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    Published on: October 3, 2008

    The Financial Times reports this morning that Walmart has opened its first Marketside small store in Mesa, Arizona, a “soft opening” for the 15,000 square foot format that is designed to allow the retailer to enter neighborhoods and communities that until now have been inaccessible or even unfriendly to it. Marketside also is seen as a rejoinder to the expansion efforts of rival retailer Tesco, which has opened more that 70 similarly sized Fresh & Easy Neighborhood Markets in California, Arizona and Nevada.

    As noted by FT, Marketside does not carry the Walmart logo and has a broader national brand presence than Fresh & Easy, though it does carry a selection of private label items, fresh foods and prepared meals that is geared to convenience-oriented shoppers.

    The Mesa store is the first of four slated to be opened in the Phoenix area, with additional openings targeted in Southern California.

    Meanwhile, the Dallas Business Journal reports that Walmart has decided to close one of its Dallas Neighborhood Market stores, which it said has not been performing up to expectations for several years. The retailer said that it is opening a new supercenter three miles from where the Neighborhood Market has been operating, and the new unit makes the older store redundant.

    KC's View:
    There probably isn’t any sort of broader lesson to be drawn from the confluence of these two events, except that it seems likely that Walmart is going to be more aggressive and flexible than ever at creating formats that will be suitable for diverse circumstances. Not only will it be operating supercenters, discount stores, Neighborhood Markets and Marketside stores, but it probably is a fair guess that it has a couple of other formats in the planning stages.

    At some level, as long as Walmart’s various formats are consistent with its message about value and values, it seems likely that we could be seeing a lot of interesting developments coming out of Bentonville.

    Published on: October 3, 2008

    The Economist reports that UK retail leader Tesco is looking into the possibility of expanding into the mortgage business, saying that despite the fact that many banks seem to be in trouble during a time of economic crisis, “mortgages are looking quite attractive as a line of business.”

    The retailer is considering the move into the mortgage business as it prepares to take full control of its Tesco Personal Finance (TPF) business, which until now has been a co-venture with retail bank RBS. TPF current has more than five million customers for what essentially is a savings, credit card and loan business, and unlike in the US – where Walmart has been prohibited by federal regulations from getting into the financial services business – there is no legal impediment to Tesco offering mortgages as well.

    According to the Economist, “Tesco has the freedom to expand into banking, touting its well-known brand, because its main business is thriving, even in tough markets. Global retail sales grew by 14% and profits by 11% compared with the same period last year.”

    KC's View:
    It is somewhat startling that the UK’s Competition Commission continues to raise questions about whether big retailers such as Tesco have too much market share, but there are no apparent obstacles to the company expanding its banking presence.

    That said, I wonder if the US would have the same sorts of financial problems if executives from companies such as Walmart and Tesco had prominent roles in the financial services business. My guess is no, that these executives would be smarter about running the banking biz and would end up offering consumers better prices and better values.

    Published on: October 3, 2008

    In western New York State, the Democrat and Chronicle reports that Wegmans Food Markets is for the first time testing a self-checkout system at its Penfield store. Spokesperson Jo Natale tells the paper that the test will go on for several months and, if successful, the company plans to expand the system to other stores where appropriate.
    KC's View:
    The difference between Wegman and some other retailers, I suspect, is that Wegmans will use self-checkout as a way of catering to customers who want this kind of convenience…but will not use it as a way of simply cutting labor costs. There’s never any lack of staff walking the floors in a Wegmans store, which is the way it should be.

    Published on: October 3, 2008

    Published reports say that Delhaize America has decided to license its Guiding Stars nutritional label concept – which awards one, two or three stars to products that qualify as being good, better or best for you - to manufacturers, schools, hospitals and restaurants. To this point, Guiding Stars has been implemented in close to 1,500 Delhaize-owned supermarkets and has been marketed to other supermarket chains; Delhaize has said that starred items have been seeing sales increases triple those of equivalent non-starred items.
    KC's View:

    Published on: October 3, 2008

    Forbes reports that “the Conference Board reported its Consumer Confidence Index rose unexpectedly to 59.8 in September from an upwardly revised 58.5 level in August … September's jump came on consumers' heightened short-term outlook--presumably due to falling energy and commodity prices - but the reading doesn't capture all of the recent crisis on Wall Street.”
    KC's View:
    This is a useless statistic, in my view, because I have trouble imagining that anybody’s confidence is higher these days than a month ago. (The October numbers are likely to crater.) The only people unaffected, I suspect, are people who don't read newspapers or magazines, don't watch television and don’t have Internet access. In other words, cave dwellers.

    Published on: October 3, 2008

    MarketWatch reports that the American Farm Bureau (AFB) estimates that “a basket of 16 basic food items cost $48.68 over the past three months, up 10.5% from a year ago … The latest survey from the nation's largest farm organization underscores the pressures reverberating throughout the food chain, from the American farm to the executive suites of the largest U.S. packaged-food manufacturers. Besides the elevated costs for basic food ingredients, rising energy prices have boosted processing, hauling, and refrigerating expenses for food makers…”

    • The Irish Times reports that Irish retailer Musgrave has withdrawn its bid to acquire Superquinn from Select Retail Holdings, which itself only acquired the legendary Dublin-based retailer in 2005. However, at least another five other retailers reportedly are interested in acquiring Superquinn, though Select Retail Holdings has maintained that it is not actively seeking to sell the company.

    • Fast feeder Burger King announced yesterday that it is now using trans fat-free cooking oils in all of its US locations. The chain committed to the transition back in 2007, and set the end of 2008 as a goal for completing the move, and actually achieved the goal ahead of schedule.

    KC's View:

    Published on: October 3, 2008

    • New Jersey-based Village Super Market Inc. said that its fourth quarter net income was $6.9 million, up nine percent from the same period a year ago. Q4 sales were $298 million, up 10.7 percent from a year ago, on same-store sales that were up 3.6 percent.

    The company also said that net income for the fiscal year was $22.5 million, up 10 percent from the previous year, on sales of $1.1 billion, up 7.8 percent, on same-store sales that were up 2.5 percent.

    • Walgreen reported that its September sales were $4.85 billion, up 10 percent from $4.4 billion during the same period a year ago, on same-store sales that were up 4.7 percent.

    • Rite Aid said that its September sales decreased 0.8 percent to $1.971 billion compared to $1.986 billion for the same period last year. Same-store sales were up 1.7 percent.

    KC's View:

    Published on: October 3, 2008

    ...will return.
    KC's View:

    Published on: October 3, 2008

    In the National League Division Series, the Philadelphia Phillies defeated the Milwaukee Brewers 5-2 to take a 2-0 lead in the best-of-five series. And the Los Angeles Dodgers beat the Chicago Cubs 10-3 to also take a 2-0 series lead.

    In the American League, the Tampa Bay Rays beat the Chicago White Sox 6-4 in their first game of their divisional series.

    KC's View:

    Published on: October 3, 2008

    There was a story in the Miami Herald this week about three guys down in Florida who have been working for something like three years on a fast food franchise concept called The Cereal Bowl that will serve people, well, bowls of cereal. They’ve got a couple of stores open at this point, with plans to open as many as 25 stores around the country.

    Now my first reaction to the story was that I’d read it before … except that it was about a concept called Cereality that had similar plans and pretty much stalled out. But the Herald notes that the original Cereal Bowl store is in profit after operating for 18 months, which is fueling the expansion plans. So maybe it isn’t the dumbest idea in the world.

    Maybe it is just me, but as much as I like cereal I cannot for the life of me imagine going to such a place – especially when a box of cereal purchased at the supermarket remains a pretty good deal. The only exception would be if I were on the road…in which case a simple bowl of cereal or oatmeal might seem like a pretty attractive option. But the kinds of locations mentioned in the story don't seem like they are geared to travelers, so it is hard to say if the concept is going to be a success.

    Two points, though.

    One is that these guys deserve a lot of credit for being willing to stick with their concept and work it. I admire that. I’m not sure I’d invest money in their operation – at the moment, I’m not sure I’d invest money in anybody’s operation – but I admire their persistence.

    The other point is that this is yet another example of how everybody is looking to eat away at share of stomach, and why supermarkets need to be extremely focused on attracting and maintaining as much of it as possible. Take no prisoners. Play hardball.

    BTW…I did try Starbucks’ new oatmeal the other day while on a business trip and it wasn't bad, though I’m not quite sure what exactly has made it the most popular new food introduction in the company’s history.

    Think what you want about the bailout/rescue bill still struggling to emerge from the Congress, but Jon Stewart had the funniest take on it in what had to be a 10-minute rant on Tuesday night’s “The Daily Show.” And not only was he extremely funny, but he was angry – and gave voice to the frustrations of million of Americans, for and against the legislation, who are exasperated by the goings on in Washington.

    If you want to watch a wonderful television series about food, catch up with “Spain…On The Road Again,” on PBS, featuring Mario Batali and actress Gwyneth Paltrow wandering the backgrounds of Spain eating amazing looking dishes and drinking what appears to be wonderful wine and getting a real sense of the nation’s culture and history. It is beautifully shot, informative on a variety of levels, and the only problem is that I keep wondering how I can get Paltrow to travel with me next time I go on one of my overseas jaunts.

    I spoke admiringly early this week about the three-hit complete game shutout that Johann Santana pitched last weekend for the frustrating New York Mets. Well, yesterday brought the news that not only did he pitch an amazing game, but he did it with a previously undisclosed meniscus tear in his left knee. (The only advantage to the Mets not being in the postseason was that he’s already had surgery, and will be ready for spring training.)

    I am particularly impressed by this because I, too, have a meniscus tear in my left knee…and I know I couldn’t have thrown a three-hit complete game shutout. (Of course, that has more to do with my arm and my age, but let’s not go there.) But I know how painful such a tear is, so my admiration for Santana is even greater than it was.

    (He got his surgery faster than me. My tear was diagnosed about a month ago, and the doctor shut me down from jogging and boxing. But I’m not having surgery until December because of a hectic travel schedule that made an earlier operation almost impossible.)

    Saw “Burn After Reading” last week and really liked this offbeat, off-kilter comedy about personal and professional misbehavior in Washington, DC. It is the kind of movie that you forget about an hour after seeing it, but it moves fast, has bright performances, and is light and enjoyable. Which is more than you can say about a lot of other comedies.

    I have a couple of nice red wines – one from France, the other from California - to recommend this week, both of which seem appropriate to autumn’s cooling temperatures…

    • the Maison Arnoux & Fils Vacqueyras Vieux Clocher Rouge 2004, which is a delicious blend of Grenache, Syrah and Mourvedre, and went great with spicy pasta.

    • the 2006 Francis Coppola Red Label Diamond Collection Zinfandel, which was perfect with steak marinated in olive oil and coated with the excellent Prime Rib Rub sold by Dorothy Lane Markets.

    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    KC's View: