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    Published on: April 29, 2008

    The Wall Street Journal reports that as rising prices cause shoppers to cut back on their spending, "one way retailers are hoping to get customers back into their stores is by offering all sorts of new rewards programs and in-store bonuses to their most loyal customers."

    Sometimes the retailers encourage shoppers to accumulate points aimed at a big reward; sometimes they offer immediate gratification in the form on freebies and bonuses; and sometimes they offer targeted rewards based on past purchasing behavior. But the broader theme is the same – that retailers believe they can generate repeat visits through the use of various kinds of loyalty programs.

    KC's View:
    Sounds like the tactic of the month to me, aimed at short-term sales boosts rather than developing long-term customer relationships.

    One of the standard MNB mantras goes like this:

    The best loyalty program is one that demonstrates the retailer's loyalty to the shopper, not one that tries to buy customer loyalty with rewards.

    The reason more companies didn’t develop comprehensive, long-lasting loyalty programs the last time the concept was hot is that they really didn’t want to make the commitment necessary, and they found that many consumers simply carried around a bunch of loyalty cards so they could cherry pick the best deals. You really think that this is going to change this time around? Arguably, it could be worse…since the economy is in worse shape and many shoppers are in more dire straits than in recent years.

    Too many retailers are more loyal to their own operational needs and the whims of investors and stock analysts than they are to the needs and desires of their shoppers. They don't think so, but they are.

    For these retailers, loyalty marketing will just be another catch phrase, another tactic without real and enduring meaning.

    Published on: April 29, 2008

    Safeway announced that it has created something called the Better Living Brands Alliance, which it will use to market its O Organics and Eating Right product lines across all retail channels – including foodservice and global markets – starting later this year.

    According to the announcement, "The mission of the Alliance is to provide Health and Wellness food and beverage solutions via two proven Multi-Category Lifestyle Brands: O Organics and Eating Right … The Alliance includes world-class manufacturing, marketing and distribution companies as Brand Licensees. Co-pack and distribution partners have also been signed to provide a robust supply chain network."

    KC's View:
    To use two words that seem to have made it into a number of stories this morning, this strikes me as a strategy, not a tactic. Which is to say that it is probably a very smart idea.

    It also is interesting to watch how Safeway diversifies while maintaining fealty to its core competency. If this marketing effort is successful and these two lines start generating real dollars in stores not owned by Safeway, it will just build on the company’s already extremely successful Blackhawk gift card business, which has Safeway getting a piece of a of sales being made by a lot of stores it does not own, including its competitors'.

    My respect for Safeway increases all the time.

    Published on: April 29, 2008

    by Michael Sansolo

    It finally happened. While out on a typical retail experience this weekend, I finally saw a company position jobs in just the way I always dreamed they should and could be.

    It started with a poster that called out: “It’s not just a job, it’s a career.” The poster called out all the benefits of the job. Instead of talking about the tough hours, it read “flexible hours.” Health benefits, career building skills and even uniforms were positioned as a positive. It reminded applicants that many of the most successful people in the company began with the lowest level jobs.

    Even the picture used was well thought out. It featured a young Caucasian man and woman, standing together with an African-American man, a Hispanic woman and an Asian woman. It screamed diversity. It screamed opportunity. It screamed “take our application.”

    Best of all, the attitude of the signage was reflected in the workers I met. One young woman quickly helped with me a question and just as rapidly suggested an extra purchase for me to add. When I asked if she was a manager, her response was incredible. “No I’m not. But we all like to work that way here.”

    It was a great, great experience and sadly, this all happened in McDonalds. What made this worse was when I went into nearby supermarket the approach couldn’t have been more different. No sign about the great careers that truly exist in the supermarket industry. Nothing about the flexibility of hours or the incredibly important role we play in the community. Rather, it had a simple sign proclaiming “help wanted.”

    Given the demographic realities caused by the coming retirement of the Baby Boom generation and the increasing competition for every employee at every level, this was a contest McDonald’s won hands down. And while many supermarkets are far better than the one I visited, there was an easy take-away from this visit. When it comes to employees, McDonalds has raised its game. Maybe everyone else gets a break today.

    Raising your game is something we should never forget, no matter how small the improvement. Kevin Coupe made an interesting comment last week about the 20th anniversary of the release of "Bull Durham," a movie that I too love for both sports and general lessons. While some of you might find parts of the movie objectionable (be forewarned) it’s worth viewing to reach the key lessons.

    The dialog Kevin quoted last week captured the essence of the lessons. It comes near the end of the movie when the lifelong minor leaguer explains to the white hot rookie the incredibly small difference that keeps one player in the bush leagues and sends the other to Yankee Stadium.

    It’s the simple lesson of the difference between good and great. Sometimes the difference is luck, sometimes skill and sometimes hard work. It may not be fair, but it’s the small things that make up all that difference. Add to that list, the difference of McDonald’s coming up with an upbeat recruiting message for some of the least desired jobs out there.

    One thing more: "Bull Durham" is a great movie … the best sports movie ever?

    Sorry to disagree, but the vote here is for "Hoosiers."

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

    Published on: April 29, 2008

    The Orlando Sentinel reports that after 18 months of speculation about its plans, German no-frills/limited assortment grocer Aldi has unveiled its plans to open 13 stores in central Florida by the end of the year. Four of the stores will be in Orlando, and the rest will be in markets that include Winter Park, Sanford, St. Cloud, Merritt Island, Titusville, Daytona Beach, Lady Lake, Palm Bay and Ocala.

    The stores will be supplied by a $40 million distribution center being built by the company in Haines City, Florida, which is designed, from all reports, to allow the company to efficiently and effectively compete with Supervalu's Save-A-Lot format, as well as with Wal-Mart and Target.

    KC's View:
    There are a lot of people in the industry who think that Aldi is poised to become a major player in an economic climate that, to be frank, has a lot of shoppers reeling and looking for new options. It won’t be everybody; there will still be plenty of shoppers who won’t want mostly private label product displayed in pallets, who will prefer a broader level of choice and who won’t want to rent a shopping cart for a quarter.

    But it also is likely that the list of people is growing who will find Aldi's specific offering to be alluring.

    Published on: April 29, 2008

    The Associated Press reports that Ahold-owned Giant in the DC/Baltimore marketplace is in the process of editing its grocery selection as it revamps its stores, "streamlining their inventories and discontinuing the bottom-selling products to make room on the shelves for larger quantities of fewer products."

    The stores will still carry 50,000 SKUs, but the chain seems to think that the move will simplify the shopping experience while taking costs out of the supply chain and reducing operating costs; however, the AP story notes that at least some shoppers are frustrated because they cannot find the products they are used to buying at Giant. And some shoppers say that Giant hasn’t resolved a central problem – that its products are more expensive than at the competition's stores.

    KC's View:
    Is editing the grocery selection part of a broader strategy that will speak eloquently and forcefully to shoppers about Giant's vision of the food experience? Or is it a price-cutting tactic that is meant to put a band-aid on the company's troubles?

    If it is the latter, I fear that it is too little, too late.

    The question, it seems to me, isn’t whether Giant has fewer products but whether it has the right products. My sense of Giant, having talked to enough people who live and shop its stores, is shoppers tend to be underwhelmed by its offerings – by the physical trappings, by the prices, and by the products being sold. (Tony Kornheiser has said on his radio program that its bagels are barely recognizable as being such. And my impression is that Mr. Tony knows his bagels.)

    I know that Giant is working to overhaul its stores, to get back to a time when it was seen as an intrinsic member of the communities it serves. I suspect that this ship has sailed…and that the company has much work to do just to keep up with the estimable competition it faces – Wegmans, Harris Teeter, Trader Joe's and Safeway's new stores.

    Published on: April 29, 2008

    The Washington Post reports that negotiators for the US Senate and House of Representatives have reached a tentative agreement "on a new $290 billion, multiyear farm bill that would add about $10.4 billion for nutrition programs while continuing to channel billions of dollars to farmers, even if prices stay at current record levels.

    "Key details remain to be worked out, but lawmakers said a final deal could come next week on the bill. The government would spend $10 billion more than allocated by congressional budget committees last year. The Bush administration had proposed an increase of about $5.5 billion."

    According to the story, "Rising food costs gave a strong impetus to stepped-up funding for programs such as food stamps that help poor and near-poor families." And, the Post writes, "The bill would reduce the tax credit for ethanol made from corn to 45 cents per gallon from 51, but the tax credit would be extended through 2010."

    KC's View:
    Okay, someone has to help me with this last bit, because I'll admit to being confused.

    I keep reading that one of the reasons that food prices are going through the roof is that the US government has a flawed biofuels policy, essentially using subsidies to make it far more profitable for farmers to sell corn for ethanol than for food. (Do I have this right?) Does this bill, tentatively agreed to by both the House and Senate, simply continue a flawed policy? And does "stepping up" aid for poor families hardest hit by rising food prices just add to the subsidy problem without really addressing the core problem?

    Understand, I am just asking questions here…and I am happy to be corrected if I am not getting this right. But when I read the Post story, the phrase "throwing good money after bad" came to mind…

    Published on: April 29, 2008

    A new study by TNS Retail Forward estimates that households will spend as much as $42 billion—of the $105.7 billion tax rebate total—at retail stores from May through the end of the year, with most of the incremental retail spending occurring in the third quarter.

    According to the report, year-to-year growth for the second quarter growth is forecast at 3.5% with the tax rebates instead of 2.0% without the rebate impact. Third quarter growth is forecast at 6.0% instead of 3.0% without the tax rebate impact. The sales forecast is of retail sales excluding autos and gasoline as reported by the U.S. Department of Commerce."

    The study also suggests that "down-market to mid-market shoppers, who are most likely to receive and spend a tax rebate, will remain focused on value and everyday purchases. Mid-to-up-market households will be more inclined to make big ticket purchases, which will likely benefit sales of consumer electronics and some home furnishings."

    And, while a combined 41% of survey respondents tell TNS Retail Forward that they intend "to use their rebate check for either everyday living expenses or to make a special purchase … More households are expected to use the rebate to pay down debts, among other things."

    KC's View:
    It is worth pointing out that the economists at Retail Forward believe that while these checks will have a short-term impact on retailers' bottom line, they also think that it is unlikely that they will have any sort of sustained positive impact on the economy.

    Which is not exactly what I wanted to hear.

    Published on: April 29, 2008

    Add Roundy's to the list of food retailers – already including all the banners operated by Kroger and Supervalu – offering special deals to shoppers who bring their economic stimulus and/or tax rebate checks into the store.

    Like Supervalu and Kroger, Roundy's will cash the checks and hand out gift cards in $300 increments, and then will add $30 t the card as a bonus for the shopper.
    KC's View:

    Published on: April 29, 2008

    MSNBC reports that the end of the world indeed may be at hand.

    Okay, maybe that is a little over the top. But it is hard to know what else to think when MSNBC says that there is a French winery selling Chablis Grand Cru Reserve de l'Obedience at $326 per bottle – and the bottle comes with a screw-top cap.

    It is, according to the story, "part of a quiet revolution sweeping the French wine business, the world's largest and fighting to stay that way. France's goal: to hold off New World winemakers that have wooed wine lovers and gained market share with jazzy marketing campaigns, helpful information on what's inside the bottle, and quality assurances that some French wines lacked.

    "Screw tops, boxed wines, colorful easy-to-understand labels and sophisticated marketing — innovations pioneered by countries like Australia and South Africa — are making inroads in tradition-bound France, even if many still sneer … The screw-top shake-up was inspired as much by practical considerations as by consumer preference. Increased demand on cork suppliers has forced manufacturers to harvest immature cork, which some suspect causes the oxidization. While some argue that wines requiring more oxygen as they age require an old-fashioned cork, many winemakers are turning to more reliable seals for all but their heaviest reds."

    And it isn’t just the bottle tops that are changing. MSNBC writes that wineries in France are getting smarter about using their labels to market the product rather than using them to pay homage to families and traditions that seem irrelevant to many of today's young wine consumers. Labels now often will identify the grape used to make the wine, rather than the estate or vineyards that produced the product.

    Here's the quote from the story that makes the argument that in today's global and cutthroat market, relevance is what is most important: "We didn't see the danger coming from the New World — where competition came with a completely new approach to wine making," says Renaud Gaillard, deputy head of the French Federation of Wine and Spirits Exporters. "Finally we understood we had to change not only production but also the way the product is presented. We had to make the buying process easier."

    KC's View:
    C'est la vie.

    I cannot pretend not to be distressed by this trend; I fear that the romance of wine, which has much to do with the bottles, the corks and the overall experience – in addition to the taste of the product – could be diminished as it becomes commoditized.

    But I am learning to live with it, to realize that to resist such change is to resist the future.

    One vintner says it well: "You can't escape history, but you don't have to live in the past."

    Though one advantage of age, I think, is that one has an appreciation for the little things that make life better. One disadvantage is that one can get caught in a rut.

    C'est la vie.

    Published on: April 29, 2008

    WBZ-TV in Boston has a report that Hannaford Bros. has found one solution to some of its fast-rising health care costs. When employees need hop and knee replacements, the company is sending them to Singapore for the procedures – because it is cheaper to fly them there and back, put them up in hotel, pay for a traveling companion and fund the surgery there than it is to have it done in the US.

    According to the story, the company's Health Benefits Manager, Peter Hayes, says that employees are open to the idea as long as the medical care equals what they would get at home.

    KC's View:
    I love Singapore, so my reaction to this is that it would be a pretty good deal…though on reflection, it would be better for the person who is the traveling companion than for the actual patient. That's a really, really long flight, and I can't imagine doing it after having endured surgery on my knee or hip.

    On the other hand, Singapore Airlines is a terrific carrier. Maybe they'd make it bearable…or even enjoyable.

    Published on: April 29, 2008

    HealthDay News reports on a new study by the University of Connecticut Center for Osteoporosis suggesting that the high consumption of carbonated beverages seems to be connected to lower bone mass in children, which could increase the likelihood of osteoporosis in later years.

    There seem to be several possibilities for why soda – especially colas – could be causing this problem. One is that because kids drink so much soda, they aren't drinking other beverages, like milk, that would give them calcium and vitamin D. Another possibility is that the caffeine in colas could be causing the lessened bone mass. Or, it could be that phosphoric acid is causing a calcium imbalance in kids, which is leading to lower bone strength.

    KC's View:
    Of course, as in almost all things, the doctors say that the best way to address this issue is through moderation – that it is okay to drink soda, but not too much, and to balance it with the consumption of healthier and fortified beverages. And, they say, it is critical to get exercise, which also develops bone strength.

    Published on: April 29, 2008

    Taco Bell has struck a deal with Oklahoma City to make its Fresco Menu, which has nine items with less than nine grams of fat apiece, the official menu of the OKC Million Challenge, which is designed to help citizens of the city to lose a combined million pounds of fat.
    KC's View:
    Caramba! The idea that a fast food joint is connected to this sort of healthy eating/healthy living initiative is sort of depressing. And it just speaks to the fact that fast food places are a lot more savvy about these kinds of marketing opportunities than a lot of supermarket chains … which should be the destination of choice for people looking to make intelligent choices in search of better health.

    Published on: April 29, 2008

    • As expected and reported almost everywhere yesterday, Mars and Warren Buffett's Berkshire Hathaway Corp. are teaming up for a $23 billion acquisition of the Wm. Wrigley Jr. Co, creating a confectionery behemoth that some experts think will result in a series of mergers that will reshape the category.

    • The Chicago Tribune notes that the price for organic milk is likely to rise in the very near future, following the lead of traditional milk, what has seen double-digit cost increases: "Many of the same factors that sent conventional milk prices soaring - climbing feed and fuel costs, for instance - are also at work in the organic world. It just takes longer for rising costs to wend their way through the organic food market because of its relatively slow-moving pricing system."
    Published reports say that Bi-Lo plans to unveil a new limited assortment, discount-driven format store in North Carolina next week. The store, said to be called Food$mart, will have both national and regional brands, as well as own-label products, but will have limited sizes and what the company is calling 'limited frills:" shopping experience.

    • Steve Burd, chairman/CEO of Safeway, has received the Corporate Heart of Gold Award from the American Heart Association, recognition for his work in the health care segment, his focus on reducing heart disease in his workforce, and broad efforts to reform the nation's health care system.

    • The Grocery Manufacturers Association (GMA) has launched a new website designed to provide food safety information to consumers, the media and government policymakers:

    • The Wall Street Journal this morning writes that the previously reported visits by the UK Office of Fair Trading (OFT) to Britain's largest food retailers – as it probes possible price fixing – also included "visits" to the British offices of Procter & Gamble, as well as requests for information submitted to Unilever, Reckitt Benckiser and Mars Inc.
    KC's View:

    Published on: April 29, 2008

    • Tyson Foods reported a second quarter loss of $5 million, compared to a year-earlier profit of $68 million – not good, but better than expected by analysts. Q2 revenue was $6.61 billion, up from $6.50 billion a year earlier.

    KC's View:

    Published on: April 29, 2008

    Responding to a story yesterday about rising egg prices, I commented that when I was a kid growing up in a big family, eggs were always a cheap meal when money was tight. Which led MNB user Cindy McGarrigle to write:

    Even at today’s retail prices, eggs are still a strong value and very affordable. At $2.20 per dozen, you can still serve a family of four a center-of-the-plate all-natural high quality protein for about $1.50. Eggs deliver a big nutrient bang for your buck! One nutrient dense egg has 13 essential vitamins and minerals – all for only 75 calories per egg – and allows people to feel full longer, stay energized, and maintain a healthy weight. Eggs are versatile and delicious, easy to prepare and can be served at any time.

    And MNB user Kurt Kreher wrote:

    It is difficult to understand why you think that eggs do not make an inexpensive meal. If your mother wanted to make a scrambled egg dish today to feed you and your six siblings, do you think she would need three dozen eggs? Quoting the price for eggs from your article, she would spend less than $7 for the main protein portion of the meal. Would she have to spend another $7 for some vegetables and perhaps another $4 for a half pound or so of cheese? In my opinion, $20 for the cost of a meal to feed a family of 7 children and two adults is not too bad. (Granted, I assume that someone trying to feed a family of 9 on a budget is not selecting fancy cheeses.)

    You both make an excellent point. I think I was suggesting that it was not as cheap a meal as it used to be, not that it was expensive when compared to other things.

    Yesterday's piece that was critical of the US government's handling of the food and energy crises led one MNB user to respond:

    Read today's MNB and have to say that I agree with you on the government's handling of the food and energy crises.

    The housing woes, the propping up of Ethanol with hefty subsidies, and a lack of international investment in sustainable development have indeed created the "perfect storm."

    Any government actions now can only be seen as reactionary and are likely to be "too little, too late."

    MNB user Donald S. Currie disagreed:

    The fact is, these increases are a global phenomenon and are the result of global commodity price increases. I wouldn’t assign so much of the blame to our government as that would imply they could fix the problem, which I don’t believe they can. I do agree that this crisis is a “perfect storm” situation but disagree with your characterization of the cause.

    Responding to one piece about a bill that would require imported foods to meet US food standards, another MNB user wrote:

    The head of the FDA recently testified in front of Congress. He was asked a simple question, if the Senate were to raise your budget, how much would you suggest that you could use effectively and efficiently. He said he would have a difficult time with any large number, simply because he is short qualified people. My take was that, while he would like the American people to throw money at the problem...he needs professional people and money can't solve that problem. I thought that was a very compelling answer. To establish an international presence, for inspection of imported food for safety reasons, would require years to implement. (If in fact we are entering a period of food shortages, there will be plenty of unscrupulous companies that will enhance foods with killer fillers.

    There has been some criticism of how the media has reported the global food crisis, and (as usual) I found myself in the position of defending the media…but one MNB user wasn't buying my argument:

    You don't believe that the media is hyping this slowdown, while the first
    MNB article today contained the suggestion from the New York Times that we will soon be eating dog food? Please....

    Consider the single fact that most people (polled) perceive the economy is very bad, but state that that their own situation is very good. That alone suggests a huge gap between perception and reality.

    You say that "the quality of the reporting is the least of our problems"? I would respectfully disagree.

    Sorry, I'm not budging on this one.

    I would respectfully point out that the New York Times didn't make up that quote. It was said by a highly respected food industry analyst with many years of experience and, I think, a level of objectivity. I would have had a lot less respect for the NYT if they hadn't used it.

    MNB user Philip Herr wrote:

    It seems there are at least three related stories covered by MNB this morning about rising prices and media coverage thereof. I remember during the early days of the Reagan/Volker era when inflation was abating. And yet, advertisers and the media in general, continued to exploit our fears for one or two years. And that was about trying to sell something today because tomorrow the price would be higher. Not particularly responsible. Almost 30 years later we have 24/7 news and as many RSS feeds from the web as we choose. So the proliferation of stories can easily reach cacophony stage when it comes to panicking consumers.

    Now I don't for a moment want to minimize the pain felt by many households that operate close to the poverty level. However, the percentage of income that US families spend on food is still the lowest in the world. I recall a quote from the New York Times article that suggested consumers would rather cut back on food, clothing and other expenses to retain their expenditure on video games. Just perhaps it is the fear of no longer taking low food prices for granted that is causing these behaviors rather than the absolute levels they have reached. I ask that we all keep some perspective.

    And another MNB user wrote:

    Although I don't deny at all the seriousness of food shortages and prices, I find all of the attention given to the matter to be mostly in the "if it bleeds it leads" category.

    Concern should be directed to areas of the world where people are actually going to starve to death because of price increases, not towards Costco shoppers. I find it difficult to feel much empathy or sympathy for a woman who has to replace her $4 box of sugar-and-air-in-a-pretty-box Lucky Charms with (horrors) a store brand of more sugar and air when she would be doing her wallet and her children's bodies much more good with a canister of plain oatmeal with some raisins tossed on top.

    I'm sorry to sound harsh but it just gets to be so much hype, you know?

    I would agree that the 24-hour news cycle and huge proliferation of news outlets does create a steady drumbeat of woe. And I would certainly agree that I would prefer it if the legitimate news operations would spend more time on a broader range of serious news stories. On the other hand, this all strikes me as serious news.

    MNB user Lou Scudere wrote:

    I don’t have time to rant today. But, in the last paragraph of your commentary you said a mouthful. Unfortunately, we seem to have grown up in a generation that has always only been interested in short-term gratification. I’m just hoping that as our kids start to have grandkids, we can pull our collective heads out of our third point of contact and take a longer term view of our situation.

    Onto less weighty matters…

    While I maintain that "Bull Durham" is the best sports movie ever made – even though Sansolo, above, says that he thinks it is "Hoosiers" – MNB user Cal Sihilling offers his choice:

    "Raging Bull" for pure grit.

    Both "Hoosiers" and "Raging Bull" would make my top five. (I especially love "Raging Bull" because I knew the guy who helped to train DeNiro for the fight sequences.) But "Bull Durham" still rests atop my list.

    Another MNB user writes:

    The debate for best sports movie could go on for years, my vote is for “Miracle on Ice."

    And still another MNB user writes:

    Oh come on Kevin, "Bull Durham" is a relationship movie set with a baseball backdrop. In fact, I think my wife liked it better than I did.

    Heck, I view "Tin Cup" the same way and between the two, I prefer "Tin Cup."

    Now, for a sports movie, you have to rank "A League Of Their Own" pretty high. I also liked "The Rookie" and "Invincible." All three of these were based upon actual events and people, even if the producers took a liberal amount of artistic judgment. The focus of all three of them was sports, not conquest of the girl and all three involved diversity and inclusion issues. Of course, none of the three had any lines as good as "I believe in opening your presents on Christmas morning rather than Christmas eve. I believe in the small of a woman's back and that Lee Harvey Oswald acted alone..."

    Certainly "A League Of Their Own" and 'The Rookie" are up there in my book.

    I'm also a huge fan of the original "The Longest Yard" with Burt Reynolds, and "North Dallas Forty," with Nick Nolte.

    KC's View: