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    Published on: June 9, 2008

    The Wall Street Journal reports on Wal-Mart’s annual meeting last Friday, saying that when CEO Lee Scott spoke about social and political issues such as the environment and health care reform, he sounded “more like the ruler of a sovereign nation than a corporate chief executive,” and used his platform to “sketch out a broad agenda to improve customers' lives, and offered to partner with governments to solve social problems.”

    “We stand ready to work with the next president and next Congress,” Scott told the attendees. “Leaders who want to get things done will see Wal-Mart as a partner." Scott said that the company has already communicated with the major party candidates in the current US presidential election, and also is speaking with government leaders outside the US.

    The Journal notes that just a few years ago, such a stance “as a social steward and government partner for addressing the world's ills would have been unthinkable…Then the company was repeatedly criticized for skimpy health benefits, forcing employees to work overtime without pay, and prizing store growth over all else -- including neighborhood and environmental concerns.”

    Scott conceded that to some extent, the current role has been imposed upon Wal-Mart because of its size, influence and ubiquity. But the general tenor of the discussion seemed to be that Wal-Mart’s leadership in these areas, compounded by a low-price image that seems perfectly in synch with an economy where people are looking to save money wherever possible, perfectly positions the retailer for strong growth during the coming years.

    “'Saving Money' has always been a part of who we are. 'Living Better' is now a real part of our company too," said Scott in a prepared text of his remarks. "That connection, and our understanding of its potential, is making the difference between the great company we have always been and the even better Wal-Mart we are today … Wal-Mart is uniquely positioned to succeed not just in this economy, but in these times. And among retailers, we are the best positioned to lead in the world of tomorrow.”

    KC's View:
    Wal-Mart has had more than a few good years in the past, but it certainly begins to look like this could end up being the Wal-Mart decade. I have to applaud the company for being public-minded in its new approach to business and society…it doesn’t have to be, but it strikes me that few companies can afford to simply sit home at headquarters and count the money. They can’t, and shouldn't. There is such a thing as public responsibility…and it is good to see Wal-Mart embracing it on a number of levels.

    Is it a perfect company? Of course not. Some will argue that it is far less than perfect, and that much of what it doing is all public relations. But I don't see it that way. I think management is working to straddle a very tough fence between private enterprise and public service.

    And others clearly think so, too…

    Published on: June 9, 2008

    In the Forbes “Unsolicited Advice” column, Wal-Mart gets the following unsolicited endorsement:

    “The White House still won't say we're in a recession. But it may be the only household in America that feels that way. Everyone who buys his own gas or shops for his own food or reads the local real estate listings or worries about his job sees his quality of life receding.

    “It hasn't felt this bad in a long time. Consumer confidence - always an indicator, sometimes a self-fulfilling prophecy - is at a 28-year low. There is a palpable air of frustration as people look for silver linings and see only dark clouds, from the inexorable escalation of gas prices to the depressing decline of the dollar.

    “At times like these, the nation looks for its leaders to provide both reassuring words and actions. But the administration is a lame duck with scarce ability to use its bully pulpit, and the challenging party tends to see its interests served by bad news. If our politicians are helpless, or hopeless, what's to be done? Who can step into the void? Ironically, help might come from a scourge of the very populists who tend to argue longest and loudest for government intervention: Wal-Mart.

    “Yes, Wal-Mart. With its vast purchasing power and strong hold over the suppliers of most of the basics of daily life, it can do something government cannot: effectively control prices.”

    And, the column continues: “Big, bad Wal-Mart coming to the rescue of beleaguered consumers would turn traditional populist thinking on its head. And it could be very good for Wal-Mart.

    “When people have concerns that marketing can address, marketing should address them. And the economy is clearly the country's No. 1 concern. Wal-Mart has always touted its everyday low prices. But the opportunity now is to claim higher ground—to take a leadership role on the most pressing issue of the day--and to reap the rewards for doing that.

    “One of those rewards is to solidify the loyalty of millions of customers, and to gain the loyalty of millions more. That's the obvious one. But for a company that has seen its ambitions expand into lucrative new territory, such as New York City, blocked by politicians who see ‘big’ and think small, the PR value could be incalculable. Imagine pickets marching for Wal-Mart.

    “You have to go back almost 100 years to find a company so well positioned to address an issue as prominent in the public mind--to the days of Rockefeller, Carnegie and Ford. Could it be that what's good for Wal-Mart is good for the country?”

    KC's View:
    Well said.

    Published on: June 9, 2008

    Fascinating piece in the New York Times over the weekend about lawsuits that concerns meatballs tainted with E. coli bacteria that were served and consumed at a Minnesota church picnic back in 2006, and that allegedly made s many as 17 people sick and killed one elderly woman.

    Now, as might be expected, the company that made the beef that went into the meatballs, Nebraska Beef, is being sued. That’s not the lawsuit that got the attention of the Times. No, the lawsuit generating so much interest is the lawsuit that has been filed by Nebraska Beef against the Salem Lutheran Church, charging that the volunteer church ladies who made the meatballs did not follow proper food safety procedures and were responsible for the illnesses and death.

    According to the Times, “The case dates back to July 17, 2006, when members of the church bought about 40 pounds of ground beef and 20 pounds of ground pork at the local grocery store, Tabaka’s Super Valu. The next day, about 20 church volunteers spent two hours preparing for a smorgasbord that was to be held the day after that.

    “The meatballs were made in a mixer in a center island in the church kitchen; the cooks wore gloves while making the meatballs. The volunteers also cooked turkeys, sliced ham, prepared a mashed-potato dish and a carrot salad, and chopped eggs and potatoes for a potato salad.

    “But according to a report by the Minnesota Department of Health, the ladies of Salem Lutheran Church didn’t do everything right, from a food-safety perspective. There are three sinks in the kitchen, one for hand-washing and two for food preparation, but all three were used for hand-washing, the report said.

    “And when the meatballs came out of the oven, it added, the cooks didn’t pull out a meat thermometer to make sure they were cooked to the correct temperature. Instead, they cut a few open and determined that they were done, the report found.

    “In Nebraska Beef’s complaint against the church, the company’s lawyer, Gary J. Gordon, cites the health department’s report that ‘there was a high potential of contamination between ground beef and other food during food preparation.’ He also said that the problems were entirely ‘the direct and proximate result of the negligence’ of the church.”

    The church has responded to the suit by saying that the little old ladies who made the meatballs have about 500 years of cooking experience among them, and that this is the first time that anyone has died from their cooking.

    The lawyer for Nebraska beef, however, isn’t impressed. Gary Gordon tells the times that the picnic was a money-making project for the church that doesn’t deserve special treatment. “When you are running it as a money-making venture, why should you be any different from McDonald’s?” Gordon said. “Nobody is suing the old ladies, to use your term.”

    KC's View:
    Gordon and Nebraska Beef may not think they are suing the old ladies, but they are…and you have to figure that the church attorney is going to line all of them up in court as a way of making the jury feel that it is their grandmothers being victimized here.

    It seems to me that a pretty good rule of litigation ought to be that you should try never to sue old ladies or a church.

    I cannot imagine that there wasn't a way to settle this case without going to court. That said, the trial ought to be something to see.

    Published on: June 9, 2008

    The New York Times carried a story over the weekend about viral marketing, web-only video spots “increasingly embraced by beer makers and other mainstream marketers … such Web-only spots have become YouTube staples and show up in social networking pages, get e-mailed between friends and co-workers, though whether they generate sales remains an open question.

    “Viral ads have the freedom to run as long or short as they want -- no 30- or 60-second constraints. They can cross boundaries even cable TV respects, and they focus on entertainment as much selling the product. Some are shot -- or made to look like they're shot -- with hand-held cameras, just like the most of the rest of the videos in those Web venues.”

    The Times story notes that the value of such viral ads is estimated at $20 billion this year…and could triple by 2012, according to Forrester Research studies.

    While the value of such marketing is still dwarfed by traditional media, experts say that it is highly effective because it targets in both format and content exactly the right kind of consumer – in the case of beer companies, young males. And, being on the Internet,
    These ads allow viewers to be more than, well, viewers – they can comment on the ads and even produce their own versions, which create even greater buzz for the product being supported. And, because these videos are on the Internet, they are there forever – unlike traditional ads, the sponsoring companies don’t have to pay for time to get them seen.

    KC's View:
    One of the ads mentioned in the story is called “Swear Jar,” and if you haven’t seen it, you should Google it immediately and check it out. It is a scream…and even better than the “Dude” ads that have been so popular. Both, by the way, are from Anheuser-Busch, which deserves real kudos for understanding the potential of the medium.

    I’m a big fan of viral marketing, by the way. When I started MNB more than six years ago, with was with 75-100 or so names and email addresses of friends I had developed over the years. I was coming off a failed business venture that also was on the web, but that sank, I believed, because so much investor money was spent/burned on building a company – especially on the sales and marketing side – with relatively little money spent on content and on proving that there really was a business.

    In the last 6+ years, MNB has grown to have an email subscriber list of around 25,000…40 percent retail, 40 percent supplier, and 20 percent “other.” And that’s happened largely because you have been kind enough to tell your friends, co-workers, clients and customers about it…which means that the email list continues to grow at the rate of between about 75 and 100 per week, every week.

    Not that marketing doesn’t have a place. Of course it does. But the first goal of any business, it seems to me, is to create an environment that people want to share with others. That goes for a website or a bricks-and-mortar retail establishment. And it is an approach that increasingly will be taken seriously by companies that want to be relevant in the years to come.

    Published on: June 9, 2008

    United Fresh has circulated a new memo regarding the new salmonella outbreak with information provided by the US Food and Drug Administration (FDA):

    “FDA is still recommending retailers, restaurateurs, and food service operators continue to offer cherry tomatoes, grape tomatoes, and tomatoes sold with the vine still attached, from any source. In its update this evening, FDA also advises consumers to limit their consumption of tomatoes to these types of tomatoes and to tomatoes from the areas listed below.

    “FDA also recommends that all retailers, restaurateurs, and foodservice operators offer raw red plum, raw red Roma, or raw red round tomatoes only if grown and harvested from the areas that are listed below.

    “The list below was compiled by FDA based on both traceback information and shipping dates. That is, the list includes production areas that have been eliminated as a possible source based on traceback information and it also includes growing regions that were not shipping tomatoes when the first illness related to this outbreak was reported. FDA has indicated that red Roma, red plum, and round red tomatoes from the following sources are NOT ASSOCIATED WITH THE OUTBREAK:

    • Arkansas
    • California
    • Georgia
    • North
    • Carolina
    • South Carolina
    • Tennessee
    • Texas
    • Belgium
    • Canada
    • Dominican
    • Republic
    • Guatemala
    • Israel
    • Netherlands
    • Puerto Rico

    “According to Centers for Disease Control and Prevention (CDC), illnesses related to this outbreak began April 23 and the last onset of illness related to this outbreak is currently May 27. There is roughly a two-week period between when someone becomes ill and when the health authorities can determine whether or not they are actually linked to the outbreak. This means that even though the CDC is reporting an increase in illnesses, the cases reported today are people who became ill between April 23 and May 27. This also means that health officials are unlikely to declare the outbreak officially over until they have seen at least two weeks with no new illness onsets.”
    KC's View:

    Published on: June 9, 2008

    Forbes reports that Tom Coughlin, the former vice chairman of Wal-Mart and protégé of company founder Sam Walton who was convicted of tax evasion and .embezzling funds from the company, has amended an existing lawsuit against Wal-Mart to say that the company engaged in a “witch hunt” against him.

    The suit specifically takes aim at Tom Mars, the retailer’s executive vice president and general counsel, saying that Mars “let his zeal to be a prosecutor blind him from a fair and impartial search for the truth … He allowed his desire to curry favor with the senior executives at Wal-Mart to turn an 'investigation' into a personal mission to destroy Mr. Coughlin."

    The former Wal-Mart executive has long maintained that while he indeed siphon off gift cards and cash from the retailer, he was doing so as part of a company-sanctioned project to pay off informants who could help uncover unionization activities; Wal-Mart has said that no such project existed.

    Coughlin, who pleaded guilty to the charges against him, is serving his 27-month sentence at home on his Arkansas ranch because his attorneys were able to convince the judge in the case that he was too ill to spend time in prison. He also had to pay a $400,000 fine and has pledged to do 1,500 hours of community service.

    Wal-Mart issued the following statement in response to the Coughlin charges: "The allegations in Mr. Coughlin's amended counterclaim are simply not true. The facts are that Mr. Coughlin's conduct was fully investigated by the FBI, including his phony union story. Consequently, Mr. Coughlin pled guilty to felony wire fraud and felony tax evasion charges."

    KC's View:
    I have no idea if Coughlin is simply delusional, or if there is anything to his claims. I do know that he should thank his lucky stars that he isn’t actually in prison…

    One other question. Wouldn’t Coughlin’s guilty plea to embezzlement and tax evasion charges be exhibit one in any defense of Wal-Mart’s position?

    Published on: June 9, 2008

    Retail Forward’s June 2008 ShopperScape newsletter is out, with recommendations to retailers about what to expect in terms of consumer behavior as a result of the current economic downturn and fast-rising prices in a variety of areas. Among the suggestions:

    • “Look for shoppers to use further cost-cutting measures to offset rising gasoline and food prices.”

    • “Expect shoppers to move beyond coupon-clipping to buying more private brand and opening price point versions of items on their shopping lists.”

    • “Anticipate that most shoppers will take a pragmatic view regarding shopping as they perceive they are getting ‘less for more’ - and in need of stretching their shrinking dollars further.”

    • “Watch for shoppers to trade down - not only in terms of buying less expensive items where they typically shop for consumables but also in terms of shopping in more value oriented venues. Expect dollar stores and extreme value grocers to benefit.”

    • “Don’t count on too many shoppers to go on spending sprees for big ticket items with their tax rebates. Most are using their rebates just to make ends meet or pay off debt.”

    • “Think gift cards vs. the traditional tie for Father’s Day.”

    KC's View:
    As I said last week, I actually think a tank of gas would make a pretty good Father’s Day present.

    But the broader message here has to be this – that business as usual simply is an unacceptable approach in 2008. These are tectonic events…not small trend shifts. And they aren’t going away – or back to the way things were – anytime soon. Or, in fact, anytime.

    Published on: June 9, 2008

    The Washington Post reports that a new Wegmans opened in Woodbridge, Virginia, over the weekend, noting that the retailer is doing so with tremendous community support that it hopes will sustain it in a time of economic doldrums.

    According to the Post, “The Woodbridge Wegmans, located off Dale Boulevard near Interstate 95, is the third and largest store to open in Northern Virginia. Beginning last week, hundreds of Wegmans staff began descending on the store. Some will stay for days and some for weeks, overseeing training and final touches for the opening.

    “The opening is not without risk. The grocer is moving forward at a time when others have retrenched. Two Giants in Woodbridge have closed in the past year due to slow sales.”

    KC's View:
    A pretty good rule in the food business is to never bet against Wegmans. Ever.

    Published on: June 9, 2008

    This month’s edition of Facts, Figures & the Future has three stories that make important points:

    • The impact of the troubled US economy on organic food sales: “Are foods and beverages with organic claims (and higher prices) immune to the deepening economic plague of 2008? Nobody knows for sure—though recent surveys show consumers are less confident and expect to shop thriftier to nourish their families, which could prompt more purchases of conventional consumables at the expense of organics.

    “Yet the counter-trend to eat healthfully, even if it costs more, remains strong. Nielsen LabelTrends data show that even as the economy took a downturn in 2007, the sales growth of organics segments across the selling floor remained as lusty as ever.” Total sales of organic foods were up more than 25 percent in the last 52 weeks, even as sales of non-organics were up just 4.4 percent…which would appear to be a good sign for organics.

    • Phil Lempert writes that in the latest survey done on SupermarketGuru.com, “60% of respondents said they knew what a carbon footprint was; and 73% said they would like to see a carbon footprint rating on foods.” But he suggests that companies move forward with both caution and precision.

    “With all the talk (and conferences) about sustainability these days, there is little doubt that while major efforts are being made to help save our planet's resources, there will also be those opportunistic and misleading efforts that will do little more than confuse and mislead shoppers. Carbon footprint ratings is one of those … The cure all needs to be a lot more than just a number on a package. That should be the result, not the focus.”

    • And Anna Marie Roerink, the Food Marketing Institute (FMI) director of research, notes that “it is clear that shoppers are carefully weighing the pros and cons of making additional trips, considering money-saving opportunities against the cost of gas. Retailers must try to maximize the shopper experience and basket size for each trip … With fewer occasions to interact with the customer, retailers must increase their efforts to read the pulse of their shoppers. A deep understanding of shopper characteristics, attitudes and behaviors will help retailers better anticipate and satisfy customer needs through changes in pricing strategies, promotion tactics, marketing outreach, merchandising, store layout and other sales approaches.”

    And, there's much more.

    To get your copy of F3, go to:

    http://www.factsfiguresfuture.com/

    F3 is a joint production of the Food Marketing Institute (FMI), ACNielsen, and Phil Lempert.

    (Full disclosure: MNB Content Guy Kevin Coupe is a contributor to F3.)

    KC's View:

    Published on: June 9, 2008

    • Amazon.com had a period of more than 90 minutes on Friday afternoon when its service was down for what the company called “technical reasons.” Advertising Age estimated that based on available numbers, this meant that the e-tailer probably lost as much as $1.8 million in sales during the period when its service was unavailable.
    KC's View:
    My only question was whether our new program, FoodWireTV, caused the problem…but I was reassured that we had nothing to do with it.

    Whew.

    Published on: June 9, 2008

    Dow Jones reports that Costco is “on track to open its first store in Australia in 2009, but concedes securing sites for its big-format warehouses isn't easy.” The company has yet to secure a site to open its first store – in part because it is hard to find sufficient property on which to build one of its stores, and in part because it is difficult to explain the membership club format to Australians, to whom it is a foreign concept.
    KC's View:

    Published on: June 9, 2008


    • BJ’s Wholesale Club reported May sales of $824.3 million, up 15.9 percent from the same period a year ago, with same-store sales that were up 13.4 percent.

    • PriceSmart, which operates club stores in the Caribbean, said that its May sales increased 31 percent to $94.9 million, from $72.4 million during the same period a year ago; same-store sales for the month were up 20.7 percent.

    Year-to-date, PriceSmart’s sales were up 25.9 percent to $811.4 million, on same-store sales that were up 20.3 percent.

    KC's View:

    Published on: June 9, 2008

    Jim McKay, who became known on ABC’s “Wide World of Sports” as a unique and passionate storyteller and who popularized the phrase, “the thrill of victory and agony of defeat,” died Saturday at age 86. Despite his longtime work in the area of sports, he is perhaps best remembered for his 16 hours of straight anchoring of ABC’s when Arab terrorists invaded the living quarters of Israel’s athletes participating in the 1972 Olympics in Munich.
    KC's View:

    Published on: June 9, 2008

    To be honest, I didn’t expect to get any reaction to my brief “OffBeat” comment on Friday that said nice things about insurance company commercials, and especially the new State Farm ad featuring Joe Torre.

    I was wrong. Big time.

    One MNB user responded:

    When you provide a product that is mandatory…at prices that are too high…and then provide cruel small print jokes on your customer in a time of need…then jack the price up if the product is used…you better have compelling commercials to dull the senses into submission…

    This was a sentiment echoed by MNB user David Carlson:

    The less someone naturally wants your product, the more creative you have to be in selling it...

    But here’s the email that really got my attention:

    Yippee. They can afford high-ticket commercials.

    We've been in our house for 12 years now, and have never filed a single claim with State Farm on our homeowner's policy -- and have always paid our premiums in full and on time. We've paid them a considerable chunk of change in that 12 years, and we never blinked --it's money you have to spend to be able to sleep at night.

    Wanna know how much they're there for us? So much so that they sent us a kiss-off letter this week, cancelling our homeowner's insurance just because we're in Florida. Did I mention we're not waterfront, and our elevation is one of the higher elevations in the county? And before anybody cries spoiled brat on me -- it's a standard issue, small (less than 2000 square feet) 3-bedroom, 2-bath house -- not exactly luxury digs built on the beach!

    Great commercials that suggest reliability and companies that actually provide it are two different creatures, and State Farm has shown its colors in hi-def resolution.

    Thanks for that, guys.


    Yes, I think that would qualify as a kiss-off.

    I’m trying to find the right epithet here that would be acceptable to the MNB audience. Lots of epithets come to mind, but I’m not sure how far I can go here.




    Responding to the proposed legislation that would further regulate the credit card companies, one MNB user wrote:

    We don’t need the government to intervene in this matter. If the government hadn’t blocked Wal-Mart’s application to be involved in this financial area originally they wouldn’t have needed to initiate legislation to level the playing field. Wal-Mart’s presence alone would’ve brought new market pressures to bear that would’ve brought many of these fees down.




    Had a brief piece about Robert Kennedy on Friday, which prompted one MNB user to write:

    I have to admit I'm not a Kennedy family fan by no means. But of all the Kennedys, Bobby was far and away the best. He can be credit for keeping his brother John on the straight and narrow. He helped the country and his brother push civil rights. He can be credited for going after organized crime, even to the point I would say that it cost his brother his life. But most importantly he was the voice of reason during the Cuban missile crisis, if not for him ( NOT John ), we might have had the first and last nuclear war. A lot of great leaders were killed in the 60's and change history for all. I hope history will teach ever one that killing, assassination and war serve to do nothing more that to take lives. For those who did live an see these horrible events, I hope you take time and learn about them and not have to live them, may they all rest in peace.

    It always has struck me that Bobby Kennedy had something that most politicians lack – the capacity for personal growth. How else to explain his metamorphosis from a supporter of Joe McCarthy to the man who ran for president in 1968?

    KC's View: