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    Published on: September 22, 2008

    CNN reports that the high price of eating out – not to mention driving to restaurants – has created a national trend toward cooking and eating at home. According to Ohio-based BIGResearch, roughly 45 percent of Americans are eating out less this year to save money, a nearly 12 percent increase from 2007.

    However, this isn’t just helping supermarket sales.

    “After years of eating out, many people have found they don't have a pot to cook in or a cookbook to guide them,” CNN reports. “The sudden rush to buy basic cooking necessities has driven up sales of cookbooks, inexpensive cookware and the basic foods needed to concoct a meal. And cooking magazines and Web sites are booming even as magazine sales overall have suffered.”

    The booming sales of cookware that costs less than $100 suggests that many of the people now choosing to eat at home are younger, less affluent shoppers.

    KC's View:
    If there are a lot of new cooks coming into the marketplace, this is an enormous opportunity for food-oriented retailers. It is an opportunity to sell them cookware and cookbooks, it is an opportunity to engage with them in the store and online, and it is an opportunity to develop in-store product and services that can help people know what and how to cook.

    And if you believe, as many do, that there may be some kind of deeper economic and cultural transformation taking place – and that this isn’t just a trend that could be reversed in a few weeks or months – then this is a time to think strategically about how to reposition the supermarket.

    Published on: September 22, 2008

    The Los Angeles Times reports this morning that a federal grand jury has indicted eight current and former executives of the Kroger-owned Ralphs Grocery Co., charging them with being engaged “in a course of criminal conduct” and hiring “employees under false names, Social Security numbers and documentation” during the labor dispute that roiled the Southern California market five years ago.

    The US Attorney’s office has left open the possibility that there could be more indictments, and has said that there are co-conspirators unnamed in the indictment.

    Ralphs pleaded guilty to similar charges two years ago and paid $20 million in fines and $50 million into a fund designed to reimburse workers hurt by its actions during the strike/lockout.

    The Times writes that the indictment “said the employees were sent to stores where they didn't normally work to avoid being recognized by customers and picketing colleagues.

    “According to the indictment, the indicted executives even circulated copies of a confidential strike manual that outlined the strategy of attracting experienced workers that store managers ‘could plausibly deny knowing’ were actually locked-out employees.

    “The indicted executives are Scott Drew, 47, of Carmel, Ind., now a vice president of Kroger Co., Ralphs' parent; former Ralphs Vice President Patrick McGowan, 49, of Menifee in Riverside County; Charles Vance, 56, of Norco, a former Ralphs zone manager; Randall Kruska, 55, of Leucadia, Calif., a former Ralphs zone manager; and Karen Montoya, 48, of Peoria, Ariz., a former Ralphs district manager.

    “If convicted on all charges, Drew, McGowan, Vance, Kruska and Montoya face maximum sentences of at least 30 years in federal prison as well as the payment of restitution to victims of the alleged crimes. The defendants are expected to appear next month in U.S. District Court in Los Angeles to enter pleas.

    “The grand jury also indicted three lower-level Ralphs managers -- Craig Totman, 55, of Paso Robles, Calif., a former Ralphs store director; Kelly Clark, 40, of Carmel, Ind., a former Ralphs store director; and current district manager Allen Moorman, 43, of Yorba Linda -- on charges that they lied to investigators.”

    KC's View:
    It is amazing that a strike/lockout that took place between October 2003 and February 2004 still is generating indictments, lawsuits and headlines. The Times also notes that a mutual aid pact among the three chains involved in the labor strife – Ralphs, Safeway-owned Vons, and Albertsons (before it was owned by Supervalu) – remains the subject of an antitrust suit brought against the companies by California Attorney General Jerry Brown.

    It is interesting to ponder the broader philosophical issues that these indictments raise – because the government is saying clearly that the “I was only taking orders” defense doesn’t fly … that people, and not just companies, have to take responsibility for their actions. Seventy million dollars, apparently, wasn’t enough to make this case go away.

    Published on: September 22, 2008

    The Boston Globe reports this morning that the New England Patriots has introduced a personalized canvas shopping bag to be used in its memorabilia and gear shops.

    “For months, executives worked on the bag's details - selecting the perfect shade of blue so it would resemble an authentic Patriots jersey, picking the proper red cord handles, and figuring out a way to print customers' last names on cards that could be attached to the bags,” the Globe writes, noting that this is in synch with the national trend toward non-disposable bags. “Over the past two years, a growing number of merchants have increased their investment in shopping bags, selecting heavier, more durable materials, handles made of silk, cord, and plastic, and designs featuring embossed or stamped foil accents. Something originally intended to hold products has become a product itself.”

    Brian Bilello, strategic initiatives and retail operations director for Kraft Sports Group, which owns the Patriots, tells the Globe: “We spent more time designing this bag than we spent designing the items we will sell to put in it.”

    The Globe reports that the Patriots are joining a long line of companies looking to use these canvas bags to reinforce their brand identities, ranging from almost every supermarket chain in the country to high-end retailers such as Saks Fifth Avenue and Ralph Lauren.
    KC's View:
    Having been creamed by the Miami Dolphins yesterday, it probably is cold comfort to the Patriots to get getting kudos for their shopping bags.

    But the bigger point is a good one – that there are a lot of ways to build a brand, and that shopping bags are becoming an important facet of how to do so for a lot of companies.

    BTW…thanks for all the notes last week about the new MorningNewsBeat canvas shopping bags that are being designed and manufactured (in India, not China) even as we speak. Not sure if we’ll be selling them or giving them away … stay tuned!

    Published on: September 22, 2008

    • In the UK, the Sunday Telegraph reports that Britain’s Office of Fair Trading (OFT) will investigate Tesco’s use of a local supermarket retailer’s name to “front” a planning application for a major retail development. It was not mentioned in the application that Tesco had acquired the independent, Brian Fords, a year before.

    The OFT reportedly will probe not just whether Tesco was trying to do an end run around local regulators by using the smaller retailer’s name, but also whether the acquisition created a local monopoly.

    KC's View:

    Published on: September 22, 2008

    Forbes reports that Krispy Kreme is looking to a number of initiatives as it tries to recapture past magic, including expanding overseas (with 58 stores outside the US opened since January) and opening smaller stores in the US that are less capital-intensive than the old format that allowed people to watch the doughnuts being made.

    In addition, as previously reported, Krispy Kreme is testing the sale of soft-serve ice cream that it has dubbed “Kool Kreme.” The ice cream is only available in select markets, and goes on the market even as Baskin-Robbins has decided to get into the soft-serve ice cream business.

    KC's View:
    Krispy Kreme’s biggest problem is a devolving brand equity that has been fueled by changing dietary priorities as well as financial troubles and the perception that its products are not as good as they used to be.

    Hate to be pessimist here, but I’m not sure that ice cream solves this problem. In addition, one of the company’s differential advantages was the ability to watch the doughnuts being made…so eliminating that component in some new stores also may not be the kind of change that the company needs.

    Published on: September 22, 2008

    • The Irish Times reports that the union representing employees of Superquinn has written a letter to management “seeking assurances on job security amid speculation the supermarket chain is to be sold.”

    Superquinn CEO Simon Burke has conceded that he has been contacted by companies interested in acquiring the chain and that conversations will be ongoing, though he also has maintained that he’s not interested in selling the company.

    • The Los Angeles Times reports that MillerCoors has backtracked from a previous position and has decided to delay the launch of its new Sparks Red caffeine-infused alcoholic energy drink. Attorneys General from 25 states had asked the company to abandon plans for the product rollout, saying that it is a “recipe for disaster" because “adding caffeine to alcoholic beverages reduces drinkers' sense of intoxication.”

    MillerCoors had said it plans to go ahead with an October 1 rollout of the drink. The attorneys general for the 25 states have hinted that they could file a lawsuit to prevent the release of Sparks Red.

    • Published reports say that legislators in Westchester County, New York, are considering menu-labeling rules that would require chains with 10 stores or more to post calorie information on their menus or menu boards. The rules would be similar to those already implemented in New York City, which lies just southwest of Westchester.

    KC's View:

    Published on: September 22, 2008

    There was some discussion on MNB last week about the value of irradiation, the off-putting nature of its name, and how to best communicate the value of irradiation to consumers.

    One MNB user wrote in to suggest that the best model for how to talk irradiation comes from the wonderful Mary Ellen Burris of Wegmans, who writes a regular column for the chain’s website. Here’s what she has to say about irradiation:

    “Think of irradiated fresh ground beef as insurance against that bad bug E.coli O157:H7. Assuming you don’t cross contaminate the beef after you open up the package, you’re assured of a safe burger, cooked any way you like it. That’s because we’ve added the food safety benefit of the FDA and USDA-approved irradiation process. And good news: the price is only 10-cents more per pound than our small pack non-irradiated beef. Available in both 80% and 90% leanness, the beef is in a one pound roll, easy to subdivide for burgers.

    “Our irradiation process uses concentrated beams of electrical energy at a level to reduce bacteria that may be in the meat. The packaged beef passes through these beams and comes out the other side as a safer product. It’s then delivered fresh to our door. As a reminder, there’s no radioactivity…not in the process, the beef, or in our stores.

    “Our shoppers tell us that in addition to food safety, they like this product because the airtight roll gives extra days of freshness in your refrigerator. Upon opening, the meat appears naturally darker in color, but oxygen in the air changes the meat to the normal cherry red you expect. This color has nothing to do with irradiation…it is merely a result of the protective packaging. There are ‘use or freeze by’ dates on each roll.

    “We are committed to finding the safest ways to bring you the world’s best foods. If you’re not buying irradiated ground beef, be sure to grill your burgers for safety’s sake to 160 degrees…color is no indication of doneness.”

    KC's View:
    That’s the way to talk about irradiation.

    Published on: September 22, 2008

    • Golub Corporation/Price Chopper Supermarkets announced that Janice Brown, a store manager in the company’s Middletown, NY, store, has been promoted to the position of Zone Director reporting directly to Jody Plonski, Regional Vice President.
    KC's View:

    Published on: September 22, 2008

    MNB noted last week that Walmart has been extraordinarily consistent and progressive in its approach to environmental issues, which led one MNB user to write:

    You are absolutely correct about Walmart beating the environmental drum loudly and often. However, as appreciative as I am about those efforts…when I think of Walmart, I think of all the sweatshops in China making all the cheap stuff Walmart puts on their shelves, and all the small American companies that have jeopardized their survival so they could meet Walmart’s price points, and the Walmart employees that are uninsured or underinsured that need public assistance to make it through a medical issue. The new premium; the ability of a brand to transcend the value of a product, and communicate the values of a company. These are my perceived values of this company, I could be wrong.

    Life is complicated, and few companies are perfect. Point taken.




    On the subject of Tesco facing a unionization effort in its US Fresh & Easy stores, where it has a choice of either recognizing the union or forcing a secret ballot, MNB user Mike Griswold wrote:

    Depending on Tesco’s passion for union-free, let’s not discount option 3, which is closing the store.

    That doesn’t seem likely. But you never know.

    One MNB user wrote:

    From one who has had to deal with Unions for years, I hope Tesco brought shovels with them. As they will need them do dig in for a long fight. Ask Wal-Mart, unions are like bit bulls, once they get their teeth in you, good luck. Not sure Tesco has the money, time or talent to fight this one…




    On the subject of Procter & Gamble coming up with a new coffee roasting process for its Folgers brand that will allow it to compete more effectively with the likes of Starbucks and Dunkin’ Donuts – even though it remains the top-selling packaged coffee in the US, one MNB user wrote:

    As you so often say…If you don’t manage your brand…your competitor will!




    Chiming in on the discussion of SAGA stores (Starbucks, Apple, Google, Amazon) that come to have greater meaning to shoppers than most retailers, MNB user Tim O’Connor wrote:

    It’s great that we can all identify SAGA retailers and what they do right after the fact. (Good write up, BTW.)

    The major retailers are learning from SAGA and co-opting their strategies and capabilities with varying degrees of success as is the natural competitive process.

    The real question is what are the strategies for SAGA Companies to regenerate or for the next SAGA company to come forward.

    The sooner we see it the more fun and more dynamic this industry will be.


    Becoming a SAGA company, as hard as it is, may not be as difficult as remaining one and maintaining that kind of culture as an organization evolves and grows.




    I made a joke last week, wondering if as a result of the government takeover of AIG all taxpayers will start getting proxy statements in the mail. Which led one MNB user to write:

    So far in recent history, government takeovers/assistance of/to industries seem to be a pretty good investment. The Chrysler bailout ended up with the loans paid off early and a stronger Chrysler. The takeover and consolidation of bankrupt northeast railroads in 1975/6 to make Conrail ended up with the company becoming one of the most profitable railroads and sold off for a good profit. Not bad for us taxpayers in the long run.

    I know, this screams of Socialism. I guess even Republicans are Socialists when the issue warrants.




    I used the phrase “I’ve said it before and I’ll say it again” last week, which led one MNB user to caution:

    And again . . . and again . . . and again. At this point, you're either preaching to the converted or wasting your breath.

    Maybe.

    The thing is, MorningNewsBeat gets 100 new subscribers each week...so I hope I’m doing neither.




    And finally, in “OffBeat” on Friday I mentioned that Michael Sansolo and I would be attending the second-to-last Mets game at Shea Stadium next Saturday afternoon…which led to a fast email from the aforementioned Sansolo:

    NOOOOOO!

    We are going to the second to last REGULAR SEASON game. All we need now is the MNB Jinx!


    Not sure if I have that kind of juice.

    But point taken.

    Though, having watched the Mets drop two out of three to the Braves this weekend, next Saturday has the potential for being a very depressing afternoon.

    Good thing they serve beer.

    KC's View:

    Published on: September 22, 2008

    In Week Three of National Football League action…

    Kansas City 14
    Atlanta 38

    Cincinnati 23
    NY Giants 26

    Houston 12
    Tennessee 31

    Arizona 17
    Washington 24

    Oakland 23
    Buffalo 24

    Miami 38
    New England 13

    Tampa Bay 27
    Chicago 24

    Carolina 10
    Minnesota 20

    New Orleans 32
    Denver 34

    St. Louis 13
    Seattle 37

    Cleveland 10
    Baltimore 28

    Detroit 13
    San Francisco 31

    Pittsburgh 6
    Philadelphia 15

    Jacksonville 23
    Indianapolis 21

    Dallas 27
    Green Bay 16

    KC's View: