retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: September 19, 2008

    The Wall Street Journal reports this morning that “Starbucks Corp.'s China operation has decided to stop using milk from supplier Mengniu Dairy Co., one of China's largest dairy companies, until further notice in the wake of widening poisoned milk scandal … The decision comes as authorities discovered in recent days that the industrial chemical melamine was added to a broader range of products than baby formula, which has been linked to an unusual spate of kidney stones in thousands of babies. A Starbucks spokeswoman in Shanghai said that customers in their stores have been asking about the safety of the milk used in their products.”
    KC's View:
    “Poison,” “scandal” and “China” are becoming words that go together like “government” and “bailout.”

    Published on: September 19, 2008

    As expected, the US Food and Drug Administration (FDA) “proposed regulations Thursday that would allow the commercial use of genetically engineered animals<’ according to a story in USA Today, which noted that the FDA states that “such animals either produce drugs; serve as models for human disease; produce industrial or consumer products, such as fiber; or have improved food-use qualities, such as being more nutritious.”

    The labeling of meat and milk from engineered animals is not being required by the FDA.

    Consumers Union released a statement saying that that it finds it "incomprehensible" that “the FDA will not require labeling of genetically engineered animals that are sold as food. Genetically engineered animals may contain genetic material from entirely different species. For example mouse genes have been put into pigs to help them metabolize phosphorous more efficiently, and spider genes have been put into goats so that they produce spider silk in their milk.”

    A period of public comment on proposed regulations will end on November 18, at which point the FDA will decide whether to finalize or amend them.

    KC's View:
    I’ve said it before and I’ll say it again. Transparency isn’t a matter of degrees, or choice. It is about being completely open, because in so many ways we live in a transparent society where such openness is not just welcomed, but expected. Companies and governments that resist such transparency do so at the risk of their own credibility.

    Published on: September 19, 2008

    The San Francisco Chronicle has a piece of the anticipated 2010 closing of a Cala Foods market on Nob Hill, suggesting that it reflects a broader problem facing the independent food retailing community.

    “Although Cala is making money, the profit margin for a large supermarket isn't large,” the Chronicle writes. “Food costs are up, vendors are charging more to deliver products. Wages and insurance costs are rising. But more than that, supermarket sites are some of the last large real estate lots in the city. Eager developers are making such generous offers that store owners would be crazy to turn them down. No wonder supermarkets are an endangered species in the city.

    “Increasingly, they are being replaced by specialized markets, places like Whole Foods, Trader Joe's, and the new Fresh and Easy markets from the United Kingdom.”

    While these stores hardly are a blight on local communities, some say that they don't offer shoppers the kinds of mainstream options that a store like Cala Foods does, but instead focus on private label items, as well as prepared and gourmet foods.

    KC's View:
    Especially in communities hard-hit by the current economy, not having low-cost and mainstream options can be a real problem.

    On the other hand, for example, Trader Joe’s may only offer private label cereals and cookies…but they tend to be less expensive than national brands in a lot of stores. So sometimes brands have more to do with perception than actual monetary concerns.

    The challenge, I suppose, is for chains like Whole Foods, Trader Joe’s and Fresh & Easy to be persuasive in making their case to local shoppers. If they can't do that, then their real estate won’t be worth that much.

    Published on: September 19, 2008

    Consumers Union (CU) said yesterday that it is opposed “to a meat industry proposal to omit the labeling of early-processed irradiated meat for American consumers. Today, the Food Safety and Inspection Service (FSIS) of the U.S. Department of Agriculture (USDA) will review a petition from the American Meat Institute (AMI) calling for the use of low penetration and low dose electron beam irradiation to reduce levels of bacteria such as E. coli O157:H7 on of the surface of chilled beef carcasses as a ‘processing aid’ rather than its current defined use as an ‘antimicrobial food additive.’

    “This shift in classification would permit this kind of irradiation to be used without being labeled. However, FDA has not made this kind of a shift in its definition of irradiation with regard to the foods it regulates. In the meantime, the AMI is asking the USDA to grant this reclassification and omission in irradiation labeling. Consumers Union is providing public comments before FSIS in opposition to the AMI petition and FSIS position.”

    "For over a decade, industry has sought to destroy the current labeling requirements for irradiated foods, including attempts to label such foods as ‘pasteurized,’ ” said Dr. Urvashi Rangan, Senior Scientist and Policy Analyst, Consumers Union, nonprofit publisher of Consumer Reports. “Consumers have a right to know if their meat is irradiated at any stage of its processing.”

    KC's View:
    Busy week for Consumers Union…

    I’m hardly an expert in this area, but smart people who I tend to trust have told me that irradiation would address many of the food safety issues that we’ve been facing in this country. These same people say that Consumers Union is off base if well intentioned with its objections to using a new name for irradiation.

    I believe in labeling and transparency … but I also believe in using technology wherever possible to make our foods safer. We have to find a balance that works.

    Published on: September 19, 2008

    The New York Times reports that Procter & Gamble, looking for a way to rejuvenate its Folgers coffee brand, is getting set to unveil a new coffee roasting method that is “the biggest innovation since the launch of decaf.”

    Now, it isn’t like Folgers is a failing brand; it remains the top-selling packaged coffee in the US. But competition has gotten a lot tougher, both in the supermarket aisle and from the plethora of coffee shops that seem to be on every street corner in America. The roasting innovation, and the ad campaign that will support it, are designed to appeal to home brewers…and will note that making coffee at home is a lot less expensive than venturing out to the local Starbucks, or even Dunkin’ Donuts.

    Jim Trout, innovation leader for research and development at P&G, tells the Times that the new roasting method is “like thawing a turkey before you cook it. If you don’t, the outside will be burnt and the inside will still be raw. This way it cooks evenly all the way through.”

    The irony, of course, is that P&G has reached an agreement to sell the Folgers brand to JM Smucker for $2.95 billion in stock, a deal that the Times reports is scheduled to close before the end of the year.

    KC's View:
    Speaking as someone who brews up a pot of coffee every morning, the economic message certainly is a compelling one. But I think the quality message is critical as well – especially in the coffee arena, where people are a lot more aspirational and brand-driven than they were in the old PS (pre-Starbucks) days.

    It is a good lesson in the broader sense. While people are clearly more price-driven today than they have been in some time, it doesn’t mean that they’ve lost their aspirations … and the more that companies can appeal to both sides of the coin, the better.

    Published on: September 19, 2008

    Winn-Dixie announced yesterday that a year and a half after it announced that it would remodel every one of its 521 stores, the retailer is about one-fifth done. The latest remodel, its 100th, is of a unit in the Miami suburb of Hialeah.

    The company expects that half the company’s stores will have been remodeled by 2010.

    KC's View:

    Published on: September 19, 2008

    • The Financial Times reports that Tesco’s Fresh & Easy chain in the US “is facing its first formal call for union recognition from its workforce, following organising efforts by the United Food and Commercial Workers, the largest US grocery union.

    “Todd Conger, a local UFCW spokesman, said a majority of staff at a store in Huntington Beach, south of Los Angeles, has requested recognition as a UFCW bargaining unit, with 70 per cent of the 19 staff at the store signing union authorization cards.”

    Fresh & Easy has two choices: recognize the union, or start a process that would likely lead to a vote via secret ballot.

    Tesco has not commented on the situation. The UFCW said it expects the chain to recognize the union.

    KC's View:

    Published on: September 19, 2008

    Convenience Store News reports that Ahold-owned Giant Foods plans to open its first convenience store, called Giant To Go, early next year. According to the story, “the 4,422-square-foot store will sell produce, meat, deli and bakery items, as well as host eight fuel pumps.”

    Reuters reports that Supervalu-owned Jewel-Osco is opening a small store format, Urban Fresh by Jewel, in Chicago this week, “clearly targeted toward shoppers who want to get in and out of the store quickly with pre-made meals and items that don't take much time to prepare.”

    KC's View:

    Published on: September 19, 2008

    Got a number of emails yesterday about the MNB Radio commentary about SAGA companies – Starbucks, Apple, Google and Amazon – that were defined by a Washington Postpiece as companies that consumers actually care about and that “represent a distinctive and distinctively American contribution to 21st-century capitalism.”

    MNB user Glen Terbeek wrote:

    You said "that modern consumers, and certainly the consumers of the future, want products to be available where they want them, how they want them, when they want them, and at a price they believe is appropriate. That, my friends, is a kind of ubiquity that the 21st century retailer needs to embrace."

    True, but this is a bit "so old" thinking, and for sure not what made the SAGA companies successful.

    The SAGA companies did more than that, they created products (services) that the consumers didn't know they wanted until they were created and marketed by the SAGA company. In other words, they took the risk of anticipating and creating new consumers' wants and needs. I would guess that if you asked consumers what they wanted before these products (services) were available, they wouldn't come up with the SAGA products (services), since consumers usually only relate to what they know and do.

    I believe that is why so much of the market research done today is not effective.

    And why breakthrough new products (services) often come from startups or outsiders.

    Another MNB user wrote:

    I propose to you that there are two other transcendent retailers that weren't mentioned in today's story.

    The first such retailer is Wal-Mart. As much as the national media likes to bash Wal-Mart, most consumers seem to love their Wal-Mart store. Go into any small town Wal-Mart store on a Saturday or Sunday and it is THE local gathering place and social center of the community.

    The second retailer would be In-N-Out Burger. There are often huge lines at the counter and drive up window at any In-N-Out Burger on just about any given day. I realize that In-N-Out is only located in certain geographical parts of the country, but people who travel all seem know about and want to eat there if it is available.

    Another MNB user chimed in:

    Just wanted to add my two cents, I was surprised the article didn't consider Wal-Mart as being one of these 4 icons, I guess making it 5 icons, but especially when you consider the environmental movement didn't really get its "wheels" until Wal-Mart got serious about it. Now everyone is having to deal with the concept in one way or another, either as a consumer or retailer.

    KC's View:

    Published on: September 19, 2008

    It was a little surprising this week to see that LL Bean – which happens to be one of my favorite designers – is opening the first of five stores in China. It will be the company’s first foray outside the US…unless, of course, you count its 15 stores in Japan.

    According to the Forbes story, “CEO Chris McCormick says he believes L.L. Bean's store will benefit from a growing interest among the Chinese in the outdoors and outdoor activities. The 3,000-square-foot store will feature natural light and weathered timbers reminiscent of the company's flagship store in Freeport.”

    I’m fascinated by this, especially because I tend to rail from time to time about it doesn’t seem right that global companies keep buying up American retail entities or opening up stores here, but few American retailers seem intent on expanding outside the US. Lately, of course, US companies have had little choice, what with the dwindling value of the dollar.

    Still, it is hard to imagine a more American company than LL Bean, and it was good this week – at a time when a lot of people and companies were taking up the fetal position and hoping that all the headlines were just a bad dream – to see such an icon expanding into faraway lands.

    Now that the US government apparently will own a substantial part of AIG, does that mean that all of us taxpayers are going to get proxy statements? Just curious.

    A couple of weeks ago I criticized the new Microsoft commercials featuring Bill Gates and Jerry Seinfeld. The first one, which featured the two men in a shoe store, was just confusing. The second one, which had them living with a suburban family in an attempt to get in touch with real people, was just perplexing. And not funny.

    Well, now Microsoft apparently has decided to pull the ads in favor of a different campaign. The company contends that this was the plan all along.

    If the plan was to produce unhelpful and uninspiring commercials, then they should be very proud of themselves.

    As for me…I much prefer the “Mac vs. PC” ads produced for Apple.

    Though…I just saw the new “I’m a PC” ad produced for Microsoft, and it is vastly superior, if for no other reason than it is clever and makes an actual point.

    Well, here’s a story that brings into question the value of technology.

    The Chicago Sun-Times reports that a new survey reveals that 35 percent of professionals would pick their PDAs over their spouses if forced to make a choice.

    Two things surprise me about these results. One is that a third of people questioned prefer their PDAs to their spouses. The other is that this group of people would actually admit it.

    Though it probably is fair to prognosticate that this number is only going to get bigger as the more technologically savvy younger generation gets older and married. (This isn’t necessarily a cultural advance…but we have to face reality.) It points up the marketing challenges that will face retailers and suppliers in coming years, as they cater to customers with intimate relationships with their gadgets.

    In addition, and this is somewhat less surprising, the survey reports that “87 percent take their personal digital assistants into their bedrooms, and 84 percent check them just before going to bed and as soon as they wake up.”

    To which I can respond with only one word.


    The great writer Pete Hamill just told a terrific story on “Morning Joe” that bears repeating, especially in this political silly season.

    Back in the sixties, Hamill was working for Newsday, where Bill Moyers, the former press secretary to President Lyndon Johnson, was serving as publisher. Hamill was considering an assignment to Washington, DC, and asked Moyers for advice on how to deal with LBJ.

    “Lyndon is pretty simple to figure out,” Moyers said. “If he scratches his nose, he’s telling the truth. If he pulls on his ear, he’s telling the truth. If he is scratching his chin, he’s telling the truth. But if he opens his mouth…”

    A story, methinks, that could be applied to a lot of politicians on both sides of the aisle.

    Yankee Stadium closes this weekend, to be replaced next year by the new Yankee Stadium just across the street. And while I am a Mets fan, I will shed a tear on Sunday night, because Yankee Stadium is where I saw my first live professional baseball game – Mickey Mantle was in the outfield, and I remember like it as yesterday how green the field seemed…because until that time, I’d only seen a major league baseball game on black-and-white TV.

    And next weekend, Shea Stadium closes, so the Mets can move into the new Citi Field next year. Those tears will be shed in person…since Sansolo and I are going to the game on Saturday afternoon, the second-to-last game being played at Shea.

    I had the wonderful opportunity this week to drive up to Burlington, Vermont, and spend a few days there before heading back. The sun was shining, the air was clear, and the top was down on the car. In other words, pretty much perfect.

    While there, I ate in two wonderful restaurants that you should visit if you ever find yourself in Burlington. One, L’Amante, is a terrific Italian restaurant that serves an amazing grilled calamari and radicchio, pancetta and balsamic vinegar, and delicious lemon risotto cakes that are just wonderful.

    Another night, I ate at a small bistro called Smokejack’s, where they served a delicious local tomato, basil and mozzarella flatbread, and one of the best hamburgers I’ve ever eaten – made of local beef, and served with local cheese and bacon-roasted organic potatoes. Yummmm…I’m getting hungry just typing the words.

    And I didn’t just eat at these two places…I also tasted some exceptional wines.

    While at L’Amante, I enjoyed the 2002 Ca’ntele Salice Salentino Riserva, which was just mouth-filling and luscious.

    And at Smokejack’s, I had the absolutely wonderful 2007 Owen Roe Abbot’s Table - which I’m told is 22 percent Sangiovese, 20 percent Merlot, 20 percent Zinfandel, 15 percent Cabernet Franc, seven percent Grenache, six percent Syrah, three percent Petite Sirah, three percent Cinsault, three percent Malbec, and one percent Pinot Noir.

    Hell of way to make a living, huh?

    BTW…while I was in Burlington, I had a chance to visit the City Market co-op, which is a neat urban store that is brimming with energy. I don't have a lot of experience with co-op stores – there aren’t any in my part of the country – but I have to say that I was impressed by the environment, the selection and the prices…it was the kind of store I’d love to shop in, and it avoided the cookie-cutter character that so many supermarkets seem to adopt.

    That’s it for this week. See you Monday.


    KC's View: