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    Published on: May 15, 2008

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Hi, I'm Kevin Coupe, and this is MorningNewsBeat Radio, now available on iTunes and sponsored by Webstop, experts in the art of retail website design.

    This is the kind of stuff that makes me nuts.

    There was a story in Advertising Age this week that carried the following headline:

    Sampling: The New Mass Medium

    And the first paragraph of the story read:

    "One of marketing's oldest and least glamorous practices -- doling out free product -- has come a long way from the gray-haired ladies in the supermarket aisle. No longer the province of marketers who can't afford to buy mass media, deep-pocketed giants from McDonald's to Starbucks, Coca-Cola and Dunkin' Donuts are adopting sampling on a grand scale, turning it into a media event -- and, in some cases, the media buy."

    According to the story, a report by Cannondale Associates suggests that even supermarket sampling is on the rise, and is expected to double in the next three years.

    So, you ask, what exactly is it about this story that irritates the Content Guy?

    Well, I don't doubt the veracity of the story. I'm sure that sampling is on the rise, and that a wide variety of companies are going to embrace it as a way of enticing shoppers.

    No, what really gets my goat is the fact that so many supermarkets - supposedly in the business of selling fresh food and enticing customers and generating shopper loyalty by creating a compelling retailing experience that prompts people to return again and again – are going to end up playing catch up when it comes to sampling. And that's just the mediocre supermarkets. There will still be plenty of stores that won't understand the basic equation – that if you put samples out there, and they smell good and taste good, people are more likely to buy.

    And this is what makes me nuts, because it makes me ask the following question:

    What the hell are they waiting for?????!!!!!

    The biggest criticism that can be made of the mainstream supermarket industry, it seems to me, is that too many food stores don't act as if they are in the food business. They focus on operations, on efficiency, on supply chains, on labor management…but forget that they are in the food business.

    The ability to sample a wide range of foods – to entice the customer with tastes and aromas, to open a window on different cultures and geographies, to stimulate not just taste buds but imaginations – is one of the real advantages of being a food store. And yet, unless there is a manufacturer paying for one of its products to be sampled, too many retailers ignore one of the things that can make them different, give them context, create a differentiated environment.

    And I'm talking about being aggressive about it, not just saying, "Well, if the customer asks for a sample, we'll give them one." That's nonsense. It is an excuse for not executing what should be an enormous strategic and tactical advantage.

    There are exceptions, of course. Costco. Trader Joe's. Stew Leonard's. Price Chopper. Those are a few that come to mind.

    But sampling isn’t nearly as prevalent as it should be in American supermarkets. When Ad Age wrote this story, it should have been about how McDonald's and Starbucks were going to school on programs executed to perfection by the supermarket industry.

    But that's not what the story was about. And that's a shame.

    For MorningNewsBeat Radio, I'm Kevin Coupe.

    KC's View:

    Published on: May 15, 2008

    Is this a case of defying the critics' expectations? Or doth Tesco protest too much?

    For the second time in a week, Tesco's Fresh & Easy chain in the western US has issued a press release designed to hype a positive access of the company's business, even as critics and analysts lambaste the company for they are feel are the inadequacies of the Fresh & Easy format. Earlier this week, the emphasis was on how Fresh & Easy's private label was so popular that the chain was adding another 250 SKUs to its own label lines.

    Today, it is about how Fresh & Easy is at least a partial solution to $4-per-gallon gasoline. The press release reads as follows:

    "Fresh & Easy Neighborhood Market customers already know the grocer for its high quality fresh, wholesome food at affordable prices. But what many customers may not realize is that Fresh & Easy may help save customers money on gas. As a true neighborhood market, Fresh & Easy offers everything a family needs at prices that are easy on the pocketbook all in a location that is easy on the gas tank.

    "When developing Fresh & Easy, customers told the company they often shopped at several stores, sometimes miles from their neighborhoods, all in order to find the freshest, most authentic food at the most affordable prices. Fresh & Easy is located right in the neighborhood and provides fresh, high quality food, as well as favorite brand products, at honest, everyday low prices everyone can afford. With the cost of gas rapidly increasing, Fresh & Easy provides customers with the convenience of everything they need in one place, which saves them time in the car and money at the pump.

    "Based on a recent study from The Nielson Group, gas share of customers’ weekly shopping ranged from 12 to 16 percent in 2007. As gas prices continue to rise, Nielson expects consumers’ gas share of their weekly spend to rise to 19 percent. With gas prices hitting $4 per gallon in many places, consumers are spending even more of their household budget on gas."

    And Simon Uwins, Fresh & Easy's chief marketing officer, is quoted as saying: "We save our customers time and money by locating stores that offer everything they need at honest, low prices right in their neighborhood … No one should have to travel miles to get fresh, wholesome food they can trust at prices they can afford."

    KC's View:
    Interesting that Tesco would choose to emphasize the locations of its stores, since one of the things I keep hearing from other retailers when they look at the map is that I appears to them that there seems to be little consistency to the company's real estate choices. The theory goes that Tesco's location choices were largely experimental – they tried a lot of different neighborhoods and situations because they wanted to see what worked, and at some point will may a more specific choice, open lots more in those kinds of neighborhoods and close the stores that didn't work out.

    That seems to me to be an expensive way to do research, but I know a number of retailers who hold that theory, and they're all smarter than I am. So there you have it.

    I would make one observation about the gas savings logic. It suggests to me that maybe Tesco doesn’t quite get the whole Southern California car-driven mindset. Sure, it is a place where people are spending more and more money on fuel. But it also is a place where people have very little choice – there are few options to getting in your car to go practically anywhere, and so people are out and about anyhow. They often are stopping at the store while going to and from someplace else.

    Sure, Fresh & Easy has the potential to save people a little bit of money on gas. But that strikes me as shaky reasoning.

    That said, I continue to believe that Fresh & Easy in the long-term is going to evolve into a viable and competitive entity, and that the people who think otherwise don't understand how big and smart Tesco is. I got an email yesterday from an MNB user suggesting that Tesco has turned into a "laughing stock" because of what is viewed as its debacle in the US. That's just silly, and underestimates the Tesco machine. (And by the way – the smart US retailers I referred to above almost to a person continue to believe that Tesco will be a force. To be reckoned with in the US.)

    By the way, there would appear to be a concerted effort at turning around some of the Fresh & Easy coverage.

    In the UK, the Evening Standard had a piece yesterday about "independent research" conducted by a company called Execution Research that concluded that Fresh & Easy has become a "new cult retailer" and is an "incredible success story." According to the story, "Execution found shoppers rated the chain ahead of both Trader Joe's and Whole Foods in terms of freshness, and even beat Wal-Mart for value for money. Execution said that it expects shopper numbers to grow from the current 20-30 per hour as brand awareness increases."

    I'm a fan of Tesco, and I believe that Fresh & Easy will eventually be a success. But even I'm not buying that most customers like it better than Trade Joe's and Whole Foods in terms of freshness. Not yet, anyway.

    This study was based on interviews with 700 customers. I'd like to know who they are and how they were chosen.

    Published on: May 15, 2008

    The Los Angeles Times reports that a poll that it conducted in concert with Bloomberg News suggests that "Americans struggling with rising food and energy costs are more worried about their personal finances than at any time since the early 1990s." Among the findings noted by the Times:

    • "Nearly 2 out of 5 people say the state of their personal finances is fairly shaky or very shaky, the poll found. And for the first time since 1993, the percentage of people who said their finances were very or fairly secure fell below 60% -- to 57%, said Times Poll Director Susan Pinkus. 'Anything below 60% is sort of like a warning sign of what's coming next,' Pinkus said. 'It paints the picture of a very grim, weakened economy that is affecting how people are going to spend'."

    • "More than three-quarters of those polled said they thought the economy had fallen into a recession and that the country was 'seriously off on the wrong track'."

    • "56% of registered voters said the economy should be the top priority for the presidential campaign -- a shift from December, when the majority said Iraq should be the candidates' focus."

    • "Money worries plague Americans across the financial spectrum. Of those making between $60,000 and $100,000 a year, 26% described their finances as shaky; 10% of those making more than $100,000 … used the same terminology."

    • The poll also found a sharp ethnic disparity in how Americans view their finances. Although 61% of whites and 54% of other ethnic groups polled said their personal economic situation was secure, just 39% of African Americans described their finances in positive terms. More than half of African Americans polled, 53%, said their finances were shaky; 34% of whites and 42% of other ethnic groups polled expressed similar concerns."

    Meanwhile, the Washington Post reports that "rising global grain prices helped spark the largest increase in monthly food costs in nearly 20 years, as consumers paid more in April for cereals, baked goods, and the dairy, meat and other animal products that rely on feedstocks, the government reported today.

    "Food prices have risen 6.1 percent in the past three months on a seasonally adjusted annual basis. The one-month rise between March and April of 0.9 percent was the biggest since January 1990, according to the Bureau of Labor Statistics. The rise in prices covered all categories of food but was most severe among such staple goods as grains and oils -- goods where inflation has touched off food riots in some less developed countries and led to concerns about supply shortages."

    KC's View:

    Published on: May 15, 2008

    The International Food Information Council (IFIC) has released a new study suggesting that while more than eight out of 10 Americans are confident in their food safety habits, the reality is sobering – that " many report not following simple procedures to reduce the spread of bacteria in their kitchen or ensure safe cooking temperatures. In particular, less than half of Americans (48 percent) report using separate cutting boards for raw meat or poultry and produce, and even fewer Americans (29 percent) say they use a meat thermometer."

    According to the survey, " Most Americans (92 percent) report washing their hands with soap and water when preparing food, and nearly as many (79 percent) say they store leftovers within two hours of serving. However, few Americans (15 percent) report checking the wattage on their microwaves, and even fewer (seven percent) say they use a meat thermometer when using their microwave."

    The food safety issue was just one of seven so-called "diet disconnects" that IFIC highlighted in its study. The others were:

    • People say they are trying to improve their diets in order to lose weight, but only 15 percent of Americans know how many calories they should consume per-day.

    • While 88 percent of Americans say they are physically active, half of those say they do not balance diet and exercise as a way of managing their health. (Beyond that, the burgeoning obesity rates in the US would suggest that at least some of the 88 percent are being a trifle disingenuous.)

    • More than nine out of 10 Americans say that breakfast is the most important meal of the day, but less than half of Americans actually eat breakfast on a daily basis.

    • While 91 percent of Americans are aware of trans fats as a negative factor in one's diet, more than 60 percent do not understand that unsaturated fats are good for you.

    • Americans remain concerned about carbohydrate intake, despite research showing that certain kinds of cabs are good for you.

    • While "nearly 80 percent of Americans agree that consuming specific foods and beverages can provide certain health and wellness benefits beyond basic nutrition. But, 50 percent or more of Americans say they currently do not consume foods or beverages that deliver these benefits, although most are interested in doing so."

    KC's View:
    No question that diet disconnects exist. Which is why it makes sense for retailers to become a resource for information, not just a source of product…because if they can help shoppers connect the dots, it is good for the customer as well as for the business.

    Published on: May 15, 2008

    CNN reports on how Wal-Mart is redefining its approach to the pet category, "including repositioning pet food and supplies right in front of its other fast-growing business, baby products," a move that it seen as highlighting a category that is reasonably recession-proof.

    The strategy is described by analysts in the piece as having two basic strengths:

    One, "Wal-Mart is being smart by ratcheting up investment in a category that guarantees continued consumer spending regardless of how tight the household budget gets. This could help offset softer sales in Wal-Mart's other businesses, including clothes and home-related goods."

    Two, the company "is well-positioned to grab a bigger piece of the pet products market that's growing about 8% a year, as cost-conscious consumers continue to 'trade down' to less pricey alternatives in a difficult economy."

    The numbers would appear to be in Wal-Mart's favor, with more than six out of 10 US households having some sort of pet, and with estimates that the retailers saves customers as much as 20 percent on their purchases of pet supplies.

    KC's View:
    Some of the analysts in the piece suggest that if Wal-Mart really wants to get successful in the pet business, it needs to mimic the likes of PetSmart and Petco and get into the service business – offering things like grooming services like will cement its relationships with the people who now refer themselves as "pet parents" rather than just "pet owners."

    But I'm not sure this is right. First of all, you get into the service business and you run the risk of screwing up your margins, not to mention messing up the floor of your store. Bad move.

    Furthermore, I question the credibility of anyone who would suggest mimicking the likes of PetSmart and Petcom, which are two of the least customer-friendly and efficient models that I've ever run into. As least for me, I hate going into these places…and so would suggest that Wal-Mart has to aim higher than that.

    Published on: May 15, 2008

    USA Today reports that Taco Bell is introducing a line of "cheap eats," a value menu that sells various items for 79 cents, 89 vents and 99 cents apiece, as a way of capitalizing on the current economic downturn.

    It also is a way, the paper notes, of attempting to shift customer perceptions of the chain, which has been plagued by a number of public mishaps, such as "the E. coli outbreak in late 2006 that sickened 70 and closed dozens of restaurants" and the "rat infestation at a New York City unit in 2007 that became an Internet must-see."

    KC's View:
    Good luck. No matter how cheap the food, it will be difficult for me to forget that rat infestation.

    Then again, I'm not a Taco Bell customer. Y'see, I have thing about lousy food … no matter how cheap it is, it simply isn’t worth it on a variety of levels.

    Published on: May 15, 2008

    Starbucks announced this week that it will reinstate its annual leadership conference, and will bring together 10,000 store managers and other "field leaders" in New Orleans next October "to reinvigorate the passion within the company," according to a story in the Seattle Times.

    CEO Howard Schultz made the announcement in an email to company employees yesterday. The leadership confab was cancelled last year in order to pay for salary increases for in-store employees.

    ""Our Leadership Conference has always served as a platform for unveiling innovative, new initiatives, and this year will be no different," Schultz wrote in the email. "It's really hard to describe, in words, just how meaningful, how thrilling and inspiring our conferences have been over the years. But trust me when I tell you that the atmosphere has been charged with enthusiasm and our partners were fired up to do great things and inspire others to join in the effort on behalf of Starbucks, which they did. And I anticipate that the reaction after this year's conference will be the same."

    KC's View:

    Published on: May 15, 2008

    • Following up on Safeway's recent announcement that it has created something called the Better Living Brands Alliance to market its O Organics and Eating Right product lines across all retail channels – including foodservice and global markets – the company said yesterday that it has chosen a number of licensees to be a part of the alliance. The companies include Lucerne Foods, Overhill Farms, Ready Pac Produce, and Schreiber Foods.

    Crain's Chicago Business reports that Kraft Foods CEO Irene Rosenfeld told shareholders this week that the company will raise its prices this year as a way of offsetting its increased costs and protecting profits and margins. Rosenfeld did not offer specific examples, but said that she expected the competition to do the same thing.

    Dow Jones reports that JM Smucker has acquired ConAgra's Knott's Berry Farms food business. Terms of the deal were not disclosed.

    • The Business Courier of Cincinnati reports that Supervalu is closing its Bigg's store in Cincinnati Mills, reducing the number of stores in that fleet to 11. The unit, one of the original hypermarkets in the US, "did not fit into the company's business plans for the future," the company said in a two-paragraph statement.

    KC's View:

    Published on: May 15, 2008

    • Rite Aid Corp. announced yesterday that Jim Donald, the former Starbucks CEO who previously served as CEO of Pathmark Stores, has joined its board of directors. He replaces Roundy's Supermarkets CEO Robert Mariano, who resigned from the position.
    KC's View:
    Said it before and I'll say it again. Any retailer is made better by having Jim Donald sitting at the table. (They ought to hire him to run Fresh & Easy…)

    Published on: May 15, 2008

    • Spartan Stores reported that its Q4 profit rose 12 percent to $8.1 million, on quarterly sales that were up 10 percent to $570.7 million. Same-store sales for the quarter were up 5.2 percent.

    For the just completed fiscal year, net income rose 36 percent to $34.3 million, and revenue rose 12 percent to $2.48 billion…increases attributed in part to the company's acquisition of Felpausch.

    KC's View:

    Published on: May 15, 2008

    Chicago is one again a safe haven for people who love foie gras.

    Though it you’re a duck or a goose, not so much.

    Crain's Chicago Business reports that the City Council there has repealed a two-year-old ban on foie gras, instituted because of concerns that the delicacy is made by essentially cruel methods – force-feeding geese and ducks to enlarge their livers.

    Mayor Richard Daley, who led the call for the repeal, said it was the "silliest" ordinance ever passed in the city.

    KC's View:

    Published on: May 15, 2008

    …will return.
    KC's View: