowing, intuitive manner.” Product categories are grouped together – like milk and cereal, canned, frozen and fresh vegetables, coffee with sugar and cream – in a way that is designed to make shopping both more intuitive and convenient.

    In addition, the store features “a large, open kitchen…where guests can watch chefs prepare meals ,” plus “special stations where as many as two months’ worth of oven-ready meals” can be prepared by shoppers.”

    KC's View:

    Published on: March 25, 2008

    USA Today reports this morning that about 20 percent of pet food products that were recalled more than a year ago because of concerns about their safety have still not returned to store shelves – and one of out of 1 recalled products actually have been discontinued. Sales of wet pet food, the segment affected by the recalls, are off as much as 25 percent, according to industry experts.

    The recalls stemmed from revelations that some imported pet food contained melamine, which was used in heat gluten to create the illusion of higher protein levels, which in turn fetched higher prices. It is believed that hundreds of dogs and cats died after eating the contaminated pet food, though firm numbers have been difficult to compile.

    While pet food companies say they have tightened their oversight of imported products, USA Today suggests that many pet owners remain skeptical.

    KC's View:
    Wonder how many consumers, when asked, would say that they love their pets, hate the place where they buy pet food, and are worried about the products they feed their animals.

    Which on the one hand sounds like a real problem…but also could be an opportunity for a savvy retailer looking to address what is an obvious market deficiency.

    Published on: March 25, 2008

    According to a story in USA Today this morning, Pizza Hut is introducing a new menu item – pasta.

    According to the story, Pizza Hut’s “new Tuscani Pastas will come as Creamy Chicken Alfredo and Meaty Marinara. The price for the pasta is $11.95, the same as a large pizza with one topping, and Pizza Hut says they'll feed a family of six. The pastas are baked in the pizza ovens and come with five breadsticks.”

    Brian Niccol, Pizza Hut’s chief marketing officer, tells the paper: “If we do it right, pasta could become as big a business as pizza.”

    KC's View:
    This is yet another example of how fast food companies are aiming for maximum share of stomach…and why supermarkets should be careful of anything that burnishes the reputation and sales of any company that sells food.

    It also is an example of the ultimate laziness of the American consumer. After all, it has to be faster to boil some water, cook some pasta, and warm up some sauce …and yet there will be plenty of consumers who would prefer to lift only one finger to get their meal…the finger they need to make a phone call.

    Published on: March 25, 2008

    USA Today has a story looking at an analysis of US Department of Agriculture (USDA) records by the Animal Welfare Institute suggesting that more than 10 percent of humane slaughter violations for the 18 months ending March 2004 “detailed improper treatment of animals that couldn't walk — mostly cattle.”

    The analysis was conducted in the wake of the nation’s biggest-ever beef recall, which came after evidence emerged showing that workers in a California slaughterhouse used a cattle prod and forklifts to get downer cattle to the point where they could be slaughtered. Downer cattle is believed to be higher risk for mad cow disease.

    The problem is that the slaughterhouse and the USDA maintained that the situation was an anomaly, while animal rights activists believe it is far more commonplace than anyone is saying.

    KC's View:

    Published on: March 25, 2008

    • Drugstore chain Walgreen Co. reported second quarter net earnings that were up 5.2 percent to $686 million, from $652 million during the same period a year ago. Q2 sales increased 10.5 percent to a record $15.4 billion, on same-store sales that were up 4.7 percent.
    KC's View:

    Published on: March 25, 2008

    • The Wall Street Journal reports that Cott Corp. CEO Brent Willis is leaving the company, to be replaced on a temporary basis by David Gibbons, the former chairman/CEO of Perrigo. The search for a permanent replacement has begun.

    The Journal writes, “The change comes as the beverage company … has been struggling to overcome surging commodity prices, intensified price competition in the U.S. beverage market, falling soft-drink demand and other problems.” In addition, Cott “also acknowledged in recent weeks that it could lose a chunk of sales through a reduction of shelf space and vending machines at Wal-Mart Stores … which is increasingly focusing on marketing name-brand products in its stores.”

    KC's View:

    Published on: March 25, 2008

    Al Copeland, the flamboyant and imaginative entrepreneur who created the Popeyes Famous Fried Chicken chain, has died at age 64 at a Munich, Germany, clinic. Copeland was being treated for a malignant salivary gland tumor.
    KC's View:

    Published on: March 25, 2008

    Got a number of emails yesterday in response to the decision by biometric provider Pay By Touch to cease operations.

    MNB user Mel Mann wrote:

    Where will all the resident biometric data land when this company goes belly up? Probably purchased by some marketing company to match up with other non biometrics for targeted marketing programs.

    Does this bother anyone? How does the retail business encourage consumer friendly security while assuring consumer privacy? These companies will develop what the retailers will buy - seems to me the retailers leading the charge to this technology need to step up and set standards for their suppliers in this area. My prediction is personal privacy concerns in the near future will make food safety concerns today seem minor.

    Another MNB user wrote:

    I have no interest in letting any company hold my finger prints on file. Call me old fashioned or paranoid if you want but with the constant news about security breaches I'm sure it's only a matter of time until some bad guy figures out how thwart the system.

    As if having my digits isn't bad enough, why give them access to something even more personal? Now with the operator of the system in financial trouble, I'd say the risk is even higher. I want no part of that. Thankfully I've never been arrested and fingerprinted so if the government doesn't have them, then nobody else needs them either.

    The interesting thing is that I willingly gave my fingerprints and other biometric information to Clear, the airport security company that offers fast-track access to gates. In fact, I paid them to take my biometric info…because I saw a clear (no pun intended) benefit to me. And I never thought twice about it.

    Responding to yesterday’s story about the revival of old-fashioned haggling, MNB user Craig Bower wrote:

    In my view, savvy customers always engage in old-fashioned haggling regardless of current economic conditions. It has been my experience that most retailers are willing to offer a concession on price, payment terms, delivery fees, free accessories, or ancillary services if only one asks the question. Negotiation on big-ticket purchases (HD TV's, home appliances, etc.) can yield substantial rewards as I have proven many times with retailers like Best Buy and Home Depot. Yes, the internet does equip the savvy consumer with the necessary information upon which to base requests for concessions, but even without such comparison pricing from the internet it is possible to pocket some meaningful discounts.

    Another MNB user wrote:

    Maybe it’s a cultural thing, we have so many diverse cultures here in the USA, they are simply re-introducing an old concept. On the other hand, it may indicate excessive supply, or a consumer’s belief that there is insufficient value for the money. Look how haggling turned out for the auto companies. Now we hear car dealers saying they have the “No Haggle Price”.

    The point is in the phrase, “retailers do say that this level of autonomy at store level seems to be good for creating the impression that these are neighborhood stores”…it’s all about creating an impression that the customer is getting a deal.

    MNB user Jeff Castrovillari wrote in about another story:

    How interesting that Hy-Vee's Small Store Model is considered "new."

    Most of us in who have been in this industry more than 20 years probably started in just that type of store.

    I guess everything old is new again as the saying goes.

    Small stores had a competitive advantage over larger ones in the fact that they have to be more in tune to the community that they serve. They definitely cannot be one size fits all. It challenges them to really know what their customers want and are willing to buy.

    Isn't that what the neighborhood store used to be all about?

    Interesting circle of life here. Sometimes the most brilliant of ideas are original ones that just need some updating.

    Regarding the lawsuit against Starbucks that charges the company with illegally sharing tips with store managers, one MNB user wrote:

    Maybe I am old school, but I understand tips - "To Insure Prompt Service" - are for servers in sit down restaurants. Originally, given at the start of the service - to insure prompt service, then it became standard procedure to give the tip at the end of the meal, in proportion to the service given - and if service was poor, a smaller tip - even no tip - is common. Higher tip for superior service.

    I am offended by "TIP JARS" at cash registers, guilting the customer into giving more money to those who are simply doing their job, which they are already paid for.

    Speaking for a moment as a father whose son has made pretty good money in tips working at the local Starbucks, I would disagree. I’m happy to throw in spare change in places like Starbucks because a lot of those employees are students who can use the money. I don't feel guilty if I don't have change, and I don't feel guilty if I use my Starbucks card and there is no change. But I’m happy to tip when I can, especially because I know how important it has been – and will continue to be – to my son.

    Another MNB user had a comment about the story in a Wal-Mart employee received permanent brain injury in a car accident and was covered by her employee health plan, but then Wal-Mart successfully sued to recover the money after the woman won a suit against the person who caused the accident:

    I can’t believe that I’m going to say this, but Wal-Mart is right. They should get the money for the medical expenses. I understand how easy it is to quickly read the story and say that once again the Evil Empire Strikes Back. But let’s go back over the facts:

    1) The woman was in an accident.
    2) While she waited for a settlement, Wal-Mart paid her medical bills.
    3) She was awarded a settlement in the amount of her medical bills.
    4) Wal-Mart gets back the money that they paid in medical bills (refer to point number 2)

    It is pretty simple: she didn’t pay the bills Wal-Mart paid the bills. What…you people think she should be able to pocket $400K?

    On a related story – labor negotiations that focus on health care costs – MNB user Geoff Harper chimed in:

    Every story that you report in which workers are paying zero for health care (and potentially striking if the company pushes for some contribution) is mind-boggling. I recognize that the union is trying to protect the earnings of its members, but in this day and age, the negotiation should be about how much (10%, 20%, etc.) of the cost the workers will pay. The workers have to have a stake in the expense of medical care if there is ever going to be an impact on this runaway cost.

    Finally, MNB noted a story yesterday about how baby boomers will be dealing with Alzheimer’s in ever-greater numbers, and I joked: I had a clever riposte to this story….but I can't remember what it was.

    Which led one MNB user to write:

    I understand your joke regarding Alzheimer's and I don't take offense, even though my mother had it and it greatly contributed to her death. I suspect other's who have loved one's who have had the disease may feel differently, but I will leave that up to them. I will say that it is an awful, an absolutely awful, disease. And unlike so many other diseases, it is not preventable via behavioral modification (at least I have not
    seen any hard evidence about what causes it and how to prevent getting it).

    There are other "cause celebs" that get much more attention but via modification of behavior, the incidence could be driven down. In the case of Alzheimer's, it seems to strike without notice and without warning and with no known cause.

    I was being a wisenheimer. And while, as noted elsewhere, I’m pretty much an equal opportunity offender (religion, sex, pet owners, etc…), there probably are times I should shut the hell up.

    KC's View: