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    Published on: June 25, 2008

    Wal-Mart has unveiled the new website for its new Marketside format, confirming that it will be opening stores in four Arizona communities – Gilbert, Mesa, Chandler and
    Tempe – this fall.

    The site is: http://www.Marketside.com

    The copy on the site also identifies the niche that Wal-Mart is seeking to fill with the small store format, which is seen as the retailer’s rejoinder to Tesco’s Fresh & Easy stores in California, Arizona and Nevada. The site describes Marketside thus:

    • “Marketside provides fresh, innovative answers to the daily question, ‘What's for dinner tonight?’ Our unique product and shopping experience will change the way you shop for — and think about — fresh food, and our prices will keep you coming back.”

    • “At Marketside, you'll find a wide selection of complete meal solutions, fresh ingredients, and everyday favorites at affordable prices — all in one easy-to-shop store. With us, you'll never have to compromise quality to get a lower cost. And we're right in your neighborhood!”

    • “Our associates are passionate about food — and about delivering top-notch customer service. They're prepared to answer your questions, help you select a delicious meal solution, and fill you in about foods that are grown or produced locally.”

    • “Marketside is designed for the quick grocery trip — when you're looking for an inspiring yet easy meal solution, or need to pick up last-minute ingredients, simply swing by your neighborhood Marketside on your way home!”

    • “Marketside is a small community grocery store owned by Wal-Mart Stores, Inc…”

    KC's View:
    The battle is joined. It is going to be fun to watch.

    Published on: June 25, 2008

    Tesco’s US operation, Fresh & Easy Neighborhood Markets, said yesterday that it will hire 750 new employees over the next three months as it ends the self-imposed three-month “time out” from opening new stores in Southern California, Arizona and Nevada.

    Fresh & Easy will open its newest and 62nd store in Manhattan Beach, California, on July 2.

    According to a press release issued by the company, “Fresh & Easy has witnessed an overwhelming response to its pay and benefits package – for every store position hired, the company has received more than 13 applications. Fresh & Easy now employs more than 2,100 people at its stores, distribution center and at company headquarters. Each store employs about 25.” The release noted that Fresh & Easy employees “start at $10 an hour in California, with similarly competitive salaries in other states, and include a quarterly bonus of up to 10 percent. The company provides the opportunity for all employees to work at least 20 hours per week, which entitles them to comprehensive and affordable healthcare, including medical, prescription drug, dental and vision coverage, with Fresh & Easy paying at least 75 percent. Fresh & Easy also offers employees a 401(k) retirement plan with company match.”

    Tim Mason, Fresh & Easy’s CEO, issued the following prepared statement: “We’re demonstrating our commitment to be a great place to work, and we’re thrilled about our continued expansion in California, Arizona and Nevada, despite tougher economic times. We know our rewards and benefits package is competitive, and our timing is right – we’re creating quality jobs for our employees, right in their neighborhoods, with great opportunity for advancement.”
    KC's View:
    How long these new hires will have jobs, I suspect, will become evident when we see what adjustments Fresh & Easy is making in its store format. Tesco’s ability to adjust to new circumstances is proven, but at some level I think the company may have to allay the skepticism of some onlookers and so-called “experts.”

    Published on: June 25, 2008

    Ahold-owned Peapod said yesterday that it has formed a new partnership with Concept Shopping that will use the latter’s Automatic Marketing program to award personalized savings offers to Peapod customers based on shopping patterns.

    According to the companies, Peapod shoppers will discover their extra savings as they prepare their orders. No coupons or extra effort will be required to earn these additional savings that automatically will be applied when the order is finalized.

    KC's View:
    Smart move by both companies, as it gives them both new differential advantages.

    Published on: June 25, 2008

    The Chicago Sun-Times reports that Walgreen Co., concerned that the competition is only get tougher among retailers selling inexpensive generics, is “getting more aggressive about marketing its prescription savings club card” and is promoting heavily via the Internet.

    According to the story, Walgreen charges an annual fee of $20 for an individual card and $35 for a family card. The card “offers a three-month supply of certain generic drugs for $12.99 -- a benefit started in November 2007. The program expanded a couple of months ago to 400 generics from the initial 300. The discounted generics include blood pressure medicine Atenolol, diabetes medicine Metformin and cholesterol medicine Lovastatin. The card also offers varying savings on 5,000 medications, from Lipitor to Viagra.”

    Among the retailers also offering discounted generic prescription drugs, thus creating the heightened competition, are Wal-Mart and Safeway.

    KC's View:

    Published on: June 25, 2008

    As so many people around the world deal with economic hard times, TNS Retail Forward has published a report, “China’s Retail Landscape,” in which it predicts that “China will sustain double-digit nominal retail sales growth in the next five years despite short-term pressures. This will push the size of the retail market in China to more than $1.4 trillion by 2012, surpassing Japan to become the second-largest retail market in the world behind the United States.”

    While there is expected to be a tougher operating environment and some short-term consolidation due to inflation, growing government emphasis on product safety and environmental regulation, the report says that “a continued influx of new retail banners, with particular interest among upscale apparel retailers, suggests there remains opportunity for entry into China. The continuing opportunity in China also is evident in the stepped-up expansion plans by a broad spectrum of retailers,” including Wal-Mart, Tesco, Carrefour, and Best Buy.

    “China remains one of the best retail opportunities in the world, with strong growth forecast across retail categories," says Frank Badillo, Senior Economist and Manager of the company's Global Retailing Program, adding, “The continued popularity of local neighborhood markets in China suggests that local independent retailers and longstanding shopping habits remain strong. At the same time, our research illustrates that high shopping frequency at hypermarkets, convenience stores and traditional department stores shows strong interest among Chinese shoppers for the new modern retail formats that are fast entering the marketplace.”

    KC's View:
    The question I want answered is how long it is going to take for China to become not the second-largest retail market in the world, but passes the US to become number one.

    I’m thinking 2013.

    Published on: June 25, 2008

    Forbes reports that “experts and data suggest Americans' trust in the safety of their fruits and vegetables may be a little misplaced - just one of many misconceptions people have about food safety and food-borne disease.

    According to the story, a new study by the Harvard School of Public Health says that far more Americans – about eight out of 10 - think that foods such as raw fish and insufficiently cooked hamburgers than believe that fruits and vegetables pose a food safety threat (just 36 percent).

    However, the story reports that the Centers for Disease Control and Prevention (CDC) “found that between 1990 and 2003, the foods most commonly linked to outbreaks with identified causes were seafood (899) followed by produce (554), then poultry (476), beef (438) and eggs (329).

    And the hits keep coming. Forbes writes that “while washing off produce is a good precaution, it won't necessarily safeguard you from a food-borne illness. Nor will only buying locally grown fruits and vegetables from the farmers' market … At the farm level, produce can be contaminated in a variety of ways, including contact with untreated manure, infected or polluted water, workers with poor hygiene habits or unclean storage or transportation facilities … While local farms may use less transportation and fewer workers, the chances for contamination are still there. And since fresh produce is, of course, uncooked, anything that comes into contact with it can taint it. Once E. coli or Salmonella gets inside a leafy green, tomato or sprout, it's hard to get rid of it.”

    KC's View:
    Traceability. Transparency. The case for both is compelling, and I simply do not understand why some people and organizations resist.

    Published on: June 25, 2008

    The Wall Street Journal reports that companies “facing consumer resistance to higher menu and supermarket prices … are responding to increased prices for their commodities by trying to squeeze more costs from their supply chain -- the collection of relationships that moves goods to stores from factories and warehouses. That means grappling with excess inventory, inefficient truck routes, poorly planned production schedules and the computer systems managing the process.”

    One example cited by the Journal is Delhaize-owned Hannaford Bros., which “used to receive two shipments a day, a load of fresh groceries such as dairy products and meat first thing in the morning, and a load of nonperishable items like canned soup and boxed cereal at night. The split delivery made it easier for store managers to process fresh items before the store opened and let them restock the rest of the store after closing … Hannaford used its transportation-management system and other planning software to analyze how much the split-delivery schedule cost the company and to see if there was a more cost-effective way to make deliveries. Earlier this year, Hannaford began combining the two deliveries for some of its 160 stores. It is less efficient for the store managers, but the added expense at the stores is offset by the savings on fuel, which the company says will be between $500,000 and $1.5 million chain wide this year.

    “Hannaford has also made other changes with the aid of supply-chain technology, such as a system that helps drivers maximize fuel efficiency that is says should save the company $500,000 this year.”

    The Journal makes the point that among the beneficiaries of the current environment are software companies coming up with a wide variety of tech-based solutions.

    KC's View:

    Published on: June 25, 2008

    CNN reports that consumers are becoming more sensitive to shipping costs as companies such as FedEx and UPS are forced to raise their prices because of increased fuel costs. “With increased competition for budget-conscious customers, stores and online sellers are negotiating lower rates with shippers, or eating the rising shipping costs themselves, and dealing out offers for free shipping or delivery.

    “Whether it's a flat rate for ground shipping or a fuel surcharge, shoppers are wary of any added expense and it doesn't take much to become a deal breaker … Consumers are becoming more adept at comparing online and offline prices to find the best possible deal before making a purchase - and often the savings is in the shipping.”

    KC's View:
    The Washington Post had a similar story the other day, which prompted me to comment: “I used to believe that free delivery – or at least the illusion of free delivery, as in the case of Amazon Prime – would be a cost of doing business in the e-grocery sector. I’m not so sure of that anymore, and tend to think that consumers will understand fuel surcharges that are fair and transparent. We all understand how expensive gas is…it all will depend on the way it is done.”

    Or not.

    I still think that the Amazon Prime program is a great model because it isn’t so much about shipping as it is about loyalty.

    Published on: June 25, 2008

    The Conference Board reports that its monthly consumer confidence index is down to 50.4 in June, from 58.1 in May, which makes it the fifth lowest level ever recorded by the organization.

    According to press reports, the Conference Board expected the June index to be 56.5, which means that its economists were surprised by the depth of the consumer skepticism.

    Lynn Franco, a spokesperson for the Conference Board, is quoted as saying that the new number means that “the economy remains stuck in low gear.”

    KC's View:
    Which means that Lynn Franco gets the “understatement of the year” award.

    Oy.

    Published on: June 25, 2008

    Forbes reports that August 22 is the date for a scheduling hearing that will determine whether Tom Coughlin, the former Wal-Mart vice chairman who was convicted of embezzling from the company, wire fraud and tax evasion, is entitled to his $15 million retirement package.

    Coughlin currently is serving a sentence of 27 months of home detention and 1,500 hours of community service, plus has to pay $400,000 in fines.

    Coughlin claims that the company conducted a witch-hunt against him, and Wal-Mart has responded by saying that his actions forfeited the retirement package.

    KC's View:
    Let’s get beyond the conviction for a moment. Didn’t Coughlin plead guilty?

    He gets home detention instead of jail, and now he wants his retirement package.

    Look up “arrogance” in the dictionary, and I suspect that you’ll see Coughlin’s picture next to the definition.

    Published on: June 25, 2008

    There is a terrific column in Advertising Age by Pete Blackshaw in which he examines how Apple has turned its retail stores into strategic assets that are defining its brand.

    An increased number of “concierges” (known in less affluent stores as “greeters”) positioned near the front door to guide and direct shoppers is teaming with the “Genius Bar” to become an enormous differential advantage. Blackshaw writes:

    “Things once considered the dark side of Apple, such as tech support, are on the verge of becoming strategic assets, with the Apple Store's geek-stocked Genius Bar able to tackle just about any issue or concern your have. And the process of planning that interaction is more akin to scheduling a haircut or spa treatment than calling those inaccessible tech-support lines … Whether explicitly acknowledged or not, there's an unmistakable ‘service is marketing’ mantra pervading every aspect of the Apple Store. And that's something every brand, even those not as shiny as Apple's, can learn from. The opportunity to solve problems, find solutions and even address ‘the darn thing doesn't work’ emotional pain-points all lead to a higher impact-marketing and sales proposition. While not every marketer has a Steve Jobs-inspired vision, every consumer facing company has problems that can be converted into opportunities to inspire loyalty.”

    Blackshaw suggests that “Apple is introducing some important new lessons and questions for marketers.” They include:

    Service is marketing. “As marketers struggle to ‘engage’ consumers, service may well be the easiest and most gratifying starting point -- and one with high sales conversion potential.”

    Problems are opportunities. “Tech support is an emotional experience – so why not capitalize on that insight by openly and enthusiastically solving problems, giving reassurance and showing compassion for the pain and frustration. A satisfied consumer might just buy something else while making the trip.”

    Employee authority and passion aids selling. “When employees ‘walk the talk’ in using the product they sell, credibility goes up -- and credibility drives persuasion. Passion and evangelism also move the needle.”

    KC's View:
    Every retailer - every retailer – can learn from the Apple Store. It isn’t perfect…but I can say that with rare exceptions, it is one of the best in-store experiences that I have. Passion. Credibility. Authority. Knowledge. And a “this stuff is cool” quotient that can’t be beat.

    Published on: June 25, 2008

    Wal-Mart announced that it is moving its annual managers meeting from Kansas City to Orlando, effective next year, because the Kansas City convention center area no longer has enough hotel rooms for all the people who attend.
    KC's View:
    Which is sort of remarkable, since at Wal-Mart people are required to share hotel rooms when on the road.

    Published on: June 25, 2008

    • New York Attorney General Andrew Cuomo announced that he is suing CVS and Rite Aid for selling expired food, medicine and baby formula, despite the fact that both companies were warned about the practice.
    KC's View:

    Published on: June 25, 2008

    • Kroger Co. said that its first quarter earnings were $386 million, up 15 percent from $336.6 million recorded during the same period a year ago. Q1 revenue rose 12 percent to $23.11 billion from $20.73 billion a year ago, on same store sales that were up 5.8 percent, not including gasoline.
    KC's View:

    Published on: June 25, 2008

    …will return.
    KC's View: