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    Published on: August 18, 2008

    The New York Times reports that a Quebec government arbitrator has ruled that eight employees who work in a Walmart automotive department in Gatineau, Canada, are to be covered by a three-year contract with the United Food and Commercial Workers (UFCW) – making the eight the only unionized Walmart employees in North America.

    According to the Times, “The three-year agreement provided eight employees with an improved wage scale, annual raises and a grievance process for settling disputes. The number of workers covered by the contract is small; there are about 250 employees in other parts of the Gatineau store and 77,000 Wal-Mart workers in Canada. But the United Food and Commercial Workers union hailed the decision as an important step in its prolonged effort to unionize Wal-Mart’s employees.”

    This is just the latest fracas in Walmart’s continuing battle with labor unions in Canada. In 2005, employees at a Walmart store in Jonquière, Quebec, voted to unionize…and Walmart responded by closing the store, saying it was unprofitable. The UFCW has continued to challenge that decision, and the case is scheduled to be heard by the Canadian Supreme Court.

    Walmart responded to the ruling by saying it was disappointed but needed to review it before making any decisions.

    The Vancouver Sun notes that there is a newer Walmart just four kilometers away from the Gatineau location, which leaves open the possibility that Walmart could decide to close the older store. But Walmart isn’t commenting. Yet.

    KC's View:
    Just a guess here, but I suspect that if you are looking for a place to open a big box store, there’s about to be a vacancy in Gatineau.

    There’s no way Walmart takes this lying down. There are too many implications, too many precedents at stake.

    Last one out of the Gatineau store, don't forget to turn off the lights.

    Published on: August 18, 2008

    Excellent piece in Business Week about how supermarkets’ ability to take advantage of the recession – offering eat-at-home meals cheaper than those being sold in restaurants, and selling higher-margin private label products instead of national brands – has turned out to be somewhat short-lived.

    Because consumers continue to feel financial pressures from various angles, supermarket chains are employing various strategies to keep them coming into the store. “Mid-tier chains that had thrived in recent years by expanding their product lines and spiffing up their interiors to compete with upscale rivals like Whole Foods,” the story writes, now are “hawking low-cost meals to compete with restaurants and ramping up gas discounts.”

    Business Week writes that “SuperValu has adopted some tactics of its discount unit, Save-A-Lot, which offers a reduced selection, such as one house brand of strawberry jam instead of the usual half-dozen mix of brands. SuperValu is beefing up profitable house labels at stores such as SuperValu, Albertsons, and Shaw's. The company may also extend a new Save-A-Lot initiative, called ‘Fuel your Family,’ that suggests food combinations to feed a family of four for less than the cost of a gallon of gas.”

    Kroger, the story says, has the added advantage of its contract with Dunnhumby, Tesco’s data-mining company, which allows it to target shoppers with relevant advertising and to send appropriate offers to shoppers’ cell phones.

    Tom Schoewe, Walmart’s CFO, tells Reuters in a separate interview that the retailer “is determined to maintain its low prices and its margins despite growing pressure from suppliers seeking price increases.” Schoewe says that the company is getting a high number of requests for price increases from suppliers, and that ultimately what matters "is the gap in price between us and our competitors.”

    KC's View:
    I continue to believe that to be competitive in this environment, retailers have to be innovative on two fronts. One, of course, is price. But they also have to figure out how to be compelling to shoppers who, despite some financial adversity, have not lost their aspirations when it comes to feeding their families and themselves.

    Published on: August 18, 2008

    The Wall Street Journal reports that the US Department of Agriculture (USDA) has expanded the recall of meat processed at the Nebraska Beef plant in Omaha, deciding “that 160,000 pounds of meat should be added to the Aug. 8 recall after examining the June 24 records for the Omaha plant. Most of the meat produced that day was included in the recall announcement, but the company omitted some meat produced later in the day after it switched to a different product. About 1.36 million pounds of beef is now included in the recall.”

    The USDA says that the expanded recall is because Nebraska Beef did not clean its equipment on the days in question, and therefore more meat had to be recalled because of concerns about the spread of E. coli bacteria.

    According to the story, “The large cuts of beef covered by this latest recall are typically used for steaks and roasts, but at least some of those cuts from Nebraska Beef were used for ground beef.

    “Last month, Nebraska Beef recalled 5.3 million pounds of meat, and federal officials said they were satisfied the company was operating safely. The meat involved in that first recall has been linked to at least 49 cases of E. coli, but that was a different strain than the one tied to the current recall … Most of the recalled meat was sold to companies that planned to further process it, making it difficult for consumers to determine whether they have any of the recalled meat without checking with their retailers.”

    KC's View:
    Two things leap out at me from this story.

    One is that it used to be considered value-added for retailers to grind or otherwise process beef in-store, but that actually could be changing here because of traceability issues. I wonder if at any point in the near future we’re going to see a shift in this policy on the part of some retailers who may have to think twice about the practice.

    The other thing that continues to amaze me is the fact that despite a highly checkered background and a long history of being investigated by the USDA for safety violations, Nebraska Beef continues to process meat at the plant where the contamination took place. Who the hell is buying this meat? Because if I shopped in a store that was buying meat from this company and then selling it, despite all the warnings and headlines, I’d be thoroughly ticked off – enough to find another place to shop.

    And retailers who think they can get away with this ought to think again. Because if more problems occur and they’re linked to them, there will be no plausible deniability.

    Published on: August 18, 2008

    Interesting piece in the UK’s Telegraph about Tesco’s Fresh & Easy stores, with columnist James Quinn examining where the chain may have gone wrong. Here is the section that seems the most telling:

    “…in a tranquil area on the edge of the mid-market Manhattan Beach, lies an F&E store that boasted the retailer's largest launch to date - with almost 2,600 customers on its first day - when it opened in early July.

    “But on the mid-week morning when I arrive, all is quiet. The 2,000 sq ft store, very similar in feel to a large Tesco Express, does not look busy. At the back of the store is what is heralded by my F&E guide as the heart of the store - the ‘Kitchen Table’, essentially a demonstration area run by a member of staff who chooses what items to display.

    “It's a nice idea, but far from original, as can be seen across the car park at rival retailer Trader Joe's whose ‘Snack Shack’ concept looks very similar.

    “As we wander further around the store, in spite of the clearly fresh produce, it feels a little cold - and not just in temperature - despite a recent revamp by F&E.

    “There are nice, localised features - a small, child-height poster encourages youngsters to locate a hidden cuddly toy within the store in return for a prize - but they are few and far between. By and large, this is very much a store that has been designed to be rolled out, rather than one designed to entice customers.

    “At Trader Joe's the opposite is true. With a strong smell of cooking out front – coming from some beef being grilled at the Snack Shack - the shop is positively buzzing with customers. Gregarious staff chat away in a relaxed environment designed with a tropical surf shack in mind.

    “It's then that it becomes clear: the cheery staff-led atmosphere is what's missing in F&E. Because F&E's tills are entirely self check-out, there is little interaction between the retailer and the customer. Given the outgoing nature of most Americans - and in particular Californians - F&E might have just missed the point.

    “One block away, at larger rival Bristol Farms, a woman offering free samples of the latest oxygenated water pounces almost before customers get through the doors. Although it's much larger than F&E it also has much more to offer shoppers. Like the nearby Whole Foods, which is just a two-minute drive away, it offers seating for people to eat their purchases from the deli, creating a sense of belonging to the shop that F&E does not.”

    KC's View:
    I was struck by the phrase, this is very much a store that has been designed to be rolled out, rather than one designed to entice customers. Because that does seem to capture the complaints that a lot of people have about Fresh & Easy.

    Now, it needs to be said that the F&E management continues to defend the format, saying that everything is working the way it should, and that with a Northern California rollout scheduled for next year and apparently plans being hatched to bring F&E to Chicago at some point, there is little evidence that Tesco is going away. And I’m perfectly willing to accept the premise that 1) they’re smarter than I am, and 2) they know something I don't know about why this format makes sense.

    But it is having been to both that Bristol Farms and that Trader Joe’s, and knowing how bustling and vibrant they are, it is hard to reconcile the reports of F&E’s relatively empty aisles with the notion of success.

    Published on: August 18, 2008

    The US Food and Drug Administration (FDA) has issued a “draft assessment” saying that bisphenol A (BPA), a chemical commonly found in household products such as baby bottles and food containers, does not pose a health hazard when people are exposed to small amounts.

    The Washington Post notes that the FDA finding “stands in contrast to more than 100 studies performed by government scientists and university laboratories that have found health concerns associated with bisphenol A (BPA). Some studies have linked the chemical to prostate and breast cancers, diabetes, behavioral disorders such as hyperactivity and reproductive problems in laboratory animals.”

    According to the story, the FDA assessment – which is similar to a finding by the federal Environmental Protection Agency (EPA) – was “welcomed” by the American Chemistry Council, which agreed with the results.

    However, “FDA critic Diana Zuckerman, president of the National Research Center for Women and Families, said the agency lacks sufficient data to declare the chemical safe.
    ‘Clearly, their effort was to minimize people being concerned about this,’ Zuckerman said. ‘It just seems that whenever there is an opportunity to look at a new, important issue, they just seem to be siding with industry's point of view’.”

    And, the Post notes, “Canadian regulators recently decided to ban the controversial compound in baby products. Walmart, the nation's largest retailer, and Toys R Us, the largest toy seller, have said that by January their shelves will be free of children's products containing BPA.

    “Democrats in Congress have introduced one bill that would ban the chemical in products intended for use by children younger than 8, and another that would restrict its use in food containers. Neither bill has advanced beyond the committee stage."
    KC's View:
    This is one of those cases where, not being a scientist, I have no idea who is right on this issue. But I do know this – the FDA has consistently undermined its own authority and credibility, and so I tend to pay more attention to the critics and naysayers (especially when those naysayers include not just political gadflies, but Walmart and Canada.)

    I’m guessing I’m not alone. And so, the question becomes what is the over/under on when more concrete evidence comes out about BPA that suggests the FDA yet again wasn't doing its job?

    Published on: August 18, 2008

    The Sacramento Bee has a story about Raley’s heir Michael Teel, who within the next year plans to have as many as three new gourmet grocery stores called Good Eats operating in the Sacramento area. The first one is expected to be up and running by this winter, and Teel and his partner – a former hedge fund manager named Michael Ashker – hope it will offer “a mix of quality, convenience and style … each Good Eats Grocer will carry slightly more items than a Trader Joe's, but with more emphasis on prepared foods.”

    The company currently is in the meal development phase, having hired two chefs (one who was a sous chef at Google headquarters) to create the 80 dishes that they hope to have available when the first store opens.

    The Bee notes that “while entering the grocery market is always risky, experts say other ventures around the country have demonstrated that the Good Eats model of smaller stores and fresh grab-and-go meals can succeed.” The paper cites not just Trader Joe’s, but also Tesco’s Fresh & Easy Neighborhood Markets, Seattle’s Metropolitan Market, and even Whole Foods as concepts that are exerting some influence over the Good Eats development process.

    Fresh & Easy, of course, also will be a competitor to Good Eats – the format is scheduled to come to Sacramento next year in some 19 locations, a rollout that will dwarf the more measured approach being taken by Teel.

    KC's View:
    The Bee quotes retail consultant Dan Raftery as saying that to a great extent, Good Eats’ success or failure will depend on the quality of the food – and I think he’s got that exactly right. There will be other factors, of course, like location and competition. But this kind of store has to get the food exactly right…because if it is wrong, getting people to try it a second and third time is extremely difficult. And that’s especially true for an endeavor like this, which is being largely financed by the owners…which means that they don't have the kind of deep pockets that Walmart or Tesco or even Raley’s would have.

    Still, despite the risks, I have to say that I’m always pleased that businesses like this one still can get started, especially in this environment. It gives one hope.

    Published on: August 18, 2008

    Over the last couple of weeks, MNB has featured stories about gourmet ice cubes and about a restaurant in Australia that is serving waters of various kinds with the same care usually reserved for wine – choosing certain water-food pairings, being careful about temperatures, and even rating the terroir of various waters.

    Well, there must be something in the air. Or in the water.

    Because the Arizona Star has a story about how a buy in Tucson has created something called Fria Frozen Water that is selling like hotcakes.

    In essence, Fria Frozen Water is bottled ice that “Tucsonans can buy and keep with them throughout the day to drink as it melts,” according to the story. “After months of research, (creator Jon Wilt) settled on bottle designs in 1-, 2- and 3-liter sizes, each filled with quarts of water, a quantity slightly smaller than liters, to let the water expand when frozen. And he added a little handle to the lid, making the bottles easy to carry and keeping people from freezing their hands.” The water comes from “Tucson-based Aquapure Hydration Cos., which uses municipal water and runs it through a series of filters before bottling the water and sending it out to two frozen-goods warehouses,” according to the Star.

    The smallest bottles sell for $1.89, the medium for $2.39 and the large for $2.89. For ice.

    KC's View:
    Only in America could a guy figure out a way to repackage ice, sell it for a premium price, and suddenly look like a marketing genius.

    Published on: August 18, 2008

    • Walmart will be rocking out with the planned release of a new AC/DC album, “Black Ice,” exclusively in Walmart stores and on its website on October 20. A single from the album, “Rock ‘N’ Roll Train,” is scheduled to be made available online at Walmart’s and Sam’s Club’s websites, in addition to the band’s site, on August 28.

    Walmart has been getting into the exclusivity business with a number of musical artists in recent years, as it has been the sole retailer carrying new albums by Garth Brooks and The Eagles.

    KC's View:

    Published on: August 18, 2008

    • Published reports in the UK say that Tesco is negotiating to sell as many as a dozen of its largest stores to a major British pension fund, a move that could generate the equivalent of more than $900 million (US), which would be used to retire debt. Tesco would lease back the stores after a sale is completed.
    KC's View:

    Published on: August 18, 2008

    • The Sunday Times of London reported over the weekend that J Sainsbury plans to open a new “green” store today that will serve as a model for future openings. The store is built from wood rather than steel, is heated by a biomass boiler that runs on wood chips, and is designed to save about 30 percent on energy bills.

    • Published reports say that Longs Drug Stores, which announced last week that it would be acquired by CVS Caremark, is being pressured by one of its investors to hold out for a better price than the $2.54 billion price already agreed upon. The Financial Times says that Bill Ackman, described as an “activist hedge fund investor” who controls more than 20 percent of the company’s shares, says that Longs should hold out for a higher offer from either Walgreen or CVS,

    • Published reports say that Mrs. Fields Famous Brands LLC plans to file for Chapter 11 bankruptcy protection to help restructure its business. The company reportedly plans to continue operating, but is considering the sale of its TCBY yogurt chain.

    KC's View:

    Published on: August 18, 2008

    MNB reported last week that a grocery trade organization in Washington State is pushing for a city referendum on a new Seattle law that will impose a 20 cent charge for every disposable plastic or paper bag used by shoppers in the city’s supermarkets, drug stores and convenience stores. The fee is scheduled to go into effect on January 1, 2009.

    I commented: While I understand the resistance to a fee, the grocers who are fighting this legislation run the risk of being on the wrong side of an issue that has momentum they cannot control. And while the grocers say that a fee isn’t necessary to make the kind of progress needed in getting rid of disposable bags, it seems to me that enough progress were being made, then government wouldn’t even have considered such legislation.

    A lot of people disagreed with me.

    One MNB user wrote:

    After reading your column over the years, sometimes disagreeing with your views without responding, I couldn't help but send my comments about your understanding of my fellow grocers objections to taxing paper and plastic bags in the city of Seattle.

    Seattle grocers have been leaders in bag reduction and recycling. Most grocers offer refunds equal or greater than the cost of bags to customers that bring their reusable bags to the store, and almost all supplement curbside recycling by including voluntary recycling centers in their stores.

    Our company has reduced front end bag use by 20% this year alone, and the trend continues to grow as more and more customers are coming to the market with reusable bags in hand.

    Less than a year ago, the city conducted an independent study to determine what the preferred course of action would be to reduce disposable bag use. 89%of all residents surveyed favored a voluntary plan for stores over a penalty tax or bag ban. Nonetheless, city councilmember’s along with our mayor shunned numerous ideas offered by concerned citizens and industry experts, and voted to impose the fee.

    This method of taxing is the first of its kind, as it applies to ALL front-end bags, both plastic and paper. 75% of the fee goes to the city, and will help fund new bag inspectors looking for checker non-compliance, which results in a $250.00 fine per occurrence. The remaining portion will be kept by the store to defray slower checkout costs and administration fees.

    Grocery, convenience stores and drug stores are the only ones that must comply. All other retailers and the bags that they furnish are exempt. It provides a distinct advantage to the growing segment of category retail such as pet, beverage, food service, and unfairly exempts department stores, hardware, clothing, and so on.

    There is much more to share, and I would urge your readers to become educated on the subject. Here is just one good website, created by a group of economists in our area: Many others can be found with a little Google time.

    In summary, the Seattle grocers that I've spoken to believe that we should be given an opportunity to let our bag reduction efforts play out. With increased reusable bag marketing, requirement for all grocers to provide recycling collection bins for disposable bags, and financial rewards to participating customers that bring their bags to the store, we can have a proactive effort as opposed to added taxation and bureaucracy. And if the city's survey is correct, 89% of the customers agree.

    Another MNB user wrote:

    I have to start off by saying that whenever the government tries to tell me that they know what is best for me and can manage my business better than me…I immediately want to point out their annual operating deficit.

    I believe in using a canvas bag for groceries…I actually think it’s BETTER than the plastic bags. But 20 cents a bag is an outrageous fee considering that the bags cost less than a cent to purchase. Governments are using the current environmental awareness trend to create tax revenue (see above reference to operating deficit). By positioning this fee as “protecting our environment” they are putting companies in the untenable position of choosing to pay an exorbitant tax…or being outed as environmental “meanies” if they fight against it. Governments could potentially collect billions of dollars before all retailers could successfully convert away from plastic.

    If the programs were really designed to drive environmental change, governments would motivate with rewards instead of fear of penalties. Why isn’t the program: a 5 cent tax rebate for every canvas bag retailers sell…or a rebate of $10,000 for every 2% decline in use of plastic bags? Why…because there is no money grab in those types of programs.

    MNB user Dustin Stinett wrote:

    Please let me tell you why city legislators pass grocery bag legislation: Because they can.

    And it’s about all they can do.

    When one looks, with a critical eye, at real issues facing most American metropolises; things like education, jobs, infrastructure, homeless, traffic, taxes, budgets, and crime rates (among many others) and then see that all these politicians do is pass ultimately meaningless, warm-fuzzy-feel-good laws like fees for plastic grocery bags—and then puff out their collective chests as if they’ve accomplished something that will improve the lives of their constituency—the absurdity of it becomes glaringly obvious.

    I say to hell with meaningless baggie laws. We have far bigger issues facing us and the politicians are paying them only lip service. They need to get to work.

    Another MNB user wrote:

    This bag tax is not about the environment it is about a huge Seattle budget deficit. Grocers offered up a significant voluntary bag program with progress measurements in lieu of a tax and the City just wants the tax. However, another major city in Washington state liked the grocers proposed program and is taking them up on it.

    Still another MNB user wrote:

    The Pacific Northwest is one of the leading areas in the country for being progressive when it comes to environmental issues. I am a proponent of reducing the environmental impact of plastic and applaud efforts to that end. I do disagree with a governmental mandate/law enforcing that behavior. When you state "it seems to me that (if) enough progress were being made, then government wouldn’t even have considered such legislation", you may have missed the efforts that are going on here. I have been in many areas of the country and the Northwest is leading the country in this effort. Concerned citizens/customers are making wonderful progress. The staying power of their effort and the ability to drive that across the county is much stronger than government mandates, that can be repealed. Have more faith in us as consumers and citizens of this planet. We care, and we are aggressively moving forward in spite of grandstanding politicians here in Seattle. Keep up the commentary. It makes us better!

    And yet another MNB user chimed in:

    These guys should embrace it, no one will use plastic anymore. Someone should look at Germany, if you ask for a plastic bag they look at you as if you had three heads…

    I think the fellows who made the arguments that the bag taxes are counter-productive and actually work against a system that seemed to be making progress are very persuasive. For the record, I pretty much always say that I prefer these things to be accomplished without legislation, but am willing to tolerate government intervention when progress isn’t being made.

    So I’ll buy what they’re saying…because it sounds like they are embracing the shift from disposable to non-disposable bags. Which ultimately ought to be every retailer’s goal.

    Responding to a story last week about how Caucasians soon will be in the minority in the US, MNB user Michael Core wrote:

    Your comment " There will be some who will say that this is a good enough reason to stop or severely limit immigration, because that's the only way to exert any control over these trends", couldn't be further from the truth. If the U.S. government were to nail the borders shut today and not let another person into this country these demographic shifts would not change 1%. The critical mass is too large to shift. The real question is not what the racial make up of this country will be in 2042, but the make up of the socio-economic classes. For a country that worships at the altar of the all mighty dollar this will be the real crisis.

    I didn’t say I agreed with the anti-immigration argument … just that it was being made in some quarters. I read a number of stories in which some people made this point, and I heard a piece on NPR in which one analyst said that limiting immigration could be a response to the demographic shifts.

    Again, I disagree with the idea. But the argument is being made out there.

    MNB user Mark Lavin wrote:

    I think you are "right on" with your comments relative to majorities and minorities and our Country's great ability to handle the coming changes.. Thanks for sharing the wisdom.

    And, on the subject of obscure and semi-obscure cultural references being made on MNB, one MNB user wrote:

    Keep ’em coming Kevin. I keep waiting for Andrew Shepherd references as the election heats up.

    And Jed Bartlet references. And mentions of Joe Cantwell and William Russell. Let’s not forget Raymond Shaw. And almost certainly there will be comments about Bill McKay.

    Count on it.

    MNB user Bryant Wynes wrote:

    Regarding your use of pop culture references . . . don’t give up on your audience. Just remember: “The oxen are slow, but the earth is patient.”

    I never give up on the audience, which I know is a lot smarter than I am.

    And, my favorite email on the subject came from MNB user D. Bruce Frazier:

    I must admit that I am a fairly new convert to MNB … solidified recently by at least 7 or 8 Jimmy Buffett references in one day’s column.

    Glad to hear it. It’s the occasionally crazy stuff that, I think, keeps MNB from getting stake and predictable.

    Besides, if we weren’t crazy we’d all go insane…

    KC's View: