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    Published on: August 12, 2008

    by Michael Sansolo

    Can companies do well by doing good? That is, can they prosper by working for the benefit of the environment and the world? The answer, increasingly, seems to be yes.

    Consider the following quote from an article in the New York Times Monday, in a story about retailers using solar energy panels on the roofs of stores.

    “It’s going to be the Wal-Marts of the world that will buy these things over acres and make a difference,” said Roger G. Little, chairman and chief executive of the Spire Corporation, a Boston company that provides solar equipment.

    Analysts are not sure how much power the rooftop projects could ultimately produce, but they say it could be enough to help shave total electricity demand. In many communities, stores are among the biggest energy users. Depending on location and weather, the solar panels generate 10 to 40 percent of the power a store needs.

    If Wal-Mart eventually covered the roofs of all its Sam’s Club and Wal-Mart locations with solar panels, figures from the company show that the resulting solar acreage would roughly equal the size of Manhattan, an island of 23 square miles.

    That story, which “Content Guy” Kevin Coupe highlighted in Monday’s MNB, should be must reading for everyone in the industry because it details a number of important truths about energy, lack of congressional action and activities by leading retailers.

    But mostly it makes clear the point of how doing well and doing good are linked together. As explained in the story, retailers installing solar panels are also looking for a major impact on the bottom line by cutting energy costs, an issue certain to grow larger in years to come.

    No doubt there are many readers out there who scoff at the concerns raised about the environment, global warming, energy prices and supply, water shortages…etc. There might be some of you with similar feelings about food safety, health and wellness and more. And, of course, you are entitled to your opinion though I’d disagree with you across the board.

    But let’s put aside politics and emotion and focus on business. To my thinking it’s hard to ignore this simple truth: what matters to shoppers must matter to you. Increasingly, shoppers say they are prepared to evaluate a wide range of issues when making a purchase. Food safety and health and wellness are on the list. Energy and environmental impact are getting on that list. Now that may not make a difference today or even in five years, but the day is coming.

    I’d also argue that you look simply at the business side of this. How will you compete with those who learn how to talk about and market to these concerns? How will you answer questions from shoppers wondering why the store down the street is talking about packaging or energy reduction, while you aren’t?

    And, let’s be even more direct. How will you compete if other retailers are shaving costs repeatedly by cutting waste, cutting energy use and more? Pennies quickly add up to dollars and pretty soon, we’re talking about real money.

    Take a second while watching the Olympics tonight and consider the razor thin margin of victory and defeat. Consider the care the swimmers put into decided which suit to wear. Or contemplate a study reported in the Washington Post sports section Monday on the microscopic, but important advantage sprinters get by lining up with their left leg in front of their right.

    Winners look for every edge, no matter how small.

    Then look at your roof, your energy policy, your waste management plans and ask yourself, am I doing all I can?

    The clock is ticking.

    Michael Sansolo can be reached via email at .

    KC's View:

    Published on: August 12, 2008

    The Dallas Morning News reports that Walmart is continuing its push into more and better environmentally themed marketing, and “is telling its suppliers that it's not enough to simply provide eco-friendly products. The world's largest retailer wants to be able to tell its customers the stories behind the products, of how they came to be and how sustainable they are … Wal-Mart has been putting increasing emphasis on ways it can be environmentally friendly and ways that sustainable methods can lower costs. From motion detectors that turn on lights only when customers are in the aisle to fuel conservation to innovations in packaging, the company has been approaching the effort from multiple angles.”

    According to the story, Walmart has created four points of emphasis when it comes to sustainability – waste reduction/recycling, natural resources, energy, and social/community impact. The retailer has given manufacturers a deadline – August 18 – by which time they need to submit products to be included in next year’s Earth Month promotion; the products will be chosen base don how they relate to the various points of emphasis, and how their individual stories can be told to consumers.

    KC's View:
    Walmart is smart enough to know that “green” isn’t just something you pay lip service to, and isn’t something to which you can just devote some marketing/merchandising efforts and expect consumers to “get it.” You have to tell a story…you have to engage in information-driven marketing efforts that can help consumers feel good about the sustainability choices they make, and even feel good about spending a few more dollars on such items.

    People want to do the right thing. And most people believe that sustainability is important, that global warming is an issue, that we have to take care of our fragile planet. They just don't always know what to do, because they are presented with so many options and so many opinions. So anything a retailer can do to help them make smart decisions is a move well worth making…and, by the way, it will also help sell product.

    Which I thought was the point.

    It goes back to my story and commentary yesterday, and today’s Sansolo Speaks. You can do well by doing good.

    And the companies that do so will end up with a specific differential advantage in the marketplace both in terms of economics and customer goodwill.

    Published on: August 12, 2008

    CNN reports that the US Federal Trade Commission (FTC), fresh from a victory last month in the U.S. Court of Appeals that said a lower court had erred in not issuing a temporary injunction that would have prevented the $565 million acquisition of Wild Oats by Whole Foods, is going ahead with plans for administrative hearings into the deal.

    The FTC has long maintained that the combination of the two companies would hurt the competitive balance in the segment by allowing the nation’s two largest natural/organic chains to merge; proponents of the deal have argued that Whole Foods and Wild Oats are parts of the broader supermarket industry, in which many players sell natural and organic products.

    While the Whole Foods-Wild Oats deal was completed a year ago, the FTC has continued to oppose it, with CNN noting that this leaves open “the possibility that it could try to halt further integration of the two companies or require Whole Foods to sell some operations … The FTC's latest order requires lawyers for Whole Foods to meet with the commission next week to set dates for full hearings on the merger, which would take place in front of an administrative law judge. If Whole Foods loses in the administrative proceedings before the commission, it could appeal to the federal courts.”

    • Meanwhile, the New York Times this morning reports that days after Whole Food announced that it was pulling ground beef off its shelves in 24 states, the District of Columbia and Canada because of concerns about E. coli contamination, the retailer aid that it would increase and improve its oversight of suppliers.

    As the Times notes, the supplier of the ground beef, Coleman Natural Beef, came under new ownership and “began using a slaughterhouse in Omaha that had received multiple citations and had fought a long-running battle with the Agriculture Department. The government has said the plant was the source of ground beef that has sickened scores of people around the country … Whole Foods acknowledged that a code stamped on beef packages arriving at its stores accurately reflected the change in processing plants. But the grocery chain said it had no procedures in place to watch the codes on arriving meat packages, and therefore failed to notice it was getting beef from a packing plant it had never approved.

    “Whole Foods will immediately institute new procedures to detect such a change in the future, the chain said.”

    • Finally, the Brooklyn Paper reports that Whole Foods is “revising” its plans for the first store the company planned to open in Brooklyn, though what exactly those revisions might be is anybody’s guess.

    According to the paper, “The announcement of the revision came after the upscale food grocer announced it would reduce the number of stores it planned to open across the country due to the worsening economy … It’s the latest admission that the stalled supermarket is off track.”

    KC's View:
    At this point, you have to figure that the folks at Whole Foods are simply trying to run out the clock on the FTC, hoping that whoever wins the presidential election in November will replace the fools at the FTC who misguidedly continue to try and stop a deal that always made a lot of sense.

    It isn’t like Whole Foods is stronger and more dominant now than it was a year ago. If anything, the company is going through some tough times…though, to be fair, those tough times probably have little to do with the merger with Wild Oats.

    As the economy went south, Whole Foods wasn’t positioned right to deal with the financial challenges facing many of its customers. When the food safety issue erupted, Whole Foods found out that there was a hole in the safety net. And right now, the company is dealing with brand equity that has been tarnished a bit. The problems aren’t likely to be fatal, but they require some attention…

    I will say this about Whole Foods. It is a big company with a big infrastructure. But its press releases and statements, especially about the food safety issue, read like they were co-written by some PR flack and a lawyer…and that probably does a disservice to both its customers and the company culture that attracted these shoppers to begin with. The company needs to eat some organic humble pie and get in front of this issue…and do so in an honest and forthright way that puts the customer’s needs and concerns first.

    All in all, management at Whole Foods must be looking back fondly at those halcyon times when the biggest problem the brand had was CEO John Mackey doing some anonymous posting on Internet message boards. Those were the days…

    Published on: August 12, 2008

    The Patriot Ledger reports that Ahold-owned Stop & Shop has decided to stop selling all kinds of shark, orange roughy and Chilean sea bass because of concerns that these species were being overfished.

    The company said that it will not sell these products again until those fish stocks are more plentiful.

    It is, the paper notes, the first time the company has made such a decision for conservation reasons. “All three kinds of fisheries are on the decline,” said Ken Pentheny, senior category manager for Stop & Shop. “They’ve got some kind of stress against them. We just made a conscious decision that it was the right thing to do, to step away from those fisheries altogether.”

    Stop & Shop is working with the New England Aquarium on conservation issues, and the Aquarium applauded the move by the retailer.

    KC's View:
    Matt Hooper would approve. Martin Brody, not so much.

    Published on: August 12, 2008

    • The Wall Street Journal features an interview this morning with Eduardo Castro-Wright, CEO of Walmart’s US stores division, in which he addresses both the company’s resurgence during tough economic times and other issues confronting the company.

    Regarding the three-year plan that brought the company to the point where it could take advantage of a declining economy, Castro-Wright says, “First, we had to reinforce our price leadership. We needed to ask ourselves what we stood for and it was more than just low prices, but [rather] saving people money to make their lives better. That gave us a unifying marketing message and gave 1.3 million associates a powerful sense of purpose.

    “Then it included everything from improving navigational signs in the stores so people could find things more easily to investing in technology to allow for a faster checkout. We took down high shelves to reduce clutter and improve sight lines throughout the store.

    “We learned that providing customer choice wasn't about more products, but carefully selected products that customers cared about. We made big bets in growth categories such as consumer electronics, providing brands that gave us authority. It's still not finished yet.”

    And, he adds, The one thing I would do differently is I would have done things faster, which is counterintuitive. When you think about changing a big organization rooted in its history, you think the changes should be gradual. I think that the faster you move, the faster you make the tough calls and the better off you're going to be. You don't want to have organizations in what some people think of as a liquid state. I'm an engineer by training so my physics comes back. An organization is something very solid and when you apply a lot of heat to change it, it becomes fluid. You want to make sure that you don't keep it fluid too long, because liquids move in many directions that you might not have intended.”

    Interestingly, Castro-Wright downplays the current economy’s role in the company’s comeback: “I wouldn't say a significant part of the current results is related to the economic environment. The changes in merchandising, marketing and improved service in the stores ... have vastly improved the shopping experience, and that will continue to drive sales after the economy rebounds.”

    KC's View:
    I think he’s got that half right. I think Walmart did what it needed to do to get its retailing house in order…but if the economy wasn't in turmoil and if customers weren't in a recessionary mindset, I don't think Walmart would be doing quite as well as it is a present time.

    Published on: August 12, 2008

    BrandWeek reports that as Procter & Gamble prepares to release a new flavor, Wintergreen Ice, in its Crest Whitening Expressions line of toothpastes, it is using to get consumers to contribute possible new slogans for the flavor.

    Up to this point, P&G has been using celebrity chef Emeril Lagasse to promote the line, and has incorporated his signature expression, “Bam!”, as a kind of slogan. Lagasse will remain as part of the campaign, but now will be seen as being on an “American Idol”-style panel of judges evaluating the submissions.

    According to the story, “From Sept. 15 through Oct. 17, consumers can submit videos featuring their take on the brand in 10 words or less. The winning phrase will be incorporated in upcoming TV spots advertising the new flavor, which replaces Lemon Ice. Lemon Ice launched in 2005 following a contest in which consumers voted for the flavor they wanted most. P&G also polled consumers before deciding to introduce wintergreen ice.”

    KC's View:
    Nicely done. Anything a company can do to involve shoppers in the creative process – whether it is designing a store, selecting services or choosing a flavor – almost always makes sense.

    Published on: August 12, 2008

    The New York Times has a story this morning saying that Tesco, the worlds third ranked retailer, plans to create a wholesale cash-and-carry business in India, and will work with an Indian company, the Tata Group, that is growing a hypermarket business there.

    Current Indian law prevents outside ownership of retail business in India, though the arrangement with Tata does give Tesco the ability to launch its own retail stores there should the legislation change.

    The Tesco-Tata deal is said to be similar to an arrangement reached by Walmart with Bharti Enterprises, which gave the world’s biggest retailer a foothold in India, which currently has a $350 billion retail industry that some estimate could double within seven years. For a fee, Tesco will provide retail expertise and technical support to Tata, which currently owns four hypermarkets.

    Tesco’s investment in the cash-and-carry business is said to be about $115 million (US) for the first two years. The Times notes that Tesco “plans to open its first outlet in Mumbai towards the end of next year, with further distribution hubs in Delhi and Bangalore that will support a network of smaller cash-and-carry stores supplying thousands of small retailers and restaurants.”

    KC's View:

    Published on: August 12, 2008

    • The Business Courier of Cincinnati reports that Dunnhumby Ltd. plans to expand its manufacturing practice worldwide,

    “With this focused effort, we will create robust and sustainable engagements with manufacturers that will change the way they go to market and help them earn the lifetime loyalty of their shoppers and consumers,” said Matt Nitzberg, who has been running Dunnhumby USA’s manufacturer practice (a joint venture between Tesco and Kroger), and who will take over the global practice.

    KC's View:

    Published on: August 12, 2008

    Regarding the ground beef/E/ coli story that keeps unfolding, MNB user Steve Smith wrote:

    Everyone should read the book “Omnivore's Dilemma.”… a fascinating look into the origins of most of the food we buy and eat. When I read stories like your E-coli story today, I think about how incredibly ignorant the American public, and I think many of the retail organizations, are about the real story of food processing. The book should be mandatory if we want to change our macro food chain to be safer and better for our customers.

    Regarding the lack of information about Nebraska Beef, the plant that seems to be the source of all these problems and that has had a contentious relationship with federal regulators for years, MNB user Jessica Duffy wrote:

    In Boston and other places, the results of restaurant health inspections are printed in the paper (bad inspections often highlighted in the Metro), and I’m sure there are plenty of public domain websites where you can get that information. Why is this not the case for meatpackers and other food production facilities? There were so many problems repeated over so many years at this plant and I had never heard about any of it, until people finally started getting sick. Why did we have to wait for people to start getting sick to find out about the monstrously bad management at this meat company? This should have been public knowledge and retailers could then make decisions based on that information. There is no legal justification for this staying internal. Just like the restaurant around the corner, meat packers should have to face public scrutiny if they are not doing there job right!

    Regarding the litany of charges against Nebraska Beef, and its seeming ability to litigate and obfuscate its way around them, one MNB user wrote:

    I'm so disgusted I don't even know what to say. I'm not sure if I'm more disgusted as the lengthy record of Nebraska Beef, or at the lack of protection the govt. is providing. Either way I want to throw up.

    Think how you'd feel if you'd eaten meat processed at its plant.

    As I wrote yesterday, the information is all out there now – and it is hard to imagine that market forces won’t take over and pretty much wreck Nebraska Beef’s business. You have to ask yourself who would want to do business with this company now. Who would want to eat meat processed in that plant now?

    Not me. Not you.

    It was reported yesterday that a judge prevented the USDA from inspecting Nebraska Beef at one point because a shutdown would have put it out of business…which prompted MNB user Michael Sommers to write:

    What judge would agree to stop the USDA from inspecting this company because, ‘another shutdown would put the company out of business’?! Good, companies like this should not be allowed to be in business if they habitually receive violations. Whoever is managing Nebraska Beef surely does not care what happens to the end consumers of their beef. With no focus on the people who keep them in business, they should have lost the ability to provide their tainted beef to Americans many years ago. Chalk this up as another case of the USDA failing to do its job, and the job it failed to do this time was to put Nebraska beef out to pasture years ago.

    In this case, let’s not completely blame USDA. But I do think we should find that judge, grill a hamburger made from meat processed at Nebraska Beef, make sure it is nice and rare, and then make him eat it.

    One MNB user, who asked to be identified as a “fed up American,” wrote:

    What about Whole Foods Markets claim in using their brand protection service, Steritech mandating all meat producers and suppliers to be third party approved. What happened at Steritech with Nebraska Beef? Nebraska Beef had to have been approved by Steritech originally to have the job of slaughtering beef for Whole Foods Market.

    Who dropped the ball at Whole Foods Market as they obviously were not doing their job in overseeing “product protection” as they claim. Nebraska Beef is a conventional beef slaughter house, why is Whole Foods using a conventional slaughter plant to begin with?

    What has happened to Food Safety within the US, as it seems to be non-existent?

    Whole Foods concedes it dropped the ball. The issue now is what happens when it picks up the ball, and what it does with the ball.

    Yesterday, in my piece about ongoing E. coli contamination issues, I wrote the following about how the folks at Dorothy Lane Markets reacted when they found out that their Coleman Natural Beef was affected:

    You should know that the moment that the folks at Dorothy Lane Market found out they had a problem and pulled the product, they also engaged in a massive outreach effort to their customers. It is my understanding that in addition to sending out emails and being completely available to the local media, staffers at Dorothy Lane made some 10,000 phone calls to customers within about 72 hours. You read that right: 10,000 phone calls.

    It doesn’t surprise me that Dorothy Lane Markets would do that, because that is the kind of operation that CEO Norman Mayne always has run. He puts his customers first, always…and runs about as transparent an operation as I can imagine.

    There probably are people who would have advised him not to make those phone calls, not to talk about the issue, to batten down the hatches and try to ride out the storm with as little communication to the outside world as possible. That would, of course, have been an enormous mistake…for anyone, but especially for Mayne, who never has run that kind of business.

    Good lesson for any other retailer dealing with these kinds of problems.

    To which one MNB user responded:

    When is Dorothy Lane Market coming out west! Kudos to them in their handling of the e-coli incident. Particularly noteworthy given the size of their staff! Very impressive in this day.

    Damn right.

    KC's View: