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    Published on: September 30, 2008

    by Michael Sansolo

    Does anyone out there have the answer to the current financial crisis?

    I thought I’d ask in case someone is sitting there with all the information and just hasn’t acted because no one actually inquired.

    However, I’m betting we won’t get an answer to that question. I’m sure we can easily spark a debate on what caused this mess, how we feel the various politicians are responding and whether we have confidence in the firm of Paulson and Bernanke who now seem to be running the United States. (If indeed it can be said that anyoneis running the country, in the wake of yesterday’s stock market freefall, the failure of Congress to pass the $700 billion bailout bill, and the blame game that everybody seems to be playing at the moment.)

    Here’s the thing: The financial mess is THE issue people are discussing and no one is feeling good. I happened to be in Mexico for two days last week and the US financial crisis was all I heard about there, too. As one businesswoman told me, if the US gets a cold, Mexico gets pneumonia. In the US, the discussion is just as downbeat.

    The reason we need to state the importance of this issue is this: what matters to shoppers must always matter to us. PERIOD.

    Think about it: since the financial crisis became the focal point of the endless news cycle the odds are that most Americans haven’t bought a house, a car or anything else. But they have gone to the supermarket and the questions we must ask is are we in step with the issue on their minds.

    Financial issues and economic upheaval always have impact on the food industry. It might take time, but it always happens. Just think back on the period of generics and barebones warehouse stores during the economic malaise of the 1970s. The growth of services and upscale products were characteristics of the boom times of the 1980s and 1990s. And the emergence of price operators accelerated during the downturn of the late 1980s and the early part of the current decade.

    Economic changes always alter this industry and the companies that thrive during these periods are those that most quickly get in line with these changing shopper realities.

    And today the realities are spinning out of control. Most Americans don’t understand this financial mess and never will, but they are worried. So what will that mean to shopping patterns, the mix of products in the basket and the emphasis on price? We’re already seeing evidence of change in many ways, but the evidence is all about reaction. None of it is about anyone leading.

    Simply put, we are facing a new reality. And a new reality requires new discussions.

    So while you may not have the answer, you have questions you must consider on how your company will address this issue with shoppers and what it will mean to your financials, your associates and your messages. We need to think about how to align with these growing concerns and how to demonstrate alignment with the shifting values consumers are likely to have.

    There are places to start. Talk to your shoppers and express your shared concerns. Remind them of all the money-saving devices in the store, from the range of products, to sales, coupons and more. Educate them on the steps you take to hold down costs even as commodity prices rise. And even talk with them about the economic benefits of home meals because, after all, there is opportunity in this. Have the same discussions with employees because they share the fears, too, and they will be the front-line eyes and ears through this mess.

    This is not the usual economic situation either. It is already hitting affluent neighborhoods as well as poor ones. It’s impacting retirees and those just starting careers. Anyone who owns stock, a 401k, a mortgage, a student loan or even a bad credit card bill is worrying. That means, pretty much all your customers.

    So, start talking. And show them once again that what matters to them is what most matters to you. And start now.

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

    KC's View:

    Published on: September 30, 2008

    The Rochester Democrat & Chronicle reports that Wegmans is unveiling a new logo this week, a script rendering of the company name that the chain says is reminiscent of its logo back in the 1930s and 1940s.

    Company president Colleen Wegman tells the paper that the new logo is “welcoming because it is more like a family signature … When we looked back at some of our earliest logos, they conveyed the warmth and personal attention to detail that we hope reflect our brand. The family culture in our company continues to grow.”

    CEO Danny Wegman told company employees in an email message that the new logo “is both a reflection of our past and a vision of our future.”

    In another story, Channel 13 - WHAM News has an interview with Danny Wegman on its website that address the question of reusable canvas bags:

    "I think it would be great not to have plastic bags,” Wegman says. “The question is, what do you have? People would have to remember to bring their own bags. I don’t think paper is a better alternative. We want to get rid of all bags you throw away. I think that’s the idea.

    “We would love for that to happen, however that takes place. It could take place through legislation. It could take place through a very high tax on bags that’s taken place in Ireland. They don’t use them anymore, so it worked. I see a day when there’s an electronic code on products, so you don’t have to go through checkout at all. That would make it a lot simpler not to use bags.”

    And, NamNews reports that Wegmans increasingly is positioning itself as a one-stop shopping experience, using as its catch-phrase: “Think Wegmans.”

    KC's View:
    It always seems to me that as food retailers think about strategies and tactics, they ought to look at a sign on their walls or a bracelet on their wrists that would say, quite simply: WWWD?

    What this stands for, obviously, is What Would Wegmans Do? Because the company’s instincts always seem to be pretty much right-on…

    Published on: September 30, 2008

    In Minnesota, the Pioneer Press reports that Kowalski’s, the up-market grocery chain, “has found its customers are coming in more often and choosing fresh produce and prepared foods from its delis, defying a national trend line that shows shoppers' cost-consciousness extending to gas spent on making more numerous trips.” In fact, the story says that Kowalski’s has begun redesigning stores to cater to this trend.

    “Hitting the niche hard is key to nailing down market share in an increasingly competitive Twin Cities market, which has seen expansion from players ranging from no-frills Aldi and cheap chic Trader Joe's to SuperTarget, Wal-Mart Supercenters and Costco,” the Pioneer Press writes, noting that Lunds and Byerly’s also “have beefed up takeout options in recent months for convenience-hungry customers though most of their shoppers are making fewer trips.”

    The Pioneer Press writes, “What's fueling the trend toward frequent grocery shopping for some is a combination of busy lifestyles and an increasing interest in eating well and focusing on fresh fruits and vegetables. A shopper might hurry in for adobo chicken or other takeout options in the deli on weeknights and spend more time selecting greens, bread and cheeses on days when there's more time for cooking. Some might only occasionally shop for larger quantities to stock the pantry.”

    KC's View:
    The key here is that companies like Kowalski’s, Lunds and Byerly’s are all working – successfully – to communicate to shoppers the value of their offerings in the face of toughening competition and a worsening economy. Now, the events of this week may make things harder…but for the moment, at least, the strategy is working.

    Again, despite the current environment, stores need to communicate both value and values, because both are important to shoppers.

    Published on: September 30, 2008

    The Wall Street Journal reports this morning that an increase in the number of at-home cooking enthusiasts “has prompted a flurry of magazines and Web sites devoted to cooking, recipe swapping and epicurean lifestyles. There will be 336 such magazines published this year, nearly a third more than in 2003, according to the National Directory of Magazines. Many of those titles have shown brisk circulation growth.”

    They are about to get some company. Hearst is getting ready to launch a new Food Network Magazine, published in concert with the popular cable television channel, and Rodale is getting ready to add a new title called Cook!.

    While at-home cooking may be on the increase, the Journal notes that the same tough economic circumstances prompting this shift makes it tough to launch a new magazine…but that “many publishers believe that as long as a new title has a distinctive point of view, there is enough consumer interest and ad dollars to go around.”

    KC's View:
    It is in food retailers’ best interests to make these titles successful. They ought to be going to the pages of these magazines and developing displays and promotions keyed to the recipe and menu suggestions made therein.

    And retailers ought not to be worried about milking this strategy for promotional dollars and considerations. They ought to do it because it is in consumers’ best interests, and because it will generate sales.

    Published on: September 30, 2008

    After years of delayed implementation, Country of Origin Labeling (COOL) regulations – covering beef, lamb, pork, fish, perishable agricultural commodities, and peanuts, and recently expanded to include chicken, goat meat, ginseng, pecans and macadamia nuts – go into effect today.

    Published reports say that program implementation is the responsibility of the US Department of Agriculture (USDA) Agricultural Marketing Service and that the first six months will be dedicated to education of both retailers and consumers about what the regulations actually mandate.

    KC's View:

    Published on: September 30, 2008

    • The New York Times this morning reports that Walmart has signed an exclusive deal with MTV that will result in the creation of an AC/DC version of the popular Rock Band video game that will only be sold in the United States at Walmart, Sam’s Club and the Walmart website.

    While Walmart has forged exclusivity arrangements for albums created by artists such as Garth Brooks and The Eagles, and a video produced by Jimmy Buffett, this is the first exclusive deal made for a video game.

    The game is expected to be available in November 2009.

    KC's View:

    Published on: September 30, 2008

    Kroger and the United Food and Commercial Workers (UFCW) have come to a new agreement covering 1100 unionized employees in central Indiana, reportedly providing employees with “significant wage increases and bonuses … major improvements to health and welfare, with employer contribution increases … (and) increases in paid holidays, vacations, and personal days,” according to a statement released by the UFCW.
    KC's View:

    Published on: September 30, 2008

    Internet Retailer reports that Ahold-owned Peapod has opened a new fulfillment facility on the New Jersey shore, immediately serving 27 zip codes in the counties of Monmouth and Ocean. A further expansion in the region is scheduled for later this fall.

    Peapod offers its online grocery service in the area through the Stop & Shop supermarket chain, also owned by Ahold.

    KC's View:

    Published on: September 30, 2008

    The Wall Street Journal reports this morning that in a movement reshaping the European food retailing business, shoppers there are demanding lower prices and retailers are responding “by allocating less shelf space to international brands and more to store brands, often at half the price. Some retailers are going even further, opening no-frills ‘hard discount’ stores that display products in their cardboard delivery boxes.”

    It is CPG companies, according to the story, that are facing some of the major pressures, since European stores and consumers have long placed a greater emphasis on private label lines…and it is these same own-label products, and some new ones, that are perceived as the best way to offer consumes improved values during a time of economic crisis.

    KC's View:
    While private labels have always been less popular in the US, the current situation could serve as a tipping point, pushing consumers and retailers to consider options they might not have previously taken as seriously. Which means that CPG companies have to figure out how to speak to both retailers and consumers in this new context – not an impossible task, but a new one.

    Published on: September 30, 2008

    The Chicago Tribune reports that InBev shareholders yesterday voted to approve the company’s $52 billion acquisition of American brewing icon Anheuser-Busch, which will create the world’s largest brewing company under the name Anheuser-Busch InBev.

    A-B shareholders still have to approve the sale.

    KC's View:

    Published on: September 30, 2008

    • Tesco plc said yesterday that its first half profit was up 11 percent to the equivalent of $1.88 billion (US) – the smallest increase registered during this period of the year since 2001, but still ahead of where analysts expected it to be. Sales for the period were up 13 percent to the equivalent of $46.4 billion (US).

    Tesco said that it suffered a $108 million (US) loss in its Fresh & Easy division in the western US – but that this loss was anticipated and that it still expects the division to break even by the end of the next fiscal year.

    • Walgreen Co. said yesterday that fourth quarter profit rose nearly 12 percent to $443 million, from $396.5 million during the same period a year ago. Q4 sales rose 8.8 percent to $14.6 billion, with same-store sales up 2.6 percent.

    KC's View:

    Published on: September 30, 2008

    • Tesco’s brand chief, James Condon, reportedly is leaving the company after less than two years in the job. Condon formerly was head of global marketing for Asda’s George clothing brand, but it is unknown what his next stop will be.

    No successor has yet been named for Condon’s job.

    KC's View:

    Published on: September 30, 2008

    On the subject of reusable vs. disposable bags, one MNB user offered the following report:

    So far, I've only seen a few retailers out here in the Northern California area make any effort on encouraging customers to use reusable bags.

    Raley's has placed signs typically on the entrance (or exit... if that makes sense) doors that are rather small which remind customers about the reusable bags.

    I visited a smaller chain store called Holiday in Meadow Vista, CA. This store had signs plastered all over the front of the building reminding customers to bring in their reusable bag. There were other signs near the entrance. Parking is in front of the building, and I saw the signs before getting out of my car. At the checkout point, they had reusable bags hanging on the edge of the check stand that faces the customer as the customer is waiting in line to pay, with signs noting some kind of 5 "green point" incentive tied to their loyalty card with each reusable bag used.

    The final retailer where I have seen signs is Scolaris in Nevada. They have letter sized signs posted on the front doors of their stores with photos of both reusable bags as well as disposable paper bags informing customers of a .05 credit per bag that is reused, "any bag."

    The final store where I saw these signs was WinCo Foods, with large, simple black and white signs stating some kind of credit (either .03 or .05) if you bring bags into the store for re-use.


    On the same subject, MNB user Joe Hermes wrote:

    In our family paper bags were re-used for lining the garden before mulching to prevent weeds coming through or were recycled. Plastic was re-used to pick up dog poop. We used 2 bags at a time, 3 times per week, for a Rhodesian Ridgeback that does her fertilizing duty 5 times a day. And the reusable bags my wife makes me use today have upset the balance of the universe because I have run out of plastic and paper.

    I would ask that the ongoing debate participants remember there are multiple uses for all types of bags besides going in the trash pile as I trudge to the store with my cloth bags.





    Prompted by a PETA recommendation that ice cream be made with human breast milk instead of cow milk – one of the more disgusting suggestions to come out of a group that, IMHO, consistently proves itself to be certifiably nuts – there has been a discussion here on MNB the last few days about how cows are treated.

    Which led MNB user Elizabeth Archerd to write:

    Someone needs to come to the defense of the wonderful organic and pasture-only dairy farmers whose cows have wonderful lives, out on pasture. Our favorite local dairy farm, which bottles their milk right at the farm, leaves the cows on pasture 24/7 except for two 10-minute milking periods per day. They let the new calves stay in the pasture with their mothers, nursing until they switch, quite naturally, to grazing. They have found this results in healthier calves and lower vet bills - more than offsetting the loss of milk for a few weeks.

    People should differentiate between practices. Not all dairy cows lead horrid lives!


    But another MNB user wrote:

    PETA was obviously just making a point… if the idea of consuming milk from your own species grosses you out, why would you drink it from a hairy stinking cow? No offense to cows, but I don’t want to eat anything that comes from or out of their bodies.

    We’ll have to agree to disagree on this one.

    Another MNB user wrote:

    People really need to learn more about things before they take such a huge stand against something. Too many times people base their opinions on partial facts or PR sensationalism of one small factor. No milk that is consumed carries traces of antibiotics! Each load is tested, if antibiotics are found, the farmer that added the milk to the load with the antibiotics has to pay for the whole load. The whole load is then dumped. In the past it is true that it was just diluted to the point of being undetectable.

    This is no longer the case. If a farmer is caught a second time with traces of antibiotics in the milk the farmer is usually dropped by their insurance carrier. This effectively puts them out of business. No farmer wants to be out of business. Most farmers use antibiotics only when absolutely necessary. An animal that is currently being treated with antibiotics never has their milk added to the milk supply that is sold for production.





    Got a bunch of email yesterday about the NY Mets loss to the Florida Marlins on Sunday, which marked the second year in a row that the Mets went from a late season first place position to elimination from the post season playoffs.

    MNB user Jeff Reinartz wrote:

    Hate to say it, KC, but as a Twins fan I have to confess to a warm fuzzy feeling when Braun hit that homer for Milwaukee yesterday. The reason? Santana turned down $20 million a year because he thought he had a better shot at a title with the Mets, and it's the Twins, who nobody gave a chance after his departure, who are still in the hunt. If the White Sox win their next two games the Twins still had a great year.

    The Mets might want to consider adding Sabathia this offseason.


    MNB user Shawn Ravitz wrote:

    I do not understand why everyone is drooling over Santana's performance on Saturday. He is a great pitcher... no doubt. And deserves to be in consideration to win the Cy Young.

    However, the Mets would have won the division if he would have stepped up and demanded the ball 3 months ago. He would have saved himself some wins and the team and city the heartache. They (Santana and the team) were so busy trying to protect him, that they lost sight of why they bought an ace in the first place.

    His performance was no better than any of Sabathia's performances over the past 6 weeks. Guess I had to be there...Anyway, Go Phillies.


    I think it just took time for Santana to realize that the bullpen left something to be desired.

    Here’s my rooting interest for the rest of the post-season, BTW.

    As of now, I’m rooting for the Chicago Cubs.

    If the Cubs fall out of it, I’ll root for the Los Angeles Dodgers.

    But if they’re not in it, I’ll root for the Boston Red Sox … because I just can't root for the Phillies. Sorry. It just hurts too much.)

    And if none of these teams are in it, I’m just going to go to bed early.

    One other note. It is interesting how subjects like this bring out disagreeable streaks in certain people.

    One guy – who, while he said that he is a former MNB reader, apparently couldn’t resist the impulse to taunt me about the Mets’ loss, which is fine – sent in a minor manifesto to suggest (I think) that my interest in professional sports is at odds with my support of reusable canvas bags – and that any real environmentalist would support the closure of all sports arenas and stadiums, which generate so much non-recycled garbage.

    But while he was being sarcastic, I actually think that the basic idea isn’t a bad one – not the closure of such facilities, but that the major sports ought to be adopting better environmental policies. And maybe municipalities that are helping to pay for new stadiums ought to be requiring such initiatives.

    I’d support that.

    KC's View:

    Published on: September 30, 2008

    In Monday Night Football action, the Pittsburgh Steelers defeated the Baltimore Ravens 23-20.

    And, in the second-to-last Major League Baseball regular season game of the year, the Chicago White Sox beat the Detroit Tigers 8-2 in a makeup game, which means that the White Sox now have to play the Minnesota Twins – with whom they are tied for the lead in the American League Central Division - in a one-game playoff tonight.

    KC's View: