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    Published on: June 12, 2008

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    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, brought to you by Webstop, experts in the art of retail website design.

    So what to make of the current economic situation and how it affects shoppers, retailers and manufacturers?

    Hard to know. Food prices are rising, making it harder for people to feed their families in the manner to which they have become accustomed. Of course, that may not matter, because fuel prices are skyrocketing, so they may not be able to drive to the store anyway.

    Listen to enough talk radio, watch enough 24-hour cable television or read enough newspapers, magazines and websites, and you can hear a wide range of opinions on the state of the economy and the nation as a whole. Some very smart people think that this is a mere blip, that the economy will rally in the second half of the year and that while we may not be returning to the good old days anytime soon, all the doom and gloom is misplaced.

    I’m sure these folks have plenty of rationales for their opinion, but I find that kind of optimism difficult to believe. I suspect the people who see a light at the end of the tunnel may be people who don't have to worry as much as other people about the price of gasoline, or heating oil, or food. They are economists or academics or politicians or consultants or pundits who aren’t sitting down at night trying to figure out how to make the numbers add up. They are, in fact, the same people who have been arguing all along that the nation wasn't headed for recession, even as real people acted and talked as if recession already had arrived.

    Now, there also are plenty of smart people who are talking in such a way that I want them to take a happy pill, or at least have a stiff drink. These are the people who are predicting the end of America as an economic superpower, who say that in history all great powers have gone into decline….and that the American infrastructure is such that in a global economy we simply cannot survive, at least not doing business as usual.

    Now, I’m not quite cynical enough to accept this notion, though I do think that it is important that we as a nation cannot do business as usual, that we have to re-examine all of our assumptions – political, cultural, economic – in the light of a global economy in which power clearly is shifting.

    One thing that I think is critically important – and this is where I feel the first group of economists, politicians, consultants and pundits falls down – is to work from the premise that not only is this not a temporary condition, but that a seismic transformation is occurring. The center of global economic power is shifting away from the US, and toward places like China and India. This is the argument that New York Times columnist Thomas Friedman makes, and I find it persuasive.

    But the reason that doom and gloom don’t seem appropriate – and least, not yet – is that the end of the story hasn’t been written. We don't know how it all turns out. That’s called opportunity. In order to take advantage of it, though, we first must have a firm grasp on reality…and then have the courage and will do deal with it, making the changes necessary to insure that we don't just survive, but find a way to thrive in a new world.

    Let’s think about this in terms of the food business. Michael Sansolo argued earlier this week, quite persuasively, I thought – about the need to reinvigorate the food shopping experience, to re-train shoppers about what is important and not important. And we got a bunch of emails from people who correctly pointed to retailers such as Trader Joe’s and Costco as examples of companies that have created compelling shopping experiences. I could add to that list companies that include Bristol Farms, Dorothy Lane Market, Jungle Jim’s, Lunds/Byerly’s, Stew Leonard’s, and plenty more.

    But here’s the thing. Not every retailer can or should try to emulate these companies. They all have very specific approaches, appealing to very specific markets. There are plenty of other markets out there to which retailers and products can cater. They just have to decide which ones to go after.

    There was a study that came out the other day about how people are suddenly going to be less concerned with convenience because it tends to cost money, and the new priority is to make the most of a shrinking dollar. Generally, I agree with that…except that it really depends in which people you are talking about, on what day of the week, and what kind of convenience. It is a moving target, extremely difficult to hit.

    The first decision retailers have to make is to determine what target to go after. That means making a strategic choice based not just on who your customer is…though this obviously is important…but also based on what your strengths are.

    The one thing none of us can afford to as we look at our businesses in the new light of a global economy, seismic competitive changes, and a customer that is being buffeted by worries about food safety, health and nutrition and economic issues - to name just a few – is to not be cold and calculating in our preparations…figuring out where the opportunities are and how best to exploit them.

    Abraham Lincoln once said that if he had eight hours to chop down a tree, he’d spend the first six hours sharpening his axe.

    The time is now to start sharpening. Because the last thing any of us needs these days is a dull blade.

    For MorningNewsBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: June 12, 2008

    InBev NV, the Belgian-Brazilian beverage giant, has launched a $46.4 billion unsolicited takeover bid to acquire Anheuser-Busch. The deal, if completed, would create the world’s largest brewer generating annual sales of $36 billion, according to the Wall Street Journal.

    Anheuser responded to the bid by saying that it “will pursue the course of action that is in the best interests of Anheuser-Busch's stockholders” and would make a decision "in due course."

    Carlos Brito, CEO of InBev, said in a statement that the deal "will create a stronger, more competitive, sustainable global company which will benefit all stakeholders."

    The Journal also reports that August A. Busch IV, CEO of Anheuser, “has indicated he is opposed to a takeover of the beer giant started by his great-great grandfather, Adolphus Busch,” but that other members of the family are open to holding discussions with InBev. And, according to the Journal, “Busch family members own less than 4% of the stock,” which means that they are not in a position to block a sale of the company.

    Anheuser is expected to explore other options in addition to the InBev offer.
    KC's View:
    I believe in the global economy, but it would be a shame if an American icon like Anheuser-Busch were sold to a foreign company; it’d be like selling the Washington Monument or the St. Louis Gateway Arch.

    Here’s what I don't understand. How come it always seems to be foreign companies coming to the US to acquire our icons, and it rarely seems to be US companies going to other countries to buy theirs? That’s probably an overstatement and a simplification brought on by too little sleep and too much caffeine. But that seems to be the case, at least lately.

    Published on: June 12, 2008

    The Wall Street Journal reports that the New York and California state legislatures are both considering laws that would require sit-down restaurants to provide nutritional facts – including calories, fat content, sodium and carbohydrates – on their menus. According to the story, if passed and signed into law these bills would be the first time states have ventured into regulatory territory that previously has been the province of cities and counties.

    It is by no means certain that these bills will become law. The Journal notes that “menu-labeling laws face resistance from some political leaders. California Gov. Arnold Schwarzenegger vetoed a similar bill last year, and Georgia Gov. Sonny Perdue signed a bill May 12 that will ban counties from enacting the laws.” And, “An official for the Center for Science in the Public Interest, a health-advocacy group that supports menu labeling, says that by the group's latest tally, 15 other state legislatures have introduced similar bills in the past two years, but none have been enacted.”

    KC's View:
    It seems to me that at some level, common sense ought to be used in crafting these laws. Which is to say that restaurants ought to be required to have menus that include nutritional information, and that they ought to be given to patrons who request them. (There could be a notation at the bottom of the standard menus that advertises the fact that these menus are available on request.)

    But it seems silly to make everybody read this information if they aren’t looking for it. I go to Emeril’s, for example, and I don't need to know the nutritional information for the gumbo or the banana cream pie. In fact, I don't want to know it. I’m there for a specific experience, and calorie counting isn’t it.

    Of course, we’re talking about politics and government here, so common sense probably should not be factored into the equation.

    One other thing. How dare Gov. Sonny Perdue tell towns and counties in Georgia that they can't pass such laws? He’s a Republican, and by definition that means he ought to be in favor of putting power in the hands of localities. I don't get it.

    Published on: June 12, 2008

    The Government Accountability Office (GAO), the investigations arm of the US Congress, has issued a report that “criticized the Bush administration for failing to identify the steps and funding needed to protect the nation's food supply,” according to a story in the Wall Street Journal, which also notes that “the GAO report said the FDA had promised a progress report by April on steps it had taken to carry out its plan to keep the food supply safe. But the agency recently told the GAO that its parent, the Department of Health and Human Services, hasn't approved the report.”

    The GAO study comes out as consumers and the food industry grapple with a salmonella outbreak that raises questions about the safety of tomatoes around the country, as well as reports that the Bush administration has increased its budget request for the U.S. Food and Drug Administration by $275 million. The White House originally asked for $2.4 billion in funding, but was undercut when FDA Commissioner Andrew von Eschenbach admitted under questioning that this number was inadequate.

    KC's View:

    Published on: June 12, 2008

    The Chicago Tribune reports that “America's two largest hot dog makers are waging a wiener war as grills fire up this summer, hoping to win over customers and secure the No. 1 spot atop the stagnating frank market.” The Tribune notes that “experts say the frank fight may become more difficult as the economy sours and hot dog consumption -- at least among adults -- hits its lowest level since the mid-1980s.”

    “The latest round in the long-running feud comes as Kraft Foods Inc.'s Oscar Mayer brand gives its signature hot dog a makeover aimed at stealing momentum from Sara Lee Corp.'s Ball Park Franks. Kraft hopes its reformulation -- its first in 20 years for the all-beef hot dog -- and a massive promotional campaign attract new customers and their palates with a zestier, meatier recipe.”

    KC's View:

    Published on: June 12, 2008

    Delhaize-owned Bloom Supermarkets, part of the Food Lion chain, has announced its official launch of the Guiding Stars nutrition labeling system that awards one, two or three stars to products identified as being good, better or best in terms of a complicated and proprietary nutritional algorithm.

    The Guiding Stars system proved to be a success at Delhaize’s Hannaford Bros. chain, where sales of products given stars showed stronger growth than similar products that did not earn stars.

    KC's View:

    Published on: June 12, 2008

    Ahold-owned Stop & Shop announced that it will team up with the US Department of Agriculture (USDA), as part of “Partnering with MyPyramid: Corporate Challenge,” to, in the words of the official press release, “encourage consumers to shop for healthy foods and live a healthy lifestyle … The company will provide key messages to customers such as ‘Vary Your Veggies’ and ‘Make Half Your Grains Whole,’ as well as encourage customers to use the new interactive tools on such as the MyPyramid Menu Planner and MyPyramid to plan menus and track their daily intake.”

    At the same time, IGA USA announced that it has been “officially named by the U.S. Department of Agriculture (USDA) as a Charter MyPyramid Corporate Challenge Partner.” Once again, there was a press release: “In 2009 the MyPyramid concept will be introduced into IGA’s marketing lineup through the IGA Hometown Healthy Challenge, an event that will be held in IGA stores Feb.15 – March 14. The event will encourage IGA shoppers to recognize and experience MyPyramid’s ‘Steps to a Healthier You’ platform through a MyPyramid consumer education sweepstakes with fitness oriented consumer prizes. With the support of IGA’s Licensed Distribution Centers (LDCs) and Red Oval Family manufacturing partners, IGA stores will also offer during a two-week time period within the event valuable savings on healthier food choices from family-favorite brands.”
    KC's View:

    Published on: June 12, 2008

    In Minnesota, the Pioneer Press reports that online grocer Simon Delivers is laying off six percent of its workforce, or about 17 people, in an effort to cut costs.

    “The cuts, which reportedly hit the company’s business-to-business department hard, come at the same time SimonDelivers is making other changes to save money,” the paper reports. “The company is adding fuel surcharges, establishing a minimum order amount of $50 and increasing the delivery window from two hours to four to maximize routing.”

    The moves appear to raise questions about the company’s viability, especially in the face of competition from Lunds/Byerly’s and a new entry, Gopher Grocery.

    KC's View:

    Published on: June 12, 2008

    Published reports say that Lidl, the German discounter that is second only to Aldi in that nation, plans to expand to the United States.

    The goal, according to reports, is to have a US foothold by 2012.

    KC's View:

    Published on: June 12, 2008

    • Kroger announced that it has come to a tentative contract agreement in negotiations with the United Food and Commercial Workers (UFCW) union representing 4,200 employees working in 60 stores in and around Indianapolis and other areas in Indiana.

    Details of the agreement were not disclosed, pending ratification of the deal by the unionized employees.

    • The Wall Street Journal reports this morning that Starbucks plans to grow its business by licensing “150 new locations at airports and railway stations in the United Kingdom, France and Germany over the next three years, part of a broader strategy to speed the coffee chain's growth overseas. The deal -- Starbucks' largest licensing agreement outside the U.S. -- is aimed in part at helping to offset the chain's sluggish U.S. business. The new stores also could become a bellwether for how much Europeans will embrace grab-and-go coffee.”

    KC's View:

    Published on: June 12, 2008

    • Family Dollar announced that it has promoted Jacob J. Modla, the company’s Assistant General Counsel – Litigation, to the position of Vice President – Deputy General Counsel.
    KC's View:

    Published on: June 12, 2008

    MNB user Dale Tillotson had some ideas about the tomato crisis:

    As the tomato situation worsens especially for those physically effected, it brought to mind a few thoughts.

    Having been buying, and merchandising tomatoes for nearly 30 years I have developed a thought line thru the years called the tomato theory, that is now really starting to rear its ugly ripe head as the economy plummets.

    My mentors thru the years told me about tomato shipments of hundreds of cases, where you built the display sold the product, made your profit then rebuilt the display.

    All this with one variety of tomato that all bought and were happy.

    As years have progressed we have moved forth with so many different varieties of tomatoes as well as most other items that we in fact as a nation have less idea today of where our food comes from than at any time in history, no matter how much money we invest into that research.

    With that said, go into any grocery store, ask the clerk where the corn or green beans are from and most likely the answer will be Georgia. Why? the crate says Georgia crate company or something to that effect. Not where the product is from.

    The more we invest in training the further we seem to get behind.

    All in all what this means is what the hell do we need approximately 199,698 varieties of tomatoes for?

    Because variety is what we got consumers hooked on. Not that this is a bad thing. But now we must deal with the consequences. And not that this is a bad thing. What is bad is when we deal with such situations with band-aids or through denial, as opposed to seriously considering the benefits of transparency.

    MNB user Dan Brady wrote:

    The technology to not only extend the shelf life of these tomatoes by several days, but more importantly KILL the bacteria economically exist – ozone spray treatment. Why do we continue to do the same old things and expect different results? Why do we continue to shut down an entire industry segment when the problem can be isolated through proper traceability?

    It is time that industry takes a serious look at their internal food safety practices and responsibility!

    On the subject of Supervalu’s outsourcing of certain financial functions, MNB user Tom Murphy wrote:

    Over the years, Supervalu has publically and privately touted its strength in electronic vendor collaboration (e.g., vendor portals, EDI, etc.) that reduces cost and paperwork. Now, they are outsourcing much of this work to a third party. In fairness to Supervalu, compared to many other grocers who are wearing blinders, their systems and processes were okay relative to the rest of the industry. However, comparing their systems, processes and efficiency outside of the industry paints a different picture.

    More grocers need to look at their backroom operations with an eye to learning how the best, not in the grocery industry, do it. Our industry is woefully underinvested in technology tools and enablers and in the disciplined processes and collaborative efforts to truly be efficient. Perhaps this is why our industry gets so excited when net profits approach 1.5 cents on the dollar!!

    Another MNB user wrote:

    I admire the way Jeff Noddle implements plans such as these.

    His last paragraph, emphasis on last sentence, makes him a giant among company chiefs in my opinion.

    “While we’re confident that this new partnership with the third-party service provider is the right thing to do for Supervalu, we understand that the decision to move forward with this initiative impacts our associates and as a result, it was not taken lightly. It is important to us that our associates are treated with dignity and respect throughout this process.”

    Listen up all you chiefs reading this....a good lesson that will ultimately make your team stronger given thoughts like these from your leadership.

    KC's View: