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    Published on: April 2, 2008

    by Michael Sansolo

    Sometimes the pace of change is so radical, it almost makes us forget what’s really happening. And when that occurs, we all miss the chance for some great lessons.

    One MNB “Your Views” writer made me think of this last week, when he commented on the latest story of a sizable retailer eliminating tobacco products from their stores. (Those reports, if you have noticed, get less and less attention as the decision becomes increasingly less radical.)

    This reader pointed out an important part of the story, the incredible turn of events that has led retailers to remove a category that once was one of the highest in terms of sales per square foot. In fact, many of the changes surrounding smoking are shocking. It doesn’t feel like that long ago that smoking was simply commonplace. We sat in restaurants, airplanes and even conference rooms and simply accepted the tufts of smoke floating above us. I can vividly remember the firestorm set off when Northwest Airlines proudly announced it would no longer allow smoking on its planes.

    At the time, it was unheard of and controversial. Today we don’t even think of it.

    However, today’s column isn’t about smoking. It’s about change and what we see and what we choose not to see.

    After all, the foundation for changes in attitudes toward smoking started with that very first Surgeon General’s report. Suddenly, smoking was far less tolerated and school aged kids like me and my sisters were part of an army pestering our parents to give up smoking. I’d like to believe that some far-sighted retailers looked at that event and began thinking about the day they’d no longer sell cigarettes in their stores. I’d like to, but I’m not sure. The same was true for seat belts or littering. The seeds of change were sowed in many second grade classrooms.

    So the question is, what signs do we see today and what unthinkable changes might they cause five, 10 or 20 years in the future? We’ve seen the accelerating pace of change in various attitudes. A few years back, hardly any consumers really understood anything about a trans fat and today there are whole cities where they are banned. Likewise, look at how quickly bottled water got tagged as an environmental problem as did plastic shopping bags. And “Made in China” became a warning almost overnight.

    So what’s next? How will environmental issues impact us going forward? Is there any form of packaging in the store that might somehow evade unseen scrutiny from shoppers and legislators? Or how will health and wellness issues change marketing and shopping going forward? Is it possible that products will be taxed based on fat content or contain new warnings from the Surgeon General on their impact?

    The bottom line is that we really don’t know anything for certain about the future, but we see signs all around us. We look at Generation Y and see how they interact globally in ways previously unimaginable and we have to ask ourselves what they will be like when they are our customers and employees. I’ve heard people question whether their environmental fervor will continue in a softening economy, but I wonder if that’s applying our generational thinking to a new generational group.

    What if these young people say, we don’t care. What if they say: We’ll make trade offs and give up luxuries to help the planet and armed with the Internet, we’ll keep track of your activities around the globe. Is that really unthinkable?

    Then again, is anything really unthinkable?

    Michael Sansolo can be reached via email at .
    KC's View:

    Published on: April 2, 2008

    More than a third of food retailers are incorporating sustainability concerns into their current store development plans, and 40 percent plan to do so in the next five years, according to the annual “Facts about Store Development” report released by the Food Marketing Institute (FMI).

    The study also says:

    • Many food retailers are focusing on reducing their impact on the environment by adding refrigeration management programs and making changes in store design, landscaping or transportation.

    • Green building is an important part of retailer sustainability plans with 21.6 percent of the respondents reporting it is a goal for their company and 58.5 percent said they are looking into green building options.

    • Two in 10 retailers already use recycled building materials such as concrete and steel, equipment and appliances in remodels or new construction.

    • Also contributing to sustainability, retailers are retrofitting existing buildings in developing new stores. In fact, retrofits accounted for 60.6 percent of all new stores opened in 2006, exceeding the number of new buildings for the first time since 2001.

    Other construction-related details discussed by the report:

    • Fewer new store buildings (39.4 percent) were constructed due in part to the shortage and cost of prime real estate.

    • The average store size increased slightly to 48,750 square feet. For the second year in a row, the number of stores closed increased and store remodels and openings were relatively flat.

    • The median new store cost more than $6.5 million to build in 2006 and increased slightly in size to 46,000 square feet, up from 44,753 in 2005. The median decor costs in 2006 added $7.42 per square foot, up from $4.25 in 2005.

    • Slightly more than half of all companies surveyed (50.1 percent) remodeled at least one store in 2006. Nearly a third of the respondents (32.4 percent) said they remodeled because they anticipated or had a competitor enter the market. An additional 32.4 percent remodeled to meet the needs of changing customer demographics.

    These changing demographics, by the way, mean that more stores are incorporating new sections and departments into their offerings, with many listing the following as top of mind: medical clinics, natural and organic food sections, coffee islands/espresso bars, specialty cheeses, shrimp bars, crêperies, modular ovens for artisan bread, and specialty wine tasting areas.

    KC's View:
    I’ll probably get myself in trouble for asking this question, but what possesses a retailer to say that he or she wants to take a sustainable approach to new store development…and plans to do so sometime in the next five years.

    Five years?

    There probably are all sorts of good reasons to say that it takes five years to bring such plans to fruition, but it all strikes me that there are all sorts of good reasons – environmental, cultural and from a public relations point of view – to be a lot more motivated than that.

    It strikes me that at least some of the real winners five years from now will be the ones who did not wait, who did not procrastinate, who did not say “tomorrow” when faced with issues that affect the world today.

    Published on: April 2, 2008

    In the face of almost overwhelming public criticism in a case that took on a life of its own, Wal-Mart blinked.

    The case in question concerns Debbie Shank, a former Wal-Mart employee who was permanently brain damaged in a car accident eight years ago. Her medical expenses were covered by Wal-Mart, but when she sued the person who caused the accident and won, Wal-Mart sued to get back more than $400,000 in medical expenses – something it was allowed to do under the terms of the company health plan.

    According to a Wall Street Journal story, “Insurance experts say it is increasingly common for health plans to seek reimbursement for the medical expenses they paid for someone's treatment if the person also collects damages in an injury suit. The practice, called ‘subrogation,’ has increased since a 2006 Supreme Court ruling that eased it.

    The Shank family – which was so concerned about their financial status that her husband divorced her because as a single person she could get more public assistance – challenged Wal-Mart’s efforts all the way to the US Supreme Court…and lost. But while Wal-Mart prevailed in the courts, it clearly was losing in the court of public opinion, and was being deluged by criticisms that it was being heartless about Shank’s situation. “Countdown with Keith Olbermann” on MSNBC, for example, pledged to put Wal-Mart on its “worst person in the world list” every day until it reversed its policy on Shank.

    Late yesterday, Wal-Mart said that the Shank case had prompted it to revisit and revise its subrogation policy, and that it will no longer seek reimbursement from the Shank family.

    "Occasionally others help us step back and look at a situation in a different way. This is one of those times," Wal-Mart human resources executive Pat Curran wrote in a letter to the family.

    KC's View:
    For a moment, let’s forget about the legal and financial implications. There will be many, and Wal-Mart – as well as other companies – will have to deal with them.

    Consider that Debbie Shank’s condition in permanent. Consider that she lost much of her memory and ability to communicate or walk. And consider that, according to CNN, her memory problems are so bad that she forgets that her 18-year-old son, Jeremy, was killed in Iraq, and weeps as if for the first time when she is told that news every day when she asks about how he is doing.

    There was no way that Wal-Mart was going to be able to spin subrogation as being anything but heartless.

    Published on: April 2, 2008

    The New York Times this morning reports that Michael Pollan, described as “the author and de facto leader of the food intellectuals,” thinks that rising food prices can be a good thing.

    “Along with some other critics of the American way of eating,” the Times writes, “he likes the idea that some kinds of food will cost more, and here’s one reason why: As the price of fossil fuels and commodities like grain climb, nutritionally questionable, high-profit ingredients like high-fructose corn syrup will, too. As a result, Cokes are likely to get smaller and cost more. Then, the argument goes, fewer people will drink them.

    “And if American staples like soda, fast-food hamburgers and frozen dinners don’t seem like such a bargain anymore, the American eating public might turn its attention to ingredients like local fruits and vegetables, and milk and meat from animals that eat grass. It turns out that those foods, already favorites of the critics of industrial food, have also dodged recent price increases.”

    The argument, essentially, is that high prices on mainstream foods could be the thing that pushed local/natural/organic/sustainable foods out of the niche category.

    KC's View:
    Now, the situation isn’t exactly that simplistic…and as one expert says, cheap food isn’t necessarily bad food. But I do think that current prices and ongoing environmental concerns can create a scenario in which some people begin to think differently about what they out in their bodies. And I’m not sure that this is entirely a bad thing.

    Published on: April 2, 2008

    The Arkansas Democrat-Gazette reports that former Wal-Mart vice chairman Tom Coughlin isn’t quite out of the legal woods yet.

    Coughlin, you may remember, pleaded guilty to stealing cash, gift cards and equipment from Wal-Mart, and was sentenced to community service, five years’ probation, a $50,000 fine, and ordered to pay $400,000 restitution. He is currently serving 27 months of home detention on his Arkansas ranch, having avoided jail when his lawyer argued with the defense contention that Coughlin was too old and sick to go to jail.

    Now, however, Coughlin is being sued by another former Wal-Mart employee, Patsy Stephens, who used to be an administrative manager with the retailer – and now is awaiting sentencing having been found guilty of eight counts of wire fraud.

    According to the story, Stephens “submitted vouchers to the company on Coughlin’s behalf, court records show. Stephens submitted the vouchers as instructed by her immediate supervisor, Rob Hey, and Coughlin. Stephens deposited the money from the vouchers in her bank account and wrote checks for cash or to Hey for Coughlin, the lawsuit states.”

    Stephens claims in her suit, according to Democrat-Gazette, that “she didn’t know her actions were illegal and that she thought the scheme was for the company’s benefit.”

    KC's View:
    Stephens was no neophyte – she worked for Wal-Mart for almost a quarter-century. But on the face of it, her claim isn’t entirely difficult to believe.

    What’s interesting to me is that I get the sense from some emails and conversations that Stephens is viewed with some sympathy down in Bentonville.

    Very interesting.

    Published on: April 2, 2008

    Wal-Mart announced that it is rolling out “its most comprehensive environmental sustainability campaign, demonstrating it's serious about moving 'green' from costly dream to routine for its customers. The Earth Month merchandising and marketing campaign during the month of April, with national television advertising breaking today, highlights eco-friendly products available at budget-friendly prices. The moves tap into the growing influence of environmental concerns on consumer shopping behavior.”

    According to a statement released by the company, “more than 50 products spanning various aspects of sustainability including energy conservation, waste reduction, and organics will be featured on store shelves during the month of April. In addition, will offer more than 500 eco-friendly items, including apparel, baby products and home furnishings.”

    "Wal-Mart is uniquely positioned to make sustainable choices a real option for hundreds of millions of Americans -- not just the few who until now could afford to choose them," said Matt Kistler, senior vice president of sustainability at Wal-Mart. "The environment and budgets will be top of mind for our shoppers throughout the month of April, and for those reasons, we are unveiling new product initiatives as well as offering seasonal favorites at unbeatable prices."

    KC's View:
    If Wal-Mart had decided to wait five years, it might have made the accountants and the stock analysts happier, because a number of them have complained that the company’s green movement has cost too much money with too little ROI. But it didn’t.

    In my mind, that is leadership.

    Published on: April 2, 2008

    Really good piece in the Washington Post celebrating the fact that Jared Fogle, the longtime spokesman for Subway sandwiches, has maintained his 245-pound weight loss for 10 years.

    “With a rising obesity epidemic, the number of people who need to shed triple-digit pounds is also increasing,” the Post writes. “A growing number try to meet that goal surgically with stomach stapling or gastric bypass. That makes Jared's accomplishment all the more important.”

    Here’s something from the piece that a lot of people may not know – that there is a National Weight Control Registry, a group of 6,300 "successful losers" who have shed at least 30 pounds and kept it off for at least a year. And the folks there seem pleased that Fogle’s weight loss was achieved and maintained the old-fashioned way – “by eating less and moving more,” as the column puts it.

    KC's View:
    It is extraordinary that a fast food chain has managed to successfully and credibly put health and wellness at the center of its marketing efforts for so long. And a shame that so many supermarkets – which, after all, offer a far greater number of options – have not done the same.

    Published on: April 2, 2008

    • In the UK, reports that Tesco “has come under fire from a supporter of its Fresh & Easy launch over an apparent U-turn on a pledge to report separate numbers for its fledging US business. James Anstead of Citigroup, the UK’s top rated food retail analyst, said in a recent note that Tesco was shying away from a promise to break out the US as a separate business unit.”

    • Tesco said yesterday that speculation about its impending entry into the Russian market is misplaced, and that its expansion priorities, for the moment, are the US, India and China.

    KC's View:

    Published on: April 2, 2008

    • The Chicago Tribune reports this morning that has introduced “a new service that lets shoppers compare prices and buy things with a few quick taps on their cell phones.” Essentially, the service allows customers use UPC codes to compare prices on almost anything sold by Amazon, and then place orders with Amazon if they find the online retailer’s prices to be preferable.
    KC's View:

    Published on: April 2, 2008

    • The Washington Post reports that DC and Baltimore-area Safeway and Giant Food employees have voted to approve a new four-year labor contract that raises wages but “will require some employees to pay weekly insurance premiums and higher health-care deductibles.”

    USA Today repots that Canada-based Menu Foods has agreed to settle lawsuits filed by pet owners accusing the company of having sold imported pet food from China that was contaminated and may have led to the deaths of thousands of animals. No specific settlement amount was announced.

    • The Vancouver Sun reports that “metro Vancouver Overwaitea Food Group and Safeway grocery store workers will hold strike votes next week to back demands for new contracts. The old contracts - involving Save-On-Foods, Overwaitea Foods and Safeway stores - expired March 29.”

    • The Des Moines Register reports that Fareway Stores, which operates 94 stores – all of them in Iowa, except for two each in Nebraska and Illinois – plans to open its first Minnesota store at the end of the year. The 30,000-square-foot, no-frills unit will be located in Stewartville, 10 miles south of Rochester.

    CNN reports that “despite a threatened strike by some independent truck drivers, many trucks were still on the road Tuesday.” Truckers had said they would pull off the road this week to protest the increase of diesel fuel prices.

    There also were some reports that some trucks were driving 20 miles per hour on the New Jersey Turnpike, snarling traffic…but those sorts of reports seemed to be in the minority.

    KC's View:

    Published on: April 2, 2008

    • Duane Reade announced that John A. Lederer, the former president of Loblaw Companies, will be named the drug store chain’s chairman/CEO.

    • The Grocery Manufacturers Association (GMA) has named Eileen Harley, the former director of government relations at the Food Marketing Institute (FMI), to be its new director of Federal Affairs.

    KC's View:

    Published on: April 2, 2008

    …will return.
    KC's View:

    Published on: April 2, 2008

    MNB received a number of emails yesterday wondering if, indeed, 7-Eleven was planning a new superstore division, and asking where more information could be found about Starbucks’ impending acquisition of Burgerville.

    In some cases, the day’s top story had been forwarded to bosses, clients, suppliers and customers.

    Which is gratifying.

    Because as was noted at the end of the lead story yesterday, it was April 1. April Fool’s Day.

    And MNB was just having a little fun.

    KC's View: