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    Published on: June 27, 2008

    The Times of London reports that Tesco and Wal-Mart-owned Asda Group are preparing to embark on yet another price war.

    According to the story, “Tesco, the country’s biggest retailer, will reduce the price of 3,000 items by up to 50 per cent from Monday in an attempt to win back customers struggling to cope with record petrol prices and energy bills.

    “Asda has promised to sell ten staple items, including bread, eggs and butter, for only 50p from today as part of a campaign that it claims will win over thousands of shoppers from rivals.”

    It isn’t just with each other that the two retailers are fighting. Aldi, the German retailer, reportedly has seen its sales increase by 20 percent over the past month alone – a reflection of the tough economic times that are pervading the UK.

    KC's View:
    Everybody seems to be using the same general language – that the retailing environment is going to be “tough and challenging” for the rest of the year, and that UK consumers can expect to see a deluge of price offers as retailers do everything they can to keep a steady stream of shoppers walking through their front doors.

    Interestingly, Wal-Mart and Tesco also will be facing off against each other in the Phoenix market, with their Marketside and Fresh & Easy formats.

    Tough times for retailers. Good times for consumers looking for new options. And great times for pundits like me.

    Yippee.

    Published on: June 27, 2008

    The Washington Post reports on a new study by the Centers for Disease Control and Prevention (CDC) saying that about 24 million US citizens – or about eight percent of the population – has some form of diabetes, an increase of three million people over just the last two years.

    In addition, the CDC says, according to the Post, that “another 57 million people have blood sugar abnormalities called pre-diabetes, which puts people at increased risk for the disease … Among adults, diabetes increased in both men and women and in all age groups, but still disproportionately affects the elderly. Almost 25 percent of the population 60 years and older had diabetes in 2007.”

    There is some good news in the study, says Dr. Ann Albright, director of the CDC Division of Diabetes Translation. The CDC notes that the percentage of people who are unaware that they have diabetes dropped from 30 percent to 25 percent.

    KC's View:
    All good reasons for food retailers and manufacturers to market to these folks in new and innovative ways. It certainly is an expanding market with specific food consumption needs.

    Published on: June 27, 2008

    The Newark Star-Ledger reports that drug manufacturers are starting to use supermarket and drug store aisles as a venue through which they can advertise their prescription drugs – which people cannot actually buy without authorization from their doctors.

    This is, according to the paper, a shift in strategy, since “in the pharmaceutical marketing universe, non-conventional advertising, such as take-one ads in stores, has become a buzz word, but it is typically used to promote over-the-counter products rather than prescription medicines.”
    KC's View:
    Gee, wasn't it just a week ago that major drug manufacturers have agreed to a six-month suspension of direct-to-consumer advertising of new prescription drugs?

    It’s like these guys, finding out that they weren't going to be allowed to be annoying in one venue, decided that they needed to be annoying someplace else.

    For some reason, not being annoying doesn’t seem to be an option.

    Published on: June 27, 2008

    The Charleston Post and Courier says that Bi-Lo has seen sales of its private label product lines increase by about five percent, described by Mike Mannion, Bi-Lo’s director of sales planning and corporate brands, as “by far the greatest increase in store-brand sales I've ever seen.”

    The trend means that Bi-Lo is reconfiguring its aisles to allow for the display of more own-label products, which generally cost less than national brand alternatives and appear to be highly desirable in these tough economic times.
    KC's View:

    Published on: June 27, 2008

    • The Atlanta Business Chronicle reports that at the company’s annual meeting this week, Kroger’s shareholders rejected five shareholder-sponsored proposals, all opposed by the board of directors. According to the story, the proposals called for the company to develop a comprehensive policy addressing climate change, to report on its policies on toxic chemicals and other product safety issues, to establish a specific pay-for-performance executive compensation plan, to give purchasing preference to poultry suppliers who use "controlled atmospheric killing" and to phase out the sale of eggs from hens who are confined to small cages.

    According to the Chronicle, “Kroger Chairman and CEO David Dillon that the company was already following or moving toward many of the policies promoted by the proposals but that the company disagreed with the methods proposed.”

    • Supervalu CEO Jeff Noddle said yesterday at the company’s annual meeting – held for the first time in Boise, Idaho, that the company is consolidating its Boise operations to house SuperValu's technology and Intermountain Region division that oversees operations in Idaho, Washington state, Oregon and Montana. Noddle said that the company plans no further job cuts in the Boise marketplace, though he noted that “we're always been careful to say that we have a business to run. Needless to say, we're in a very competitive environment, and the economy is more challenging than anybody would have thought.”

    Shareholders rejected a proposal by People for the Ethical Treatment of Animals that urges vendors to use a more humane method of killing chickens than the current method of scalding them alive,” according to a story in the Idaho Statesman.

    KC's View:

    Published on: June 27, 2008

    The Wall Street Journal reports that Anheuser-Busch “will stop making and selling caffeinated alcoholic drinks as part of a settlement with 11 state attorneys general, the attorneys general said Thursday.

    “The states' top lawyers began an investigation of the U.S.'s largest brewer by sales a year ago. They alleged that the St. Louis company had failed to adequately disclose negative health effects of its Tilt and Bud Extra drinks on their labels, made false or misleading marketing claims that they help users stay up late for partying, and illegally targeted minors with its advertising … Anheuser said in a statement that it will reformulate Tilt and Bud Extra, removing caffeine and other stimulants. The company said it may take several weeks for the caffeinated versions to sell out on store shelves.”

    KC's View:

    Published on: June 27, 2008

    • In the UK, the Telegraph reports that “Tesco is considering launching an unprecedented appeal following the Competition Commission's two-year investigation into the UK grocery sector. The retailer has until Monday to lodge an appeal against the Commission's findings,” which proposed the introduction of a “competition test” that would be part of the planning process when retailers apply to open new stores.
    KC's View:

    Published on: June 27, 2008

    • The Great Atlantic & Pacific Tea Company (A&P) said yesterday that it will convert the majority of its SuperFresh stores in the Philadelphia market to its new Price Impact format operating under the Pathmark Sav-A-Center banner.

    According to the company, “This already popular format has received overwhelming success in its recently launched Irvington, New Jersey and Edison, New Jersey locations. The dramatically re-designed Pathmark format provides customers an expansive variety of fresh products while also offering substantially lower prices.

    • Kroger reportedly has reached a tentative agreement on a new contract with the Nashville, Tenn.-based union that represents some 8,500 employees who work in 94 Kroger stores in Nashville and Knoxville and Huntsville, Ala. Details of the pact were not made available pending ratification of the deal.

    • There is a report out of Boston that Subway, the fast food sandwich chain, will begin a delivery service in that city … which the retailer says is a step toward providing delivery in every market in which it operates in North America. The company is using a single phone number (1-888-Sub-To-Go) around the country to give customers access to the service.

    KC's View:

    Published on: June 27, 2008

    • Rite Aid reported a first quarter loss of $162.8 million, compared to a profit of $19.5 million a year earlier. Q1 revenue was $6.61 billion from $4.43 billion a year earlier, before it acquired the Brooks and Eckerd stores.
    KC's View:

    Published on: June 27, 2008

    Yesterday, MNB had a radio commentary that speculated about replenishment models that could upend the traditional supermarket business.

    To which MNB user Ken Fobes, one of the smartest guys out there, responded:


    What a novel idea, but certainly not new. Your are right that parts of this system were in the Anderson Consulting's SmartStore demonstrations. We were involved with industry visionary Glenn Terbeek (who was head of the consumer package goods and supermarket practice at that time) in helping to define the initial concepts and visions for the SmartStore initiative.

    In 2000, the concept became a reality when we visually demonstrated the existing technology that enabled the digital kitchen and perpetual inventory in the SuperTECHmart edu-tainment exhibit at the FMI 2000 Convention and Exposition in Chicago for senior industry executives.

    I was amazed then that, even though the exhibit received raves from these executives, that it has taken so long for so many of the initiatives we visibly demonstrated, to actually take hold in the industry. Finally, we decided that we need to take the next step, and in 2002, in my new smart home, we actually implemented our version of the Digital Kitchen and Perpetual Pantry (with some help and guidance from Microsoft, Symbol, Afterbot and MyWebGrocer).

    Oh, and by the way, we had to do a lot of things manually (scanning items etc.). Think of the possibilities when the EPC eventually gets down to the actual consumer. Smart cupboards, refrigerators, pantries, etc. could have low voltage readers built right in and maintaining the Digital Kitchen and Perpetual Pantry could become as simple as using a telephone.


    This is the future. It may not be new, but it also is not common yet, and while there may be able out there who will resist these sorts of ideas, but it is immutable and inescapable.

    As for resistance to at-home scanning and automatic replenishment, MNB user Kevin Nolan wrote:

    Don’t mistake wanting to make that “personnel connection” and/or the desire to actually talk to the people from whom they’re buying groceries with resistance to change or anti-progress! I’m guessing that the people that expressed this opinion are old school but not because they don’t like technology but, because they believe the retail business has already lost enough personality and humanity. I’m not suggesting this is the majority of the people but it is, obviously, some of the people.

    PS- On the flip side…..this seems like a perfect application for the Apple iPhone!


    Maybe. But here’s my question.

    How many customers in a given day actually have a personal exchange of any note with the people who work in the nation’s supermarkets?

    Hmmm?

    MNB user Marv Imus had some thoughts:

    Hi Kev … I agree with you on this issue. I am a very happy user of Amazon.com’s replenishment for as many of the canned, boxed, bagged items I can get. Why not ? They don’t change the product in the can/box/bag enough for me to waste my time on them. But when it comes to fresh items, I am all for doing it myself. I am a foodie that wants to look at what local product is now available, when Navel oranges are is season and how they look, pick up an Indiana Cantaloupe and smell it, get the right size Vidalia onion, get the thickness of the Delmonico steak at 1 ½”, etc. I would love to empty my cart of all package goods and just focus on the really good stuff ! Now my time would be used to maximize the selection process and not in trudging down aisles to load my cart items that are necessary but are the same as the last time I bought them, and the time before that, and the time before that, and the time before that … Boy would that make grocery shopping fun for me ! And I could always still check out new items or replacement products and my leisure … it’s coming but not fast enough for me!



    Reported the other day that Barack Obama was asking Tesco to work with unions trying to organize is Fresh & Easy stores in the US, and I suggested that this is just a way to solidify support from organized labor. I also suggested that each of he major candidates should be asked to name one thing that he would do that would thoroughly annoy his base…because being willing to tick off your supporters ought to be a requirement if you are going to be president.

    One MNB user responded:

    You raised a great debate question. And if we had debates instead of joint press conferences, perhaps we can get that answer.

    For now, we only have the candidate's actions to provide an insight into how they might govern as president. Obama votes consistently with his party, a lot more than McCain. When asked on a recent Sunday morning gab fest if he could provide an instance when he had crossed the aisle, Obama failed. It was a repeat of the classic Ted Kennedy moment from the 1980 Democratic primary.

    In the most visible example of putting aside political difference, seven Democrats and seven Republic senators worked together to present a comprise that cleared the way for appointments for several federal judgeships. Obama was not one of the seven Democratic senators.

    Obama bases his entire campaign on being the person who can change Washington's ways. He speaks his message better than any presidential candidate I have heard except for Ronald Reagan. However, when given the chance to act on his words, Obama fails consistently to follow through.

    As to McCain, his campaign rests on the notion that he will end the money sloshing around Washington. Surprisingly, no one has brought up his involvement with convicted felon Charles Keating. McCain used his influence to hinder a federal investigation into Keating, a campaign donor. Many of McCain's contributors donate to his campaign in order to get face time before McCain's powerful Senate committee.

    As to these candidates, when words fail to match actions, the best word to describe you is hypocrite. In November, we will find out if that word is also unelectable.

    By the way, I am not voting for either of these gasbags.


    We have to elect somebody

    And another MNB user wrote:

    Tesco is adding 750 jobs over the next three months. The Senator should be thanking them for their job creation in our weak economy. This is a democracy, and the NLRB is the forum for unionization. Let the employees decide. It is time politicians realize unions represent a very very small percentage of the American workforce. And, unfortunately, their biggest share is from government employees.

    Another MNB user wrote:

    Mr. Obama may want to think further ahead than just mustering up the support of organized labor in the southwest. He’s going after a company that is based within our strongest foreign policy supporting nation, Great Britain. Short term vs. long term politics. He’s a politician just like all the rest of them.

    MNB user Mike Griswold wrote:

    This is clearly an attempt to gather votes from a labor entity and not listen to the people. With 13+ people applying for each open position (Fresh & Easy claim) people are not disappointed with how Fresh & Easy treats their associates. No one other than the union is pushing for the union. I have spoken with over 100 associates who are not interested in or need the union. One more in a long list of reasons I will not vote for the senator.

    Another MNB user wrote:

    It would be naïve to expect that major organizations like The Trial Lawyers, Unions, and The Education Lobby are going to make a huge investment in Obama without expecting a return. The Obama organization just flipped flop on public financing for his campaign. They must assume that the money is coming from somewhere else.... and that he will have to deliver to keep the funds flowing.

    Politically, it is surprising that he chose to scapegoat a foreign company that few constituents have ever hear of. More typically, he would have thrown a few thunderbolts at Wal-Mart and be done with it. Perhaps he is trying to placate the union chiefs while not scaring those in the political center. Whatever the rationale, he seems to be behaving as his stakeholders expect and it would be unwise to expect anything different.





    Finally, to revisit the George Carlin one last time…

    After our obit for Carlin earlier this week, one MNB user wrote in to say that one of the things he liked best about the comedian was his attitude toward religion and his expressions of skepticism about “an invisible little man living in the clouds.”

    To which MNB user Al Kober responded:

    I can guarantee you that he changed his mind one second after he died, when he met that "Little Man" face to face.

    Perhaps. Or perhaps it is a woman living in the clouds.

    I went back to check the original Carlin routine on this, and thought it was interesting, funny and thought-provoking:

    Religion has actually convinced people that there is an invisible man, living in the sky, who watches everything you do, every minute of every day; and the invisible man has a special list of 10 things he does not want you to do; and if you do any of these 10 things, he has a special place, full of fire and smoke and burning and torture and anguish, where he will send you to live and suffer and burn and choke and scream and cry, forever and ever, until the end of time. But he loves you. He loves you. He loves you and HE NEEDS MONEY.

    It seems to me that there is a difference between being skeptical about the existence of God and being outraged by the apparent priorities of organized religion. Carlin may have been both, but his vehemence seems more specifically directed at the latter.

    And there is even a pretty good argument that if there is a God, he or she may not all be thrilled with how organized religions are presenting his or her case.

    Or, as an American troubadour once put it…

    Where’s the church, who took the steeple
    Religion is in the hands of some crazy-#&@ people
    Television preachers with bad hair and dimples
    The god’s honest truth is its not that simple
    It’s the Buddhist in you, it’s the pagan in me
    It’s the Muslim in him, she’s Catholic, ain't she?
    It’s the born again look, it’s the Wasp and the Jew
    Tell me what’s going on
    I ain’t got a clue…


    KC's View:

    Published on: June 27, 2008

    The New York Times had a piece earlier this week about changes taking place in the music business, and the trend there is worth noting for broader reasons.

    “The traditional music industry is in the tank — record sales are off another 10 percent this year and the Virgin Megastore in Times Square is closing, according to a Reuters report, joining a host of other record stores. That would seem to be bad news all around for music fans,” The Times writes, but the fact is that the collapse of the traditional record business – the disintermediation of the retailers and manufacturers that traditionally controlled the follow of product – has been good for many of the actual musicians. You know. The artists.

    The story cites a group called the Drive-By Truckers, a Southern Rock band said to be influenced by the likes of Lynyrd Skynryd and William Faulkner. (Needless to say, I was intrigued by this description and immediately went to iTunes to check them out. Good stuff.) “The Drive-By Truckers were never going to be record industry darlings. As it is, they have found a sustainable, blue-collar business model of rock stardom in which selling concert tickets and T-shirts have replaced selling CDs,” says the Times, which then quotes guitarist/lead singer Patterson Hood: “The collapse of the record business has been good for us, if anything. It’s leveled the playing field in a way where we can keep slugging it out and finding our fans.”

    The Times goes on: “After investing early and continuously in the Web, the Drive-By Truckers have a MySpace page with 37,000 friends, offering four songs from Brighter Than Creation’s Dark” with almost 800,000 downloads alongside a touring schedule that would put James Brown in his prime to shame. This week, they will be in five cities and two countries (Canada, remember?).

    “Before file sharing tipped over the music business, bands used to tour in support of a record. Now they tour to get the dough to make a record. Cheap recording technology, along with all manner of electronic distribution, means that bands don’t need to sign with a giant recording label to get their music out there.”

    Drive-By Truckers may not know that it is a kind of poster band for the business trend of disintermediation. But it is.




    Further evidence of the enormous change taking place in the entertainment business: Apple announced that music sales on its iTunes sites have passed the five billion mark, and that visitors are renting and purchasing more than 50,000 movies each day.

    What was really remarkable about the announcement, though, was that it came just 77 days after Apple had announced that it had sold four billion songs via iTunes, which meant it had sold roughly 13 million songs a day during the period of time.

    By any standard that is an enormous amount of product. And while in some ways Apple is taking the place of the old-world music companies in the entertainment continuum, the very structure of its business – and the fact that much of the newest music also is available elsewhere – suggests that it will only continue to be vital as long as it continues to innovate and create unique and relevant connections between hardware and software (like, for example, the iPod).

    In the big picture, control has shifted. To the artists, who are more in control of what they do. And to consumers, who are more in control of what they listen to and what they buy.

    The real lesson here is that this expectation of control, as experienced by a generation that does not remember a world before the iPod, will filter into all of its rules of acquisition.

    Vendors in all venues need to take notice, and begin changing their approach. Now.

    Because the writing is on the wall, and they have a choice. Ignore it and eventually fall victim to obsolescence. Or read it, adapt, and survive.




    Speaking of control…

    There was a piece from Reuters this week noting that a new study saying that children who believe tat they have control over their own lives may grow up to be healthier- better-adjusted adults. In fact, the belief by children that they can control their own lives through their own actions seemed to a better predictor of adult health than IQ, education and even income.

    "Parents who encourage independence and help children learn the connection between their actions and consequences tend to have children with a more internal locus of control," Dr. Catharine R. Gale, of the University of Southampton in the UK, tells Reuters.

    This sounds very logical to me. I’ve always told my kids that life essentially boils down to a simple equation:

    Responsibility + Discipline = Autonomy

    And autonomy, I’ve always told them, is the Holy Grail when it comes to living your life.




    Reese Schonfeld, the longtime television news executive who created CNN for Ted Turner and also created a little something called the TV Food Network, wrote the other day on his Huffington Post blog that there used to be a telethon on the Food Network called “Let’s Make Sure Everybody Eats,” designed to raise money to feed the hungry.

    “That's something the Food Network should think of reviving, given the current price of food,” Schonfeld wrote.

    Not only is he right, but the nation’s food retailers – spearheaded by one of the trade associations – ought to get out in front of it.




    My wine of the week: the 2006 Deloach Pinot Noir, which is wonderfully smooth. I enjoyed it this week with a nice mushroom risotto at the excellent Citrus City Grille in Orange, California.




    I know everybody is whining about the travel experience these days, by the way, but in the last two weeks I’ve traveled to Munich, Germany as well as to Pointe Clear, Alabama, and Southern California. Put one bag under plane and carried a small duffel bag and briefcase on the planes. And have to say that by and large the experiences have been fairly pleasant…mostly on time, seats where they were supposed to be, and crews that weren't hostile and even occasionally smiled.

    Maybe I’m just lucky. But I also think there is something to be said for not obsessing about how awful things are, and just doing what you have to do with the best possible attitude.

    I travel for a living. I give speeches for a living. I write, I eat, I drink for a living. I am amazingly lucky, and for me to whine about these circumstances would be to spit in the face of good fortune. Plus, nobody would care and nobody would listen.

    So book me another flight, and order me another meal and glass of good red wine.

    I’m ready.



    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    Sláinte!!
    KC's View: