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    Published on: April 10, 2008

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    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, available on iTunes and brought to you by Webstop, experts in the art of retail website design.

    There was a bit of not-so-good-natured banter earlier this week on MorningNewsBeat over the actions and motivations of the Shank family, which has been fighting to hold onto medical benefits received from Wal-Mart after Debbie Shank, a former employee, 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. Wal-Mart eventually changed its mind., which was the right thing to do…but when one MNB user questioned the family’s motives, a number of users – including me – jumped ugly with him.

    Now, I still think he was wrong and we were right. But in thinking about the exchanges a little more, it occurred to me that I let the discourse get a little more personal than I am comfortable with. I was particularly sensitive to this because of a different set of circumstances that I encountered just last week…

    Those of you who have been reading MNB for any period of time will know that I have been fairly merciless in my criticisms of A&P. I haven't been alone, but I’ve said things like “Can there be worse news than coming to work in the morning and finding out that your company is being bought by A&P?” And to be honest, that’s a line I’m sort of proud of. Or at least I was.

    Because last week I found myself at a dinner, and then a small conference, where I was at the table with Christian Haub, who is executive chairman of A&P. And I have to tell you, he couldn’t have been more charming and friendly – a lot more charming and friendly than I might have been if I’d encountered some blogger who’d been raking me and my company across the coals. And, just coincidentally, I got a note on a completely unrelated subject from Eric Claus, who is the CEO at A&P, and he was extraordinarily nice and even said some kind things about MorningNewsBeat…and I can guarantee you that I wouldn’t have done that if our positions had been reversed. No, I think I would have been fairly vindictive…because let’s face it, one of the advantages of this little soapbox is to be able to say nice things about people I like, and rip the folks about whom I am, to put it charitably, less fond…even if they haven’t done anything to me personally.

    I’m not sure that says something very good about me. As I think about it, there really isn’t much cause to be personal…at least most of the time. Even when I violently disagree with someone, it is probably fair to say that in most cases they are doing the best they can to confront the situation in which they find themselves. And I should start from that premise….giving people the benefit of the doubt, even if I doubt the wisdom of their actions.

    So I’m going to try to be better about this. Or at least more thoughtful. I can’t guarantee I’m going to be perfect, because there may be a morning when I think of a really funny line that is sort of mean, and I won’t be able to help myself. Or, either Larry Johnston or Priceline will decide to go back into the grocery business, and I’ll be compelled to find and use every eviscerating adjective at my disposal.

    But I’m going to try. It seems like the right thing to do.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: April 10, 2008

    The Wall Street Journal this morning reports that Starbucks has decided to end a licensing deal with Save Mart and Lucky Supermarkets that will result in the closure of 45 in-store cafés in Northern California and Nevada.

    According to the story, a spokesman for Starbucks said that the stores were not part of an earlier decision by the company to close 100 US stores defined as non-productive. In addition, the spokesman seemed to leave open the possibility that this could be part of a strategic move by the company to end or reduce licensing deals with other retailers such as Safeway and Kroger.

    KC's View:
    This strikes me as a particularly fascinating branding story because it seems redolent of what was happening with Krispy Kreme just a few years ago. You remember Krispy Kreme – one day it was the toast of the town, an enormous business success, with cachet and quality written all over it, and seemingly the next day it was in financial trouble, had become so ubiquitous as to be lowest common denominator, and had completely lost its mojo. (It didn’t help that almost the entirely country went on a low-carb diet just as the doughnut company hit its peak, causing the decline to seem even more precipitous.)

    Now, I’m not at all sure that this is where Starbucks is headed, but it seems entirely possible that as CEO Howard Schultz thinks about next moves, he thinks about the problems that Krispy Kreme still is experiencing. Brands need careful nurturing, and it seems to be Schultz’s notion of the moment that the company’s growth has exceeded its ability to care for its most important asset.

    By the way, it won’t surprise MNB readers to find out that I’m not sure this is a bad thing for the supermarkets affected. They have three choices here. One is to find another national brand coffee company to take the space. The second is to find a local coffee purveyor to take over the operation. And the third is to develop a terrific in-house operation that will clearly offer a point of difference from everyone else, and then nurture it into a clear differential advantage. I like the last option best, and the second option second best.

    Published on: April 10, 2008

    The Denver Post reports that when it surveyed grocery prices over a four-visit shopping trip between September and January at eight stores in four chains, it found that “stores that cater more to the lower-income shoppers — many of them recipients of government benefits such as food stamps — on average didn't provide lower prices than stores in areas whose shoppers are better off, the review found. And when differences were noted, they tended to favor the affluent areas, meaning lower-income customers generally paid more for the same bag of groceries purchased closer to home.”

    And, the Post writes, “Advocates for the those living on food stamps say it costs more to be poor simply because the choices are not as varied, whether it's among the items that stock store shelves or the stores themselves.

    “A store in a neighborhood without any competitor of like size is unimpeded in its pricing, according to several grocery chain representatives. Retailers explained the price differences as driven by competition — or the lack of it — and dismissed any notion that high prices purposely correlated with income.”

    KC's View:
    Certainly sounds like an opportunity – like a company that caters to low-income shoppers with lower grocery prices could actually make some headway in markets like Denver.

    Wonder what company might be interested in such an opportunity? Gotta be someone out there…

    Published on: April 10, 2008

    Fresh & Easy, Tesco’s US retailing arm, announced this week that its 61 stores will celebrate Earth Day, April 22, by bagging groceries with free, reusable “bags for life.” The plastic and reusable “bag for life” normally retails for 20 cents, and Fresh & Easy commits to customers that it will replace the bag for free if it ever is damaged.

    "We want to make it easier for our customers to make more environmentally friendly decisions," said Tim Mason, Fresh & Easy CEO. "If everyone in the neighborhood shops with reusable bags, we can really make a difference."

    KC's View:
    That “bag for life” guarantee sort of depends on Fresh & Easy being in business for life, and staying viable for the long term, a premise that not everybody would bet on.

    Published on: April 10, 2008

    The Wall Street Journal this morning reports on a speech given by Carrefour CEO José Luis Durán to the World Retail Congress in Barcelona, Spain, in which he spoke of “a number of structural challenges, in all industries -- especially for the retail industry itself -- the scale of which we probably haven't seen in the last decades or even in our lifetimes.”

    Duran said that the rising wholesale cost of food, as well as the increased cost of raw materials and energy – which are increasing at rates not being matched by the retail sector – create market volatility that is affecting both his company and virtually all of the markets in which it operates.

    The Journal notes that Carrefour itself “is at a crossroads. Its founding family is ceding its position as leading shareholder by dissolving a shareholder pact this spring. The move thrusts Blue Capital -- a consortium of private-equity firm Colony Capital and French investor Bernard Arnault that has two seats on the board -- into a dominant position.”

    KC's View:

    Published on: April 10, 2008

    CNN has a story saying that McDonald’s is hoping to get a piece of the $600-$1200 economic stimulus checks being distributed by the federal government, and will time a free samples giveaway to coincide with the distribution of the checks.

    According to the story, the samples will be of McDonald’s new Southern Style chicken sandwiches and the “hope is that, in trying the fast-food giant's latest poultry fare, patrons who are feeling temporarily flush will order French fries, drinks and other items to round out their meals.”

    KC's View:
    Not sure how much the sampling of Southern Style chicken sandwiches will raise the nation’s economic prospects…though it probably is pretty fair bet that it will raise a lot of people’s weight and cholesterol levels.

    Published on: April 10, 2008

    The Wall Street Journal reports that Cott Corp., “a maker of private-label sodas for human consumption, is one of the latest companies taking the health-and-wellness craze to the animal kingdom. Cott is rolling out a line of vitamin-infused beverages for dogs, not unlike the enhanced juices and drinks for humans lining grocery and convenience-store shelves.”

    According to the story, Cott “spent nearly 18 months on research and development with veterinarians and food scientists to come up with the products designed to meet the specific nutritional needs of dogs. Its ‘Fortifido’ line of fortified waters for dogs includes a peanut-butter flavored water that is fortified with calcium for healthy bones. Another is fortified with zinc for healthy skin, and there is even one pumped with spearmint for fresh breath.”

    The Journal notes that the American Pet Products Manufacturers Association “expects Americans to spend about $43.4 billion on their pets in 2008, up from $41.2 billion in 2007.” The evolution of pet owners into “pet parents” seems to the shift that is prompting Cott, as well as other manufacturers to look to pet health and wellness products as fertile ground on which to grow sales.

    KC's View:
    My dog’s view of “fortified food” is the crème in an Oreo cookie.

    (Just joking. Don't want to get a bunch of emails from folks lecturing me about how chocolate is bad for dogs and how I’m killing my dog by feeding her Oreos.)

    Published on: April 10, 2008

    • Published reports in the UK say that British television has launched a new reality program called ‘Breaking Into Tesco,” in which contestants compete with their own recipes – with the winner given the opportunity to create a Tesco private label product actually sold in stores. The first show had viewership of about 1.4 million people, and much of the action takes place inside Tesco stores.
    KC's View:
    Sounds like a very good idea, though I have to admit that I hate reality television – everything I know about “American Idol” (which is the only reality program I know anything about) I’ve learned from listening to Tony Kornheiser on the radio – he’s addicted, and his analysis is funnier and better than his work on “Monday Night Football.”

    My idea of “reality television” is news and sports.

    Published on: April 10, 2008

    • Bashas’ – the Arizona company that operates Food City, AJ's Fine Foods, Sportsman's Wine & Spirits, Ike's Farmers Market, Eddie's Country Store, and both Bashas' and Bashas' Dine supermarkets – has been named a “best place to work” by the Phoenix Business Journal and BestCompaniesAZ for the second year in a row.

    "We're very pleased to be recognized for such an honor two years in a row," Mike Gantt, Bashas' senior vice president of human resources, tells the Sun Herald. "The real honor, however, is knowing that our employees had the ultimate say in this award -- it's wonderful to know they're satisfied with a well-balanced work environment that addresses both their professional and personal needs. Everyone benefits from this type of environment: our employees, our customers and the communities we serve."

    • Worth pointing out that with the time and attention paid to Starbucks in this space, Caribou Coffee has been rated by Consumer Reports as the best coffee brand in the nation, topping 41 other brands, describing it as “complex, fragrant, well-balanced, with floral, fruity and earthy notes.”

    KC's View:

    Published on: April 10, 2008

    • Costco this morning reports that its March sales were up 11 percent, to $6.57 billion, from the same period a year ago. Same store sales were seven percent overall, with a five percent same-store sales increase in the US and a 17 percent increase in global markets.
    KC's View:

    Published on: April 10, 2008

    Got several emails yesterday about the story describing how almost three decades of video productions that were shot by an independent production company for Wal-Mart have suddenly come onto the market, opening a sometimes embarrassing window on the retailer’s private behavior. The reason – the videographer had only a handshake deal with Wal-Mart to shoot its various events, and when Wal-Mart terminated the deal, the producer got angry because Wal-Mart represented the vast majority of its business. The story noted that Wal-Mart apparently didn’t want to pay the several million dollars that the producer wanted for the archive of footage, which could prove to be an expensive choice since various plaintiffs and Wal-Mart critics may find it to be useful.

    MNB user Mike Griswold wrote:

    While this will probably end up in court, I am amazed at times about Wal-Mart’s short sightedness. Several million dollars? Seems like a rounding error and to counter with 500K was insulting. I know they can’t pay-off everyone, but in the grand scheme, my guess is they will be paying a lot more over time.

    Agreed.

    MNB user Guy P. DiCenzo wrote:

    Buy any standard, the tapes belong to Wal-Mart. When a portrait artist is hired by a family, the resulting painting belongs to the family, not the artist. Flagler's behavior is abhorrent.

    Again, agreed. The producers must be hoping for either a big win in court or a big settlement. Because I’m guessing that they’re not going to get a lot of work elsewhere after this.




    On the subject of Supervalu’s launch of a new natural/organic private label, one MNB user questioned the use of the words “new” and “launch.”

    I thought there was something wrong this article. I'm sorry, but the Wild Harvest private label natural and organic line is not "new"…

    The thing is Wild Harvest has been around since the 1990s. It was introduced by Star Markets and was even a stand-alone store concept like Sunflower Markets. Star merged with Shaw's who introduced Wild Harvest in their stores, Albertsons acquired Shaw's, who introduced Wild Harvest in their stores, then Supervalu acquired Albertsons.

    So why is Supervalu taking credit for creating Wild Harvest?


    Supervalu doesn’t need me to defend it, but it seems to me that since it bought all those stores, it owns them and their properties and can take credit for anything it wants. Also, I’m not sure about this, but this “launch” certainly seems broader and more strategic than what has been done before. But I’ll try to find out more…

    I wrote yesterday that a private label organic line could offer Supervalu a differential advantage, but one MNB user thought I was overstating the case:

    Private label organics will be produced as non-organic private label is produced – i.e. same manufacturer different labels. The only “differentiating” will be in the attractiveness of the label. As I recall the poisoned dog food was produced by one manufacturer with innumerable labels, or was it two with innumerable labels?

    Differentiation comes in how the store is merchandised, how the staff treats their customers, price and location – location – location.





    I lamented the fact yesterday that the FDA is refusing to publicize the names of new slaughterhouses found lacking in their procedures, and one MNB user agreed with me:

    My big question in all of these issues (MAD cow disease, recalls, dangerous products, etc.) is:

    Who do these people (USDA, FDA, etc.) work for?

    We pay our taxes to employ the people and they seem to think they’re not accountable to the people.

    I don’t get it!!!


    Me neither.

    Again, I refer you to the Thomas Jefferson line:

    “When the people fear the government you have tyranny... when the government fears the people you have liberty.”




    In a story about Tesco’s Fresh & Easy the other day, I made the following comment:

    …One retailer told me last week that he’d heard a story - anecdotal, and unconfirmed – that there are food banks in Southern California that have stopped accepting donations from Fresh & Easy because they have become too much to handle.

    MNB user Garry Adams took exception to the inclusion of this information:

    I normally agree and like your views.

    However, I, too, have heard "anecdotal, unconfirmed" stories, comments, from various competitors of certain retailers. I would not repeat them, much less put them in print. Sounds like the typical strategy of the LA Times.

    I get calls every week from real estate brokers and developers raising concerns about Fresh & Easy. I give my name and number and tell them to call me if they do not want to lease to Fresh & Easy. I will purchase their property and I will do the lease.

    Guess what ... no calls. And I will bet you your favorite Starbucks drink... they never will.


    For the record, it was not a Fresh & Easy competitor that told me the story.

    That said … and let’s leave Fresh & Easy out of it for a moment … you make a legitimate point. While I was clear the anecdote was unconfirmed, and the context was clearly not straight reportage, I’m not sure in retrospect that I should have used it.

    To be honest, I’ve received some good natured and well-meaning criticisms from people I respect who think that I’ve been too easy on Fresh & Easy, and have cut Tesco too much slack based on reputation. So I’m trying to make sure that I’m as fair as can be.




    Amazon.com often comes up on MNB, which is probably why one user sent us the following email:

    Another great example of customer service at Amazon.com. I'm entirely happy with my HD DVD player's quality with regular DVDs and probably won't be a big buyer of BlueRay DVDs anyway, so I didn't feel too much pain when HD-DVD was dropped. But this email from Amazon sure helped ease any residual pain.

    As someone who purchased an HD DVD player from us before February 23, 2008,* you might like to hear about a special offer available from Amazon.com.

    New technologies don't always work out as planned. We at Amazon.com value our customer relationships more than anything and would like to support customers who purchased these players by offering a credit good for $50 off any products sold by Amazon.com.


    Very smart.




    Yesterday, I was talking about the need for utter transparency…as I often do…in the question of whether prescription drugs ought to carry Country of Origin Labels.

    Which prompted one MNB user to quite legitimately ask:

    Have you ever thought of yourself as a broken record?

    Often...often...often...often...

    KC's View: