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    Published on: July 22, 2008

    by Michael Sansolo

    Unintended consequences usually come when we least want them. By solving one problem, we find that two or three others - sometimes worse - get created. Yet, every now and again, the solution to one problem brings benefits in an entirely different direction.

    For instance, consider the idea for changing retirement that comes from a new book reviewed this past weekend by the New York Times. The book, called “Working Longer: The Solution to the Retirement Income Challenge,” poses the question of whether Baby Boomers will and should postpone retirement to accumulate the money necessary to fund life in a period of growing longevity. It’s not a small question and one that certainly deserves attention as Boomers face up to the implications of insufficient savings, falling housing prices and consumer debt of all forms.

    Postponing retirement by just three years, the authors argue, could drastically impact the financial fortunes of many soon-to-be retirees. And just to show that the authors aren’t talking about wild changes, the suggestion they make is that Americans work to push the average age of retirement to 66 from 63 today.

    But it also connects beautifully with the companion issue of the knowledge and labor drain likely to follow the massive retirement of the Boomers, which is expected to build to tidal wave strength over the next decade.

    In fact, Mark Bartholomew of Profiles International, a consultant working with me on FMI’s new Future Connect conference (that’s the full disclosure there) highlights longer careers as the single best way companies can address the coming labor crisis. Trading off reduced hours and responsibilities with reduced salaries could be a win-win for workers looking to extend their careers, while reducing their daily pressures. As increasing numbers of companies become aware of the incredible impact Boomer retirements are going to have, an innovative approach to managing the end of careers might provide an immense amount of relief.

    It’s not the only win-win. Terry Soto, a leading consultant on issues facing the Hispanic population (and a long-time friend of mine) talks about the increasing importance of that part of the population. At a time when qualified workers are harder than ever to find and retain, industries - particularly the supermarket industry - cannot afford to give this burgeoning population group anything but its best opportunities. But none of this will come easily. It’s more than learning Spanish, which many of us would be well served to do. It’s about understanding cultural differences and reaching out in neighborhoods and population groups that are currently as foreign to many of us as a message board.

    Here again, the win-win is pretty compelling. As Hispanics continue to make up a growing part of the population, winning their shopping dollars will become more important than ever. Lou Dobbs might fulminate at the Presidential candidates’ overtures to Hispanic community groups, but the simple truth is that appealing to 14 percent of the population is something candidates and retailers must do. Attracting Hispanics into retail and manufacturing companies and moving them into management is a great way to better understand, better serve and better win over this market.

    It won’t happen easily and it won’t happen without effort. But as the great sage wisdom reminds us, necessity is usually the mother of invention. When it comes to our work force, the necessity is clear and the inventions may be well within our grasp. If we grab them, that is.

    Michael Sansolo can be reached via email at .
    KC's View:

    Published on: July 22, 2008

    Federal investigators say they have found a Mexico-grown jalapeno pepper that is contaminated with the rare Saintpaul strain of salmonella, which they believe could indicate why more than 1,200 people in 47 states have been sickened – as opposed to tomatoes, which were blamed for the food poisoning as recently as last week.

    According to the Wall Street Journal, “The positive sample was found in a Mexican-grown pepper at Agricola Zaragoza Inc., a relatively small distributor in McAllen, Texas … The (FDA) has issued a warning to consumers against eating fresh jalapeño peppers and foods made with them.

    “The distributor has recalled all peppers, but declined to comment on the finding. In a news release posted through the FDA, the company said the jalapeño peppers were first shipped since June 30 to Georgia and Texas in 35-pound plastic crates and 50-pound bags without labels or brand names.”

    The FDA remains unsure about where the contamination occurred – at the farm where the pepper was grown, or elsewhere in the food chain.

    KC's View:
    Hope they get it right this time. The tomato industry lost hundreds of millions of dollars when it was identified as a likely source of the salmonella contamination…and then was let off the hook.

    Published on: July 22, 2008

    The New York Times has a story saying that “more Americans are trading in their car keys for a keyboard” and that “online shopping is gaining at a time when simply filling up a gas tank to head to the mall can seem like a spending spree.” And many retailers – including Nordstrom, Target and Macy’s – are using free shipping promotions to encourage the move to Internet shopping.

    “Retailers are walking a fine line in encouraging online sales,” the Times writes. “Of course, they are happy to attract more shoppers to their Web sites, but not at the expense of in-store sales — an important measure for investors. Then again, the Web can drive in-store business, whether shoppers go into a store to return an online purchase or whether they buy an out-of-stock item through a computer at the store.”

    Still, the numbers are compelling, with some of these retailers seeing double-digit sales increases online even as they are seeing decreases in their brick-and-mortar shops.

    Forrester Research projects that Internet will exceed $200 billion this year, up from $175 billion in 2007.

    KC's View:
    To me, the major disconnect in this story is the notion that retailers can determine whether people shop online or in-store. Shoppers make that decision…and as has been said here in the past (ad nauseum), all retailers can do is be where the customer wants, when the customer wants, how the customer wants, carrying products that the customer wants at prices that the customer deems to be appropriate.

    The shopper decides. Retailers that resist this formulation will find themselves at a strategic and competitive disadvantage compared to those that do embrace it.

    Published on: July 22, 2008

    Advertising Age predicts a slowdown in marketing spending later this year, noting that “amid roiling financial markets, a who's who of blue-chip marketers are making moves to slash marketing spending, or at least apply tougher financial discipline to what they do spend. Among them are five major companies that together contribute more than $10 billion to the U.S. ad economy: General Motors Corp., Procter & Gamble Co., Anheuser-Busch, Coca-Cola Co. and Nissan.”

    One example of where the business community’s priorities may be can be seen at Procter & Gamble, which “last week appointed as its new Global Marketing Officer Marc Pritchard, who spent eight years in finance compared with only six in brand management and marketing. The new steward of P&G's reported $7.9 billion global ad budget has spent the past two years developing corporate cost-cutting initiatives and before that was known by marketing executives who worked with him for his keen eye on spending.”

    In addition, Ad Age writes, “Coca-Cola wants to save between $400 million and $500 million a year by the end of 2011 and wants to find some of those savings in marketing.” And the acquisition of Anheuser-Busch by Belgian brewer InBev is also expected to have an impact on A-B’s marketing expenditures.

    KC's View:

    Published on: July 22, 2008

    • Walmart’s membership warehouse Sam’s Club division announced yesterday that it will offer college students a special membership tier – one-year for $40, with a $15 gift card included, for people with a valid college ID and college email address. In addition, the membership will include a free second card for students to give their roommates or friends.

    The goal of the tactic is to increase membership fees, the growth of which the company said last year was not meeting expectations.

    KC's View:
    Smart idea, and the first thing I did when I saw this story was check to see where the closest Sam’s Club is to my son’s college. (Just 17 miles, as it happens, from Delaware, Ohio, to Dublin, Ohio.) In a tightening economy, I suspect a lot of other parents may be doing the same.

    Published on: July 22, 2008

    In the UK, the Independent reports that Tesco’s Fresh & Easy division in California could be forced to eliminate its alcohol sections if a new piece of legislation is passed by state lawmakers.

    The proposed law would ban the sale of alcohol by any retail establishment that only has self-checkout systems, on the premise that it is easier for underage minors to buy booze in such environments.

    Fresh & Easy only has self-checkout, and is the only major retailer in California to operate in such a manner. However, the California Assemblyman who sponsored the bill, Hector De La Torre, said it was not aimed specifically at the company.

    The California Grocers Association reportedly opposes the bill, and Tesco says that it is doing everything necessary to make sure that minors are not able to obtain alcoholic products.

    KC's View:

    Published on: July 22, 2008

    The American Council on Science and Health (ACSH) has released a new report saying that it has proven that organic foods have no nutritional superiority over conventional foods.

    According to the report, Joseph D. Rosen, Ph.D., emeritus professor of food science at Rutgers University and a scientific advisor to ACSH, “analyzed a pro-organic report by Charles Benbrook and colleagues at the Organic Trade Association's Organic Center and found the data had been selectively chosen and presented to ‘prove’ the desired point … In the original pro-organic paper, Benbrook and colleagues had stated that organic produce is 25% ‘more nutritious’ than that produced by conventional agricultural practices. But when Dr. Rosen actually recalculated some of their data, correcting several inaccuracies, he concluded that the conventional products were actually 2% more nutritious than the organic varieties … Dr. Rosen's analysis demonstrates how organic proponents have, once again, used misleading and inappropriately-evaluated data to support their agenda.”

    KC's View:
    On the other hand, there doesn’t seem to be any mention in the ACSH materials that I read that this organization reportedly receives between 50 and 75 percent of its funding from the chemical and pharmaceutical industries. Which would certainly seem to give it a rooting interest in how the numbers turn out.

    For most of us who are neither scientists nor nutrition experts, these kinds of issues really come down to common sense. Organic foods – if they truly are organic – are purer in they way they are developed…and people who are concerned about such things should be able to have confidence that they are getting what they pay for.

    It seems entirely reasonable to me that organic foods are more nutritious than conventional foods…though I concede that there are plenty of people making arguments on both sides of the issue.

    This ends up being like global warming. Sure, there are people who suggest that global warming isn’t a problem, doesn’t exist, or isn’t a manmade phenomenon. But common sense suggests to me that they are wrong…even though I don't have the background knowledge to be able to argue every point.

    And I always remember this. There were plenty of so-called scientists who said that tobacco didn’t cause cancer. We know who underwrote their research, and we know that they were lying because they had their own agenda – to sell more cigarettes and addict more people.

    So when I hear a scientist arguing against a position that I think makes sense, I tend to be a little skeptical and to question their motives and judgment.

    Published on: July 22, 2008

    Even locavores can be lazy or time-constrained…which is why there appears to be a new mini-industry emerging – people who will grow local food for other people who don't have the time or inclination to do it themselves.

    The New York Times this morning has a piece saying that San Francisco resident Trevor Paque will, for a fee, “build an organic garden in your backyard, weed it weekly and even harvest the bounty, gently placing a box of vegetables on the back porch when he leaves.”

    According to the paper, “As a result of interest in local food and rising grocery bills, backyard gardens have been enjoying a renaissance across the country, but what might be called the remote-control backyard garden — no planting, no weeding, no dirt under the fingernails — is a twist.”

    For example, there is the FruitGuys, “which has offices in San Francisco and Philadelphia, will deliver boxes of local, sustainably raised or organic fruit right to the cubicle.

    “In the mood for a meal that reeks of community but does not necessitate a communal activity? Three Stone Hearth in Berkeley, Calif., which describes itself as a community supported kitchen, offers its customers the opportunity to make friends while making food from local, sustainable farms, but the worker-owned company also offers online shopping for people who do not have the time to pick up orders or participate in educational activities. Customers 20 miles away in the affluent community of Mill Valley, for example, can pay $15 to have jars filled with Andalusian stew, made with pasture-raised pork, delivered to their door. The jars, of course, are returnable.”

    KC's View:
    As someone who has a brown thumb and absolutely no interest in gardening, I can't tell you what a good news story this is for me.

    It seems to me that one of the things this story points to is the kinds of opportunity that may be available to mainstream retailers…if they want to go beyond more conventional marketing approaches. I read that reference to locally sourced Andalusian stew, and I get hungry…and I wonder to what extent that kind of offering is expandable to a broader audience.

    Published on: July 22, 2008

    The Wall Street Journal has an interview with John Culver, president of Starbucks Asia Pacific – a region that is still growing for the retailer even as it revamps its management structure and closes up to 600 stores in the US.

    There were two quotes in the piece that stood out. They were not specific to Starbucks, but rather dealt with broader management issues…and seemed worth repeating here.

    About managing in times of change... “In times of change, it is really important to keep employees well informed, to share a clear company vision and demonstrate how the changes support our core company values. Providing timely, consistent, open and honest communications via formal or informal meetings and open forums are the most effective, [giving workers] the opportunity to ask questions and give feedback.”

    About various paths to leadership… “I believe it is more important to have a passion and be emotionally connected to whatever you choose to do, whether it is study or work. Starbucks has several individual success stories where partners have started as part-time baristas while in high school and have become key leaders for our organization and have built a long-term career. We also have the same stories where partners have come to work for us after completing their college education and M.B.A. The common characteristic here is that they love what they are doing and feel as though they are having a positive impact in a very personal way on people they work with or interact with on a daily basis.”

    KC's View:

    Published on: July 22, 2008

    • Becky Skaggs has been promoted to Vice President of Strategy and Consumer Insights at Haggen, Inc., the 33-unit chain operating in Washington and Oregon.

    A longtime company officer and member of Haggen’s executive team, Skaggs is responsible for many of the company’s strategic projects, market and consumer research, consumer affairs and public relations.

    KC's View:
    I’ve always had a soft spot for Haggen and its executive team, and have found Becky Skaggs to be exceptionally enthusiastic about her company in particular and the industry in general (the latter through her work with Portland State University’s excellent Food Industry Leadership Center (FILC). Congrats to her on the promotion, and to Haggen for recognizing excellence.

    Published on: July 22, 2008

    • The Boston Globe reports that Massachusetts health officials are trying to determine whether a patient in a Cape Cod hospital has Creutzfeldt-Jakob disease, the variant of mad cow disease. According to the Globe, “There have only been three cases of the human form of mad cow disease reported in the United States in the last several years.” It will take a few days for test results to become available.

    •The Chicago Tribune reports that Sara Lee Corp. has agreed to change the labeling on its Soft & Smooth bread to note that the product is 30 percent whole grains. The Center for Science in the Public Interest (CSPI) had threatened to sue the company for its claim that the brad’s “whole grain goodness” overstated its case and mislead consumers about the makeup of the product.

    • The Detroit Free Press reports this morning that a new study from Michigan State University and Hope College says that “while employers may view their larger workers as lazy, antisocial and moody, they are no different from their thin counterparts.” The study maintains “that people with excess weight were no more likely to be lazy, non-cooperative or pessimistic than those of normal weight.”

    KC's View:

    Published on: July 22, 2008

    The Dayton Daily News reports that Ohio native Gregory Johnson, who currently is aboard the space shuttle Endeavor, which launched on March 11 and returned on March 26, carried with him a Dorothy Lane Market shopping bag.

    According to the story, the folks at Dorothy Lane figure that their bag traveled 6.5 million miles during the course of the 12-day trip: “That might be a new record for the program, called A Famous Name in a Famous Place, which encourages loyal DLM customers to send in photographs of themselves holding a Dorothy Lane Market bag in any internationally famous place they visit.

    “The bags usually visit Disneyworld, the Grand Canyon and Mount Rushmore, but they have also been to the North Pole, Mt. Everest and the Brazilian rain forest. The program is so popular that the board where the photos are displayed is taken down each year to prepare for the next round of photos. Customers can earn a gift card for submitting their photos.”

    KC's View:
    There aren’t many retailers that I would describe as out-of-this-world…but Dorothy Lane Market is among them.

    So this somehow seems both poetic and appropriate.

    Published on: July 22, 2008

    • Supervalu Inc. announced that its first quarter net profits were $162 million, compared to $148 million during the same period a year ago.

    First quarter retail food net sales were $10.3 billion compared to $10.4 billion last year, a decrease of 0.7 percent, which the company said primarily reflected the impact of store closures and identical store sales of negative 0.9 percent. First quarter supply chain services net sales were $3.0 billion compared to $2.9 billion last year, an increase of 4.6 percent, primarily reflecting the pass through of inflation, new business growth and lower than normal customer attrition.

    • Weis Markets said that its second quarter earnings were down 29 percent to $12.8 million, from $18.2 million during the same period a year earlier. Q2 sales were up four percent to $603.4 million, on same-store sales that were up 4.3 percent.

    KC's View:

    Published on: July 22, 2008

    MNB had a story yesterday about how new figures show that obesity rates in the US continue to increase, despite all the publicity paid to the issue. I wondered why…and posed the following possibilities:

    Is it because all the various initiatives that have been launched haven't had enough time to be effective?

    Is it because people are making ill-informed decisions about how to address their weight problems?

    Is it because the food industry isn’t doing enough to inform and assist its consumers to lose weight?

    Is it because consumers really want a magic bullet that will solve their weight problems without them actually having to do any work?

    Is it because Americans simply don't give a damn?

    Or some combination of the above.

    Elizabeth Archerd responded:

    Here are more possible contributing factors to growing girth in the US:

    Stress - financial and otherwise (think about region-wide hurricanes, droughts, floods, fires over the past several years). Stress seems to signal the human body to hold on to calories in the form of fat.

    Economic stress also contributes to consuming more cheap products high in refined carbs and artificial trans-fat, which are lacking in nutrition and contributing to inflammation, which can increase weight through water retention.

    Aging population. Waistlines spread during middle age. Most of us thin out in old age. To some extent, a few pounds in the middle years provide a cushion against weight loss that comes from the illnesses of aging - a metabolic 401k that eventually runs out.

    Research done at the Cooper Institute repeatedly shows that physical fitness, not weight, is what has an impact on health. Instead of trying to get people to focus on weight loss, get them moving. Physical activity can reduce the impact of stress, too.

    Another MNB user wrote:

    Your multiple choice of reasons Americans aren’t improving the nation’s obesity numbers are spot on. The most likely answer is “all of the above,” and “…without them actually having to do any work” gets the nod for how strong (lazy) we may be in our resistance to behavioral change. Two personal observations: one is my diabetic brother-in-law who goes 3 bills, injecting insulin and then devouring Oreos…one right after the other. Another observation is about friends and family members who stand strong in their defiance (rationalization) to “accept me as I am” regardless of health implications. Oh, and two more come to mind: have you noticed all of those “handicapped parking” spaces, which have gone vacant for years, are now occupied by persons who along with, and adding to, other medical conditions, fit the standard for obesity? The “little rascals” electric carts at supermarkets, amusement parks, State Fairs, etc. – always in use and rentals have become a booming business. The burden on health care is staggering – = you’ve reported the numbers in the case of untreated diabetes and its associated costs…

    Keep this in front of us. As an industry we need to sell health as hard as we do convenience, variety, quality and price.

    Agavni Gasparyan wrote:

    With the rising food prices, I think part of the problem is that people can't afford healthy food. More Americans are functioning on a tighter budget and have to make the tough decisions on how to feed their families and since healthy food is more expensive than $1 burgers, guess what they'll choose?

    I would point out that a tomato-and-lettuce sandwich on whole grain bread and a bottle of spring water isn’t any more expensive than a burger, fries and a soft drink…

    Another MNB user wrote:

    Kevin just a couple thoughts here…

    1. People’s behavior is very difficult to change, even if they choose to change, their own behavior patterns are very difficult to change…
    2. There is a reason they are obese, and those reasons have not gone away
    3. We really do not know the obesity rate…it could be even worse – obesity rate is determined through researching doctor visits…with 20% uninsured and 30% underinsured…statistics are based on 50% of population with the ability to make non-emergency doctor visits…and this may be the healthiest half of the population!

    Still another MNB user chimed in:

    So much of this obesity issue has focused on food. It seems to me that the reason behind increased consumption needs to be addressed. For many, food is a source of comfort in times of stress. Ever since 9/11 there has been the underlying sense of immanent attack from some rogue terrorist.

    Fear, with red and orange terror alerts, has predominated the U.S. psyche. Add in the mortgage and bank crisis and you have a potent psychological condition that is unnerving let alone upsetting to our normal routine. Face it, people are nervous, fearful and living in an unstable world. In many cities parents don't feel it is no longer safe for their children to go outside and play.

    The quickest means to dealing with all of that emotional trauma is the most
    immediate form of comfort--through food. Until there is a more direct
    approach, dealing with the cause behind obesity, this will continue to be a
    major issue.

    Does this mean that if Americans get fatter, the terrorists have won?

    Don Kirkley observed:

    I think the reason is that it takes personal discipline to solve the problem. You have to be disciplined concerning eating foods in moderation. You also have to be disciplined in exercising.

    Larry Surkan wrote:

    Just a random thought, but I believe there is a sixth "Is it because . . . " excuses why obesity is on the rise: due to the increasing prevalence of socioeconomic distress of a large portion of our populations, food (especially high fat and sodium content foods) has become the newest addiction. These types of foods (for many people) seem to help relief stress through meeting the cravings of the worst kinds of food. The product of this new addiction is obesity, heart disease, and diabetes, which add to the vicious circle by creating more stress. Human willpower has been diminished in a certain percentage of our population groups due to the feeling of helplessness in dealing with big government, big business, big personal debts, and big family problems.

    Jessica Lee Samples wrote:

    I drove through all these states coming home to TX from a vacation in the Mountains. It seems like every restaurant in TN, MS, and AL includes a buffet. One exit off of I-20 in Meridian, MS has (we counted) 12 restaurants with buffets. No form of portion control will do that to a person!

    Kurt Burmeister wrote:

    I fly all the time for work, you don't need a study to tell that we are getting bigger, just try getting on a commuter plane nowadays.

    Like smoking, we all end up paying for the people with little or no self-control. I'm not totally without empathy knowing that some suffer from certain diseases however it's totally out of control. It's typical of the American way, we want, we want, we want without owning the responsibility for our actions.

    And still another MNB user wrote:

    Reading that Obesity rates in America continue to rise and noting your thoughts as to possible causes I began to wonder about it myself. Perhaps the real reason is a combination of everything. Perhaps it has as much to do with our corporate environments (hours on end on our butts in front of a computer, shorter and shorter lunch "hours") as personal choices. While clearly the ultimate decision for what goes into someone's body and how much activity they participate in is up to the individual companies and governments must practice what they preach.

    Working for a company that claims to be a leader in health and wellness, I would reasonably expect a number of healthy options in our cafeteria, but I am met everyday with fried chicken and fish, old unappetizing produce, potato chips, french fries, and limp lettuce. Even the one "healthy option" that is offered is often a pan-fried chicken breast doused in a cream based sauce. I cannot even get a grilled chicken breast to put on a salad unless I use the cold, prepackaged, processed chicken in the salad bar. (but ask for a double cheeseburger and they will throw it at you) It has become increasingly clear to me that although my company would like to preach health and wellness it is not willing to take the steps to provide it for its own people. How can it be then, that the employees are expected to represent a company about health and wellness when they must struggle to lead that life themselves.

    My point is that companies that really want to make an impact must be trendsetters and not trend speakers. Companies, from manufacturers to retailers, must not use rhetoric as a tool, but rather, must use innovation as a weapon to fight off competition, create healthy, meaningful messages to their consumers, and begin to prove that they are out fighting to make this change both within their own corporate environments and with their consumers. Maybe then we can start to reverse this trend and see these rates drop.

    Disclosure: I unfortunately fall into the obese category, however I have lost 50 pounds in the last 18 months, and have 50 to go reach my goal. So it is possible to reverse the trend.

    We also got some responses to yesterday’s piece about the retirement of Daymon Worldwide’s Peter Brennan.

    Ted File wrote:

    I had the opportunity and privilege to get to know and respect Peter many years ago. The first was in the late 70's while working for a full line wholesaler in California and later through my stints with FMI, IRI and into my own consulting business.

    He is and was a manager and a good one. Peter knew the business, was creative, personable, and loved the associates with whom he worked and educated daily. An example to many was the love for his family. Setting the stage for the growth and future of the company he co-chaired will be his legacy and those left behind will always know that without Peter's influence and patience the company would not be where it is today. The creation of the scholarships in his name will only stimulate the continuing growth in the future.

    Bob Anderson wrote:

    Peter Brennan’s retirement will be a big loss to Daymon and the Store Brand business. His years of service and expertise in the Store Brand business will be missed, but his retirement is well earned. I wish him all the best.

    KC's View: