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    Published on: April 18, 2008

    A new TNS Retail Forward ShopperScape survey says that that two-thirds of shoppers “would definitely or probably shop a small food concept that places emphasis on convenience and fresh, prepared foods,” and suggests that the “future retail landscape will be filled with an increasing number of small-store food concepts as retailers strive to capture the attention of busy consumers.”

    Jennifer Halterman, a senior consultant with TNS Retail Forward and author of the recent report entitled “Small Stores, Big Trend,” says that “the combination of small size and a fresh, prepared foods emphasis is a compelling offer for the time-pressed shopper. The small-store trend, which more players are beginning to explore, is part of an ongoing evolution in the retail food sector and we expect more players to throw their hats into the ring.”

    The Retail Forward survey takes note not just of Tesco’s much-written-about Fresh & Easy chain of stores in California, Nevada and Arizona, but also how “Wal-Mart and Safeway are reportedly planning to open small-scale grocery concepts of their own in their quest to take advantage of the demand for convenience, attract the aging Baby Boomer, search for new growth vehicles and round out their store portfolios.”

    However, Halterman also notes that store development alone does not guarantee success. “The jury is still out on whether small-format food stores will meet shopper expectations and company return on investment objectives going forward,” she says.

    KC's View:
    The guess here is that both Wal-Mart and Safeway, as well as other retailers, will go to school on what the Tesco experience seems to teach us…and the next generation of small stores may prove to be quite compelling.

    If I had to make recommendations, I’d suggest that prepared foods be given a stronger presence than Fresh & Easy gave them, with far fewer offerings in the single-serve, ready to cook category. I’d make sure that every private label item had a national brand alternative, so that stronger comparisons could be made by shoppers (though there shouldn’t necessarily be a private label alternative to every national brand). I’d put that kitchen/sampling station concept and put it front and center in every store, so that the aromas of fresh foods wafted through the air greeting every customer. And, I’d develop some sort of relationship with an online grocery provider that would use the small store location as a depot for picking up larger orders.

    That’s what I’d do.

    Published on: April 18, 2008

    The New York Times reports that an increasing number of retailers are deciding to cut back on the amount of financial reporting that they do, citing a volatile marketplace that is made only more tumultuous by a constant drumbeat of financial data.

    “Faced with an economic slump, a growing number of national retailers are abandoning the longstanding tradition of reporting monthly store sales and forecasting annual profits,” the Times writes. “The stores say that they are eliminating outdated practices that encourage short-term decision-making and can confuse investors.

    “But many Wall Street analysts and investors, who rely on these numbers to gauge a company’s health and the mood of the American consumer, are crying foul. The motive for providing less financial insight, they suspect, is to avoid issuing embarrassing numbers in the middle of a recession, numbers that can drive down a company’s stock price.”

    Among the companies making these kinds of moves are JC Penney, Macy’s, CVS, and Starbucks.

    KC's View:
    The argument against information cutbacks is that investors need such data to make intelligent decisions about a company.

    Even though I am in the information business, I have to admit that I’m siding with the companies on this one. It seems perfectly clear to me that when a company offers a constant stream of projections and information, decisions start being made so that the company can live up to expectations…even if those decisions aren’t good for the company in the long run. And while the information might be seen as being good for investors, the people who are betting their money on these companies ought to be interested in the corporation’s long-term health and viability, not a quick hit. (I know that’s not how everybody invests, but I’m not particularly interested in those folks.)

    While MNB does do some reporting of the numbers released by companies, I actually stay away from projections and promises because I think they are unreasonable and create, in some cases, situations that are not good for companies’ long-term economic credibility and viability.

    I do realize that reduced reporting will allow some companies to hide fundamental problems in some cases, and that this is not a positive trend. But I think a balance has to be found.

    Published on: April 18, 2008

    CNN reports that Wal-Mart has agreed to write a check for $300,000 to settle a lawsuit in which it was charged that the company illegally discriminated against a job applicant in its Richmond, Missouri, store because he had cerebral palsy. The company also agreed to provide Americans With Disabilities Act (ADA) training “to managers at its Richmond store; notify job applicants about the settlement; and inform several Kansas City-area job service agencies that the company seeks to employ qualified persons with disabilities, according to the CNN story.

    The case dates back to 2001, when Steven J. Bradley reportedly applied to work at a local Wal-Mart after seeing commercials in which the company was shown using disabled employees. Bradley applied for “any available position,” but was told that because of his wheelchair, he’d be best suited to be a greeter, and then was not hired.

    The Equal Employment Opportunity Commission (EEOC) filed the suit on Bradley’s behalf in 2004; Wal-Mart got a summary judgment in its favor in 2005. But in 2007, an appeals court overturned that ruling and the lawsuit was scheduled to go to trial.

    This is at least the second go-round between Wal-Mart and the EEOC, according to CNN, which reports that “in December 2001, the EEOC and Wal-Mart agreed to a $6.8 million national settlement of a discrimination suit. In that case, the agency accused Wal-Mart of using a pre-employment questionnaire that violated the ADA between Jan. 1, 1994, and Dec. 31, 1998.”

    KC's View:
    I’m assuming that someone down in Bentonville has sent out a memo saying that if this sort of lawsuit happens a third time, it will mean somebody’s head on a pike.

    Published on: April 18, 2008

    The Bellingham Herald reports that Haggen Inc. “will have all of its finned seafood tested for and certified for low mercury content, meeting stricter standards than what has been set by the U.S. Food and Drug Administration.

    “The seafood will be certified by Safe Harbor technology, which can test a seafood sample in less than a minute. This will take place at the processing plant before it is shipped to any of Haggen Inc.’s 33 stores. Eventually, they will also test for live shellfish.

    “Haggen is the first supermarket chain in the Pacific Northwest to use the Safe Harbor seal.”

    KC's View:
    This reflects a long-standing argument advanced here on MNB - that if companies truly are to be seen as agents and advocates for the consumer, in many ways they must use government standards as a base line, and go further than the government requires them to when it comes to issues like food safety.

    Good for Haggen.

    Published on: April 18, 2008

    The Wall Street Journal reports this morning that “a shortage of special kosher-for-Passover margarine is causing dismay in Jewish households across the nation as family cooks discover they can't make many of their traditional Passover meals without it.

    “Particularly irksome is the absence of kosher-for-Passover stick margarine, an essential ingredient in baking for the weeklong holiday starting at sundown Saturday … Some stores in the New York area have been rationing kosher-for-Passover margarine, letting customers buy only a single package. Others are using it as a marketing tool, selling only to those who agree to buy a certain amount of other items too.”

    According to the story, “Margarine is crucial to kosher cooking because the dietary rules don't allow mixing meat and milk products, such as butter, at a meal.” The rules get even stricter for Passover, because “stricter kosher rules for the holiday forbid corn and legumes such as soy. So Passover margarine is made only from cottonseed oil or palm oil.”

    There apparently are two basic problems affecting production of kosher margarine. One is that it is pretty much a once-a-year product that requires precise cleaning of machinery before it is made, and not all manufacturers are willing to do so. Second, there is a shortage of cottonseed oil because some farmers decided to plant corn instead because ethanol was driving up corn prices.

    KC's View:
    Somewhere in here, there is a lesson.

    Published on: April 18, 2008

    The New York Times reports thus morning that “rising prices for organic groceries are prompting some consumers to question their devotion to food produced without pesticides, chemical fertilizers or antibiotics. In some parts of the country, a loaf of organic bread can cost $4.50, a pound of pasta has hit $3, and organic milk is closing in on $7 a gallon.”

    According to the story, “Organic prices are rising for many of the same reasons affecting conventional food prices: higher fuel costs, rising demand and a tight supply of the grains needed for animal feed and bakery items. In fact, demand for organic wheat, soybeans and corn is so great that farmers are receiving unheard-of prices.

    “But people who have to buy organic grain, from bakers and pasta makers to chicken and dairy farmers, say they are struggling to maintain profit margins, even though shoppers are paying more. The price of organic animal feed is so high that some dairy farmers have abandoned organic farming methods and others are pushing retailers to raise prices more aggressively. Several organic manufacturers worry that sales may slow as consumers cut back.”

    KC's View:

    Published on: April 18, 2008

    The New York Times reports this morning that “throughout the country, businesses grappling with declining fortunes are cutting hours for those on their payrolls. Self-employed people are suffering a drop in demand for their services, like music lessons, catering and management consulting. Growing numbers of people are settling for part-time work out of a failure to secure a full-time position.

    “The gradual erosion of the paycheck has become a stealth force driving the American economic downturn. Most of the attention has focused on the loss of jobs and the risk of layoffs. But the less-noticeable shrinking of hours and pay for millions of workers around the country appears to be a bigger contributor to the decline, which has already spread from housing and finance to other important areas of the economy.

    “While official unemployment has risen only modestly, to 5.1 percent, the reduction of wages and working hours for those still employed has become a primary cause of distress, pushing many more Americans into a downward spiral, economists say.

    “Moreover, this slippage is a critical indicator that the nation may well be on the verge of a recession, if not already in one.”

    KC's View:
    It increasingly seems to be that economists will be the last to admit when the nation is in a recession. From where I sit, it’s pretty clear that most consumers – and a lot of businesses – are acting as if we already are mired in one.

    Published on: April 18, 2008

    The New York Daily News reports that US District Judge Richard Holwell has ruled that New York City can indeed enact regulations requiring some chain restaurants to post calorie information on their menu boards, turning back a challenge by the New York State Restaurant Association.

    “It seems reasonable to expect that some consumers will use the information disclosed ... to select lower calorie meals ... and these choices will lead to a lower incidence of obesity,” Holwell said in his ruling.

    The new regulations, developed by the New York City Department of Health as a way of combating increases in the obesity rate, go into effect next Monday and applies to restaurants that are part of chains with at least 15 outlets nationwide. It is not known whether the restaurant association plans to appeal.

    KC's View:
    I have no particular problem with the ruling or the regulations, but nobody should expect an enormous or immediate impact on obesity rates. People generally pay attention to what they want to, and see only what they want to see … and if they’d been paying attention at all, obese people would have known to lay off the fast foods that exacerbate their conditions.

    Published on: April 18, 2008

    The Food Marketing Institute (FMI) has announced the nine finalists in the 2008 Store Manager Awards competition, based on stories submitted about them by their supervisors or associates demonstrating how the manager promoted sales growth and customer satisfaction. Entries were judged on originality and creativity, and the person’s impact on growth, customer satisfaction and community service.

    The finalists are: Mark Halvorson, Cub Foods, St. Paul, Minnesota; Jeffery Iwamuro, Potash Bros. Market, Chicago, Illinois; Dale Kahn, Bi-Lo, Cleveland, Tennessee; Bob Kees, Sissonville Foodland, Sissonville, West Virginia; Ramiro Marquez, Bashas’, San Luis, Arizona; Cheryl Rondenelli, Hannaford Bros., Clinton, New York; Mitch Streit, Hy-Vee, Columbus, Nebraska; Ralph Towery, MarketPlace Foods, Minot, North Dakota; and Janice Yergeau, Hannaford Bros., Hooksett, New Hampshire.

    Three winners – chosen in categories related to company size – will be named at the upcoming FMI Show in Las Vegas. All nine finalists, including the three grand prize winners, received two tickets to the FMI Show, three nights of hotel accommodations in Las Vegas and a certificate of achievement. The three grand prize winners will each receive a $1,000 check.

    KC's View:

    Published on: April 18, 2008

    • Wal-Mart said yesterday that it will invest the equivalent of more than $700 million (US) to develop e-commerce capabilities in Brazil later this year, saying that online shopping will be a critical component of its Latin America growth strategy.
    KC's View:

    Published on: April 18, 2008

    • Tesco’s Fresh & Easy chain of stores announced that it will increase the number of stores it has in Las Vegas from 11 to 35…with 10 new sites selected in addition to 14 new locations that already had been identified.

    The company currently is taking a three-month hiatus from opening new units as it evaluates the shape and progress of the 61 stores already opened in Southern California, Arizona and Nevada.

    KC's View:

    Published on: April 18, 2008

    USA Today this morning reports that new legislation drafted by Democratic leaders in the US House of Representatives could require new fees charged to food and drug companies that would in turn be used to increase government oversight of these industries.

    However, opponents say that any fee increase would come at precisely the wrong time.

    "We should not be taxing food companies at a time of record food prices," Scott Faber, vice president of the Grocery Manufactures Association, tells USA Today. "Congress ought to provide the (Food and Drug Administration) with ample funding and not pass that cost on to companies and consumers."

    KC's View:
    If Congress provides the funding, the money has to come from somewhere. I’m thinking taxes. Taxes get paid by consumers.

    If companies have to pay fees, they’re going to have to find the money somewhere. I’m thinking higher prices. Last time I checked, higher prices get paid by consumers.

    I agree that the FDA and USDA need to do a better job, and that they need more funding. I also agree with FMI CEO Tim Hammonds that a single food safety agency would be a better, more efficient approach.

    But I think we have to be honest about where the money is going to come from, no matter how it is raised. Or am I missing something here?

    Published on: April 18, 2008

    • Rite Air Corp. reported fourth quarter revenue of 6.82 billion, up 50.5 percent compared to the same period a year ago, reflecting its acquisition of the Brooks Eckerd stores. Same-store sales for the period were up 1.3 percent, while the company declared a net loss for the quarter of $952.2 million, compared to last year’s fourth quarter net income of $15.1 million.

    For the 52-week fiscal year ended March 1, 2008, Rite Aid had revenues of $24.3 billion, up 39.8 percent compared to revenues of $17.4 billion for the 52-week prior year, with same-store sales that were up 1.3 percent. The net loss for the year was $1.1 billion, compared to last year’s net income of $26.8 million.

    KC's View:

    Published on: April 18, 2008

    …will be back on Monday. I promise. (There is a long plane ride home from Barcelona coming up, and I’m not planning on sleeping…)

    KC's View:

    Published on: April 18, 2008

    Not a good week to be an inhabitant of planet Earth.

    Wars continue to be fought. Human rights controversies impinge on the upcoming summer Olympics games in Beijing. Energy is increasingly expensive. Food, for almost everybody, costs more and more. In some cases, foods of certain kinds are becoming harder to find. The list goes on and on, and I won’t even get into US domestic politics.

    Makes it sort of hard to be an optimist.

    And then, just when you think things can't get much worse, comes the news, published by the Los Angeles Times, that an $8 billion particle accelerator, also known as a super collider, built on the France-Switzerland border in 300-foot-deep tunnel and that is 17 miles long, may have a tiny downside to it when the thing is activated this summer.

    Yes, the particle accelerator “will send particles crashing into each other at just a wink shy of the speed of light, generating energies more powerful than the sun.” And yes, it may be able to allow scientists to “peer into a looking-glass world that could contain entrances to extra dimensions and super-massive partners of the familiar particles that make up our world. One creature that must be hiding there, the scientists say, is the Higgs particle, one of the most exotic undiscovered objects since the yeti.” (I have no idea what any of this means, but it certainly sounds impressive. And important. And makes me wish I’d been a better science student, rather than learning everything I know about scientific theory from Star Trek.)

    But it also could – emphasize the word could - create a black hole.

    Actually, let me give it to you the way the Times wrote it, because it is so much more impressive:

    “Critics think the collider could also spawn a black hole that will swallow Earth. That could be just an appetizer. Once the collider got going, according to the doomsday scenario, it could gobble up distant stars like a child popping Skittles.”

    Okay, the good news is that if this were actually to happen, nobody would be worrying about $4 gasoline, food shortages would seem like a puny issue, and we’d never have to watch another Obama-Clinton debate.

    But the bad news would be that…well, the bad news would be so, so bad, that suddenly $4 gasoline wouldn’t seem like such a high price to pay. Would sound pretty damn good, in fact.

    The LA Times story is a calm, reasoned and lengthy (2500+ words) piece of journalism, which itself I find sort of amazing. Because when I read it, my reaction was two words – neither of which I can use here. (Actually, I can tell you the first word. It was “holy.”)

    An what makes this really sort of extraordinary is that the scientist who created this spectacular super collider – a man with the equally spectacular name of Michelangelo L. Mangano – concedes that this could happen. Again, emphasis on the word could.

    Again, from the Times story:

    Mangano says that “any black hole would be so tiny that it wouldn't be able to get its teeth around a bit of local chevre cheese, let alone the world.

    “Still, if a black hole were produced at all, ‘that would be an extremely spectacular result,’ he said, a half-smile creeping across his face.”

    And then he says the following:

    "Look, what if I told you tomorrow when you shave you will blow up the world? You laugh. You say that can't happen. But how do you know?

    "The only thing we know is that there have been about a million billion shaves since people started shaving and the world is still here. So all we can say is the probability of you blowing up the world when you shave tomorrow is less than one in 1015."

    Yikes.

    I want to take Michelangelo L. Mangano on faith, because I believe in science and I believe in scientists.

    But I have to say, while I’m not sure what the odds are of this thing destroying the universe as we all know it…whatever they are, I’m not crazy about them.




    If this were not enough to shake my belief system, then came the news that a 13-year-old German student named Nico Marquardt had done a little figuring and discovered that when NASA scientists calculated the odds on the asteroid Apophis hitting the earth in about 20 years as one in 45,000 (which already doesn’t sound like great odds to me), they got it a little bit wrong. The actual odds, according to Marquardt, were more like one 450.

    This bit of scientific wizardry hit the newswires and was instantly all over the planet, with young Marquardt becoming an overnight celebrity. And then, as the story unfolded, there ever were stories suggesting that NASA agreed with his calculations.

    I was sitting in Barcelona reading these stories, and my reaction was pretty much the same as when I read about the super collider.

    Now, as I check the wires this morning, the story seems to have changed a bit, with Marquardt’s calculations being challenged and NASA saying that it never agreed with his numbers.

    But here’s what I find interesting.

    First of all, it took absolutely no effort at all to convince a lot of people that a 13-year-old was smarter than NASA. And I’d be willing to bet that a lot of people thought that NASA lied about the 45,000 to one odds in the first place because it didn’t want to panic anyone. (Sort of the same way that a lot of people believe that the FDA and USDA are lying about mad cow disease in the US.)

    And even now, as I see that NASA isn’t backing down, I’m not taking their odds on faith. Because I’m not inclined to believe anybody anymore.

    Besides, it may not matter. Because if the super collider creates that black hole, 20 years from now there may not be an Earth for Apophis to hit.




    In a week when faith in science has been challenged, I must tell you about a book that I found to be profoundly moving on a variety of levels, and which I urge you to buy, to read, and to pass along to friends and family.

    “The Last Lecture” is based on a lecture given by Carnegie Mellon University Professor Randy Pausch as part of a series of talks given by teachers that were supposed to be what they would say if they had the opportunity for a final imparting of wisdom to their students, friends and loved ones. It could be about anything, but essentially had to reflect whatever that teacher’s priorities were.

    In Randy Pausch’s case, however, it really was a last lecture…because he had been diagnosed with pancreatic cancer and despite numerous treatments, he had not been given long to live.

    Now, Pausch’s “last lecture” was videotaped and made it onto the Internet, where I suggest you find it and watch it. The talk takes about 70 minutes, but it is worth every moment – never maudlin, and always about hopes and dreams and turning those two things into realities. It has become an enormous hit on the web, watched by millions of people and ABC News did a one-hour special about it.

    I am not a sentimental person, and books like these don’t usually appeal to me. (“Tuesdays With Morrie,” for example, just wasn't my cup of tea.) But I have become addicted to the death – and more importantly, to the life – of Randy Pausch, and I think it is because he is first and foremost a natural teacher. I envy the students who have had him in the classroom, and I think we are lucky to have him not just offering a “last lecture,” but a kind of graduate course in living.

    “The Last Lecture” has made me think about my parents, my wife, and my kids. It has made me think about my life and my priorities. And it has made me wonder if I could face the same circumstances that Randy Pausch is dealing with, and do so with the same kind of grace and equanimity.

    All good questions, I think.

    Perhaps most remarkable for a book that is about impending death, it has a happy ending of sorts. A happy ending that made me shed a tear.

    Read this book. Watch the lecture. Take the course.




    One final note. When I came to Barcelona this week, I brought my 13-year-old daughter, Allison, who happened to be off from school. And it was the best decision I could have made, because it has given us special time together as we’ve walked the streets of this marvelous city, tried to speak Spanish, dealt with hail storms and both fought off bad colds. Because we’ve also had ice cream for breakfast, found perhaps the world’s greatest chocolate shop (“Cacao Sampaka”), watched the moon rise over the Mediterranean, kidded and teased and just enjoyed moments that come too rarely and might never come again, as “The Last Lecture” and the stories about the super collider and the asteroid certainly makes clear in dramatically different ways.

    For me, it was a great week to be an inhabitant of Planet Earth.

    Before I left, an executive with whom I was chatting said that he’d always meant to take his kids on business trips, but never had, and now they were grown and it was too late.

    “Too late.” I hate those words.

    I’ve been lucky enough to have taken each of my three kids on at least a couple of trips over the years. If you haven’t, I urge you to find a way. It is worth the effort.

    Take it on faith.




    That’s it for this week. I’ll be back in the states on Monday, and will see you then with an all-new edition of MorningNewsBeat.

    In the meantime, have a great weekend.

    Sláinte!!
    KC's View: