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    Published on: July 29, 2008

    by Michael Sansolo

    No matter where you stand in the political spectrum, you have no doubt paused for a moment to wonder if the words dignity and Washington, DC, ever get used in the same sentence. It’s a good question. Life in the Washington, DC, area comes with many special issues from motorcades clogging the streets to advertisements for obscure political issues clogging the airwaves.

    Yet, little looms as strange as the parade of people (including celebrities) coming to town and then seeing who is and isn’t branded helpful.

    So it’s hard to know what to make of one such visit last week. It featured one of America’s most mocked exercise gurus, complete with his trademark curly hair, strangely upbeat voice and patriotic short-shorts leading congressional staffers in aerobics.

    Yes, Richard Simmons stormed the Capitol in his own style and it’s clear that he too has a dream. And, honestly, there was little to argue with in his comments…in fact, the food industry might want to think about embracing him.

    Simmons came to Washington to talk about the increasing health problems of America’s youth and the decline of physical education in the schools. As Simmons told a congressional committee, No Child Left Behind was meant to produce well rounded children. Instead, it is producing simply rounded ones.

    His comments came only days after a storm whipped up over the prospect of giving various pharmaceuticals to pre-teens to battle the early onset of so many health related problems. There may be some wisdom in doing that, but honestly, I think Simmons makes a whole lot more sense.

    Incredibly, I’m old enough to remember gym class for all the good, bad and ugly. I remember the horrors of dodge ball, the death-defying rope climbs, badminton, volleyball and even square dancing. The funny thing is that when I think back on school, I remember a larger percentage of all of those classes than many others. (And, in case you are wondering, I was blessed with an incredibly late growth spurt, which meant that I was always one of the shortest kids in class. So I know the indignity of getting picked late for basketball and yet I survived.)

    Common sense is rarely topic number one in Washington. It’s hardly what we’d expect Richard Simmons to bring, but I think he did it.

    A great portion of America’s health problems could come from simple, common sense solutions. Washing hands is a really good thing. Handling foods properly is a really good thing. Physical education in the schools is a really good thing. And eating as a family at home falls into the same bucket.

    2008 should be glory times for the food at home industry. Consumers are worried about rising costs. Well, eating at home helps on that. Drivers are worried about gas prices. Again, eating home really helps there.

    Wait, there’s more. Health and nutrition can both be improved by more home cooked meals as can the social health and welfare of a family getting together around the table. Sure, there are time constraints everyone faces, but there are also increasing numbers of solutions to help battle that problem. In short, 2008 isn’t a tough economic year. It’s a year of endless opportunity.

    It’s all a matter of thinking positive. As I recall, Richard Simmons believes in that too.

    And just one additional thought from the world of exercise. The Tour de France, the world’s premier bike race ended this past weekend and there’s a lesson in the race for all of us. The New York Times ran an article by one racer detailing the strategy of a teammate in racing time trials, apparently one of the hardest elements of any bike race. The strategy is one we should all consider.

    According to rider Dave Zabriskie, time trials make you “dig until you scratch the bottom, then ease off a bit and hold it there until the finish.” In the words of his teammate, “pedal just a little bit less than the maximum and never relent.” Sounds like a pretty fair strategy for business.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .


    KC's View:

    Published on: July 29, 2008

    Fascinating piece in AdWeek detailing the tough economic times that face marketers, but explaining how an aggressive approach to gaining market share actually can turn hard times into hard cash.

    It isn’t hard to quantify the nation’s economic difficulties, AdWeek writes. “Houses are worth less, home-equity lines of credit are being suspended, jobs are at risk, wages aren't keeping up with inflation and energy prices continue to soar, eating away at Americans' disposable income.” And the hard times seem to be cutting across most demographic lines, affecting people at almost every economic level. And marketers are responding to the times by cutting back; Forrester Research projected earlier this year that “77 of nearly 100 global-marketing chiefs expect their budgets to be flat or shrink this year, posting on average a decline of 3 percent.”

    And, AdWeek writes, “By some estimates, consumer spending on essential goods now accounts for 57 cents out of every dollar spent in the U.S., the highest since record keeping began in 1960 -- and a percentage expected to grow. That's evident in big shifts and small details. In June, for instance, discount stores like Wal-Mart and Costco posted a category increase of 6 percent in sales compared to full-price department stores, which saw a 3.8 percent drop; while consumers are giving up their Starbucks lattes, they're turning to cheap staples like pasta and peanut butter, which saw respective increases of 13 percent and 5 percent in the 12 months to June; and coupon redemption -- in decline since the last recession -- is back, with food products showing the biggest usage.”

    One comment in the story that seems to make sense comes from Gary Stibel, CEO of The New England Consulting Group, who makes the case to AdWeek “that downturns are opportunities to build share at the expense of competitors who are cutting back. The major challenge for marketers, he says, is to strike the right balance between pricing and marketing support.

    "’Pricing decisions are almost a daily, certainly weekly, focus of discussion for marketers now. It's no longer a monthly consideration,’ Stibel notes. ‘These are the times when the best marketers thrive. The smart money takes more aggressive pricing than average and then spends it back to grow share, even if it means taking a hit on earnings.’”

    A good example of this, according to the story: “Wal-Mart, which increased its measured media ad spending 82 percent from January through May 2007 to $234 million January through May 2008, per Nielsen Monitor-Plus, reported its best monthly sales gain in June in four years. The company had a jump on the current downturn: After straying from Sam Walton's founding edict of low prices, the retailer returned to its roots last year after hiring The Martin Agency, which crafted the ‘Save money. Live better’ strategy.”

    KC's View:
    Granted, there may be a little self-interest at work when AdWeek comes out with a story suggesting that even in a recession, advertising and marketing can work wonders.

    But put that aside for a moment. The argument makes sense.

    Too often, businesses react to hard economic times and declining sales by cutting back and uttering nostrums such as “we have to get back to basics.” Which has always seemed silly to me…mostly because if you haven't been taking care of the basics all along, a business decline is probably a little late to be getting back to so-called fundamentals.

    Now is the time not just to be aggressive on pricing, but to find new and relevant easy to define value that will transcend economic hard times. After all, everybody is looking to reduce prices and highlight promotions. It is in the other stuff – the products, the services, the unique take on what a food retail experience should be – that competitive wars are won and lost.

    The best metaphor that I can find for this is in automobile racing. Years ago, I took a racing course at the excellent Skip Barber School in Lime Rock, Connecticut. One of the lessons I learned – and it came hard to me – was the importance of speeding into the curves. Bruce MacInnes, one of the coaches during my time at Skip Barber, explained it thus: It is on the curves – where you have to know how to take the right line from one point to the next – that races are won and lost.

    And it is on the curves where businesses often set the pattern for success or failure.

    By the way, if you’re interested…I wrote a piece about my race car driving experience that first appeared in Chain Store Age and then was reprinted here on MNB. You can check it out at:

    http://www.MorningNewsBeat.com/News/News_Article_Detail_S.las?A=21338&Date=2005-10-14

    Published on: July 29, 2008

    The Austin American-Statesman reports that Whole Foods, hit with a lawsuit by Stop & Shop over its use of “The Real Deal” as an ad slogan promoting low prices – Stop & Shop said it used it first – has decided to change its campaign slogan to “The Whole Deal.”

    It is unknown whether Stop & Shop will drop the suit.

    KC's View:
    “The Whole Deal” is actually a better slogan for Whole Foods. Not only does it tie into the chain’s name, but it also suggests both value and quality…which is consistent with its broader brand message.

    Published on: July 29, 2008

    If you don’t get aggressive in reacting to tough economic times, the odds are pretty good that your competition will.
    The Milwaukee Journal-Sentinel reports that Aldi is a prime example of a company that is taking advantage of the declining US economy to build up its own operations: “The low-profile, no-frills German grocery chain sees opportunity in the sagging U.S. economy, and Aldi is stepping up both its U.S. expansion plans and its profile. Aldi recently ran a batch of TV ads after staying off the airwaves for 15 years. The company also has loosened up and started talking with the media, reversing a longstanding policy of not taking calls from reporters.”

    The paper notes that while the limited assortment chain doesn't release sales figures, the National Retail Federation's Stores magazine ranks the chain 91st in size among U.S. retailers, with sales estimated at $3.6 billion.

    And the formula is both basic and consistent – Aldi carries fast-moving basics and commodities, doesn’t take checks or credit cards, and if you want a bag for your groceries you’d better bring your own. The message from start to finish is about savings…and it is one that Aldi believes will serve it well during a well-timed US expansion.

    KC's View:

    Published on: July 29, 2008

    The Minneapolis/St. Paul Business Journal reports that Fresh Seasons Market, the upscale fresh food-driven supermarket with one store in Minnetonka, plans to open another location, in Victoria, Minnesota.

    Dale Riley, co-owner and president of Fresh Seasons, tells the Business Journal that Victoria is the right place for the company to expand. “It’s a growth area and there aren’t a lot of grocery stores readily available to the people of Victoria and the surrounding communities. It’s a good distance for people to drive and the demographics are good for a store like ours.”

    Riley is a former Lunds/Byerly’s and Kowalski’s Market executive, and he says that he continues to look for other locations in the area.

    The paper notes that Victoria does not have a supermarket at the moment, and that officials there have worked closely with Fresh Seasons to bring the project to fruition.

    KC's View:

    Published on: July 29, 2008

    • Tesco PLC said yesterday that now that it has bought the Royal Bank of Scotland (RBS) out of their joint financial services venture for the equivalent of $1.9 billion (US), it may eventually create its own full service retail bank, offering loans, credit cards and savings accounts. The Wall Street Journal reports this morning that “after taking a strong lead in the highly competitive U.K. retail sector in the past decade, Tesco has increasingly looked to diversify into the fast-growing services arena. As well as a financial services offering, it also has telecoms and Internet shopping operations.”

    In a prepared statement, Tesco CEO Sir Terry Leahy said: "Services are bigger and faster-growing markets than food. As consumers look to make every pound work harder, it is a good time for Tesco to expand its presence.”

    KC's View:

    Published on: July 29, 2008

    • MyWebGrocer announced this morning that, according to Quantcast, its network is now ranked in the top 2000 most visited sites based on monthly visitors. MyWebGrocer’s network has 956,865 visitors worldwide on a monthly basis.

    According to the statement by MyWebGrocer, the reason for the increase in traffic is the company’s new ad network, which essentially creates a coalition of online grocery providers with a common ad sales infrastructure. MyWebGrocer’s advertising network is divided into two categories based on where the ads are displayed; the e-commerce side of retail sites, and the grocery chain’s home page. The e-commerce side of the site is specifically reserved for product brands sold at that location; the home page is open to advertising for products not necessarily sold by that chain. Ads on the e- commerce side display a list of items sold by that retail vendor. Ads on the home page can direct the customer to the manufacturer’s website or landing page.

    (Full disclosures: Webstop, which is MNB’s online service provider, is part of the MyWebGrocer ad network. And, My WebGrocer has been an ongoing sponsor of MNB.)

    KC's View:

    Published on: July 29, 2008

    • The Wall Street Journal reports that Unilever will sell its US laundry detergent business to private equity group Vestar Capital Partners Inc. which will pay $1.075 billion in cash and $375 million in shares in the company that Vestar will form with the brands, to be called Sun Products Corp.

    KC's View:

    Published on: July 29, 2008

    • Kraft Foods said that its Q2 profit rose to $732 million, up from $707 million a year earlier. Second quarter sales were up 21 percent to $11.2 billion.
    KC's View:

    Published on: July 29, 2008

    Responding to yesterday’s story about the decision by the Fresh Market’s owners not to sell the company, MNB user Jack Di Salvo wrote:

    As a man there are only a few stores that I like to shop, Home Depot, Best Buy and don’t usually enjoy the trips to your run of the mill food store with my wife. However, I’m out the door in a second when it’s a trip to Fresh Market. Yes, it’s premium priced, but how many ways can I sing their praises. Produce A, Deli A+, Meat department A++, Sushi fresh, Fish department…only place to shop. Reminds me of my youth with all the specialty stores available to you but Fresh Market has it under one roof.

    Fresh Market …. Keep it up and keep it in the family.


    And MNB user David Livingston observed:

    Sounds like Fresh Markets, Roundy's, and others are in the same boat as homeowners in a soft market. They put themselves up for sale but the market is so soft that they decide they cannot afford to sell out at garage sale prices. That’s fine with me because I know that whoever will buy those companies will not run them as effectively as they are run now. We have all seen what happens after an acquisition. Everything A&P, Safeway, Supervalu, or any of those private equity firms have recently bought have all seen sales declines.




    On the subject of innovation – much discussed in this space over the past few weeks, MNB user Phil Censky wrote:

    I've noticed a paradigm shift, although I don't know how long it's been going on, or why it started. Remember when the American Spirit came with a "can-do" attitude that can overcome all odds?

    Is this just an idealized, June and Ward Cleaver image of American history? Why is it that any "shoot the moon" concept today is met with criticism stuck in the status quo? When did we become a nation of "can't do" naysayers? What happened to our collective bootstraps and why can't we tighten them?

    It's no wonder why oil prices are skyrocketing and some are calling for drilling/tax cut solutions. It's all we really know how to do. We must find a way to overcome our current state if inertia. I don't think it'll happen until gas goes well above $6 per gallon.

    Perhaps then we'll see that fossil fuels are exactly that: fossils, relics of a bygone era.

    I'm wholeheartedly in favor of the solar space collectors. I'm willing to ask "why not", instead of "why". I'm willing to look for solutions instead of problems, and yes, I'm willing to invest in companies with the same mindset whether it's as lofty as building solar collectors in space; or as simple as canvas bags and parking lot signage.


    Agreed. Completely.




    And on another subject, MNB user Jeff Folloder wrote:

    I saw your blurb on the possible $100m pay out to the tomato industry. If anyone did not see *that* coming...

    In an earlier not to you I mentioned the twin concepts of total government incompetence and marketers' capitalizing on the trust of the consumer with regard to government keeping food safe. Two sides of the same coin that result in a plodding erosion of that trust. But what if there is an even more nefarious mechanism at work? "Gaming" the government could be the latest brand manager's tool! Have a product that has declining sales and profitability? Get somebody with a food-borne illness to seek medical care and claim that he/she consumed your product. The FDA or the USDA or whoever, will issue a warning, there will be a voluntary recall, and you get the US taxpayers to pick up the bill for your whole quarter. Many will see it as a no-lose situation: the raw product producers still made their money, as did the finish producers, the brand, the truckers, the stores, the garbage collectors, the landfill operators...

    I can see it now! Instead of Efficient Consumer Response (how about that blast from the past), we have conferences dedicated to navigating government programs for gain. Specialized centers for the reclamation of recalled goods will pop up, there will be an automatic fee deducted from every invoice by retailers to support these centers (at a profit), computerized models will predict "clusters" so that these centers can plan in advance for recall trends... Oh yes, I'm cynical.





    And, regarding the hit movie “Wall-E”, one MNB user wrote:

    I’m on your side regarding the “Wall-E” movie. We took our 6yr and 71/2 yr olds to see the “Wall-E” movie opening weekend. As the movie went on, I was worried that without a lot of talking or action that the kids would get bored and want to leave. To my surprise not only did they understand all that was going on – they actually GOT the movie! Bravo to Pixar and Disney for getting a message across in a way that both adults and kids understand and enjoy. Not only did it make me re-think some things – but I can’t put anything plastic in our trash without being yelled at by my children for not recycling correctly. My children have become my environmental conscience. Probably a good thing too – since we can’t seem to straighten out this mess we are in, at least our children are already working on it.
    KC's View: