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    Published on: October 10, 2008

    The Nielsen Company has come out with a new study saying that the upcoming holiday season is not expected to be the most wonderful time of the year – especially if you are a retailer. The study says that “more than one-third (35 percent) of U.S. consumers across all income levels expecting to spend less” during the holidays.

    Getting more specific, the report says that “fourteen percent of consumers expect to spend less for the holidays in grocery stores, while 19 percent expect to spend less in mass merchandisers. Seventeen percent expect to spend less in drug stores and 12 percent expect to spend less in pet stores.”

    In addition, Nielsen “forecasts flat to declining sales across grocery stores, drug stores, mass merchandisers and convenience stores for the holiday season and a 4.7 percent growth in dollar sales, in large part due to higher commodity prices. Nielsen projects unit sales to be flat or down 0.8 percent … Necessities, not the nice-to-haves, will drive strong sales this holiday season.”

    “Clearly, consumers across all income levels have some trepidation about holiday spending,” says Todd Hale, Nielsen’s senior vice president, Consumer & Shopper Insights. “The unstable economic environment is creating a high level of caution among consumers, leading us to conclude that this will be a tough holiday season.”

    KC's View:

    Methinks that Todd Hale has a talent for understatement. The headlines and news coverage suggest that we’re in the middle of a full-blown panic, and that nobody knows where the bottom is.

    A guy I know referred to our current situation as a “Craig’s List” economy – second hand, used products are beginning to look very, very attractive to an expanding segment of the population.

    That said, Hale is right when he also says that “retailers answering consumers’ call for value will capture shoppers’ attention this holiday season. Whether it’s lower prices, instant rebates or free shipping offers, value messages will speak to bargain-seeking consumers in today’s tough economic climate.”

    At the same time, though, retailer should not forget to continue to communicate their core values, not just their value proposition, to shoppers. Because eventually there will be an end to this mess that hopefully won’t involve the apocalypse, and retailers that have been consistent to their own values, and have built market share during the tough times, will be well-positioned for the good times to come.

    Published on: October 10, 2008

    The Times of London reports that Sainsbury has seen a 30 percent increase in the sales of its budget and private label lines, encouraging the retailer to believe that it has successfully blunted new and aggressive competition from discounters Aldi and Lidl.

    CEO Justin King tells the Times that the retailer, faced with a toughening economic environment, has been assiduously working to broaden the choices available to its shoppers, and as a result has seen its private label sales increase to the point where it now accounts for more than half of total store sales.

    Sainsbury has been engaged in a series of budget-minded campaigns including a “switch and save” promotion that specifically was designed to move shoppers from national brands to own-label equivalents, and a campaign featuring the chef Jamie Oliver designed around the theme, “feed your family for a fiver.”

    The Times reports that “the fight for a share of Britain's weekly food shop is growing steadily more competitive. Tesco has already branded itself as ‘Britain's biggest discounter’ and Sainsbury's, perceived as the most upmarket of the ‘big four’ supermarkets, faces competition from Asda - which recently took over Sainsbury's position as the second-largest grocer - and Morrisons. The heavy discounters, such as Aldi, Lidl and Netto, are also expanding their market shares rapidly. Together, they account for about 6 per cent of sales, but are reporting double-digit growth figures.”

    KC's View:
    Conventional wisdom here in the US always has been that private label will never be as successful here as in Europe, but I wonder if perhaps the current economic downturn might be enough to challenge this belief. Especially now that many private label items have improved in quality, and retailers such as Trader Joe’s and Costco have shown how successful a high-quality, well-marketed own label item can be.

    Published on: October 10, 2008

    Interesting story in the San Francisco Chronicle about how the Bi-Rite Market there is taking a fresh approach to the notion of farm-fresh foods.

    “Bi-Rite has long been recognized for its commitment to local, seasonal produce, but it may be the first market to actually grow its own food,” the Chronicle writes. “Though Rainbow Grocery in San Francisco, Monterey Market in Berkeley, Draeger's on the Peninsula, Whole Foods and other Bay Area markets buy some produce directly from farms, (produce manager Simon) Richard and Bi-Rite's owner Sam Mogannam are taking the farm-to-table philosophy a step further, growing their own produce on one-third of an acre in Sonoma … The Bi-Rite Farm is a natural progression for a store that butchers its own hogs and has a 4-year-old rooftop herb garden. The store's produce bins have also been filled with figs and blueberries from Mogannam's parents' Placerville ranch since 2002.”

    "We wanted to get closer to understanding where our food came from," Mogannam tells the paper. "We have developed so many great relationships with farmers, and we wanted to bring that connection to the land closer to the staff, closer to the customers."

    KC's View:
    We’re beginning to see more of this. MNB reported on the Wegmans organic farm not that long ago, and just this week we noted that Stew Leonard’s may start its own farm on Connecticut property that it has been unable to get zoned for a new store. And there probably are plenty of others.

    If customers are increasingly interested in the narrative behind the foods that eat, it will be advantageous in some cases for retailers to actually be part of the narrative.

    Published on: October 10, 2008

    Congratulations are in order for Uwajimaya, which the Seattle Times reports is celebrating its 80th anniversary this week.

    The Times, in a front page story, describes it this way:

    “With 430 employees and annual sales close to $90 million, the Asian grocery and gift store — with stores in Bellevue and Beaverton, Ore. — plans to expand again in the next five years. That's quite a feat for an enterprise that rose from the rubble of wartime internment, prospered at the 1962 World's Fair and risked its future on an ethnic identity before it was chic to do so.

    “From modest origins in the back of a truck in Pierce County, Uwajimaya has achieved prominence as thriving retailer, community anchor and tourist destination — the region's premier Asian supermarket and one of the nation's best. For some, the store founded by Fujimatsu Moriguchi is a portal to fading memories and comforts of the heart; for others, it's a cultural citadel; for others still, a mesmerizing sojourn to worlds beyond.”

    KC's View:
    If you’ve never been to Uwajimaya, next time you are in the Pacific Northwest you should make an effort to go. It is, quite literally, a trip … and a marvel of merchandising and marketing.

    Published on: October 10, 2008

    Business Week reports that the US Environmental Protection Agency (EPA) has settled a dispute with Walmart over alleged violations of the Clean Air Act, which the EPA said Walmart violated by selling "Glow-in-the-Dark Looney String" that contained a banned ozone-depleting substance.

    Walmart will pay $199,000 in fines to settle the case.

    KC's View:

    Published on: October 10, 2008

    • Twenty-store supermarket chain Rosauers announced that it is participating in the ProtectSeals Campaign organized by the Humane Society of the United States. According to the announcement, “In an effort to stop the annual slaughter of baby harp seals off the east coast of Canada, Rosauers Supermarkets has pledged not to sell any Canadian seafood from the seal-hunting provinces in its grocery stores until Canada ends its commercial seal hunt for good.”

    Other participating companies include WinCo Foods, PCC Natural Markets, Whole Foods Markets, Trader Joe's, Jimmy Buffet’s Margaritaville Cafés, Ted Turner’s steakhouse chain - Ted’s Montana Grill, Harris Teeter and Bon Appétit Management Company.

    • The Los Angeles Times reports this morning that a new E. coli outbreak that has sickened 36 people in Michigan has been linked to tainted iceberg lettuce from California. However, the specific cause of the contamination still is unknown, and investigators are working to narrow the options.

    • The Associated Press reports that two former Duane Reade executives, Anthony Cuti and William Tennant, have been charged with securities fraud by the federal government. The US Securities and Exchange Commission (SEC) charges that the two men juggled the books at Duane Reade and “deceived the investing public by providing false and misleading information about Duane Reade’s financial condition while lining their own pockets with millions of dollars in compensation.”

    According to the story, “The charges stem from December 2000 through June 2005, when Mr. Cuti was the company’s chief executive, chairman and president. Mr. Tennant was chief financial officer and senior vice president.”

    • Chick-fil-A has joined the list of fast food chains eliminating the use of trans fats from their cooking processes. There will be just one exception to the rule – the chain’s cheesecake, which reportedly has 0.5 grams of naturally occurring trans-fat.

    KC's View:

    Published on: October 10, 2008

    • BJ’s Wholesale Club reported that its September sales were up 11.8 percent compared to the same month a year ago, on same-store sales that were up 10.4 percent. The company said that its food sales were up about 10 percent, which countered sales of general merchandise that were off three percent.

    • Longs Drug Store reported that its September sales compared to the same month last year were flat at $447 million, with same-store sales down 1.7 percent.

    KC's View:

    Published on: October 10, 2008

    • Family Dollar Stores announced that it has promoted Dorlisa K. Flur, its Senior Vice President – Strategy and Business Development, to be its new Executive Vice President – Strategy and Marketing.

    • InBev SA has announced that when Anheuser Busch’s shareholders approve the $52 billion merger of the two companies, AmBev CEO Luiz Fernando Edmond will be put in charge of North American operations.

    In addition, David A. Peacock, A-B’s current vice president of marketing, will become president of Anheuser-Busch and will manage all U.S. operations of the combined company.

    KC's View:

    Published on: October 10, 2008

    …will return next week.
    KC's View:

    Published on: October 10, 2008

    There was a story from the Associated Press earlier this week that contained paragraphs that deserve a lot of attention, especially from retailers who are responsible for hiring employees and serving customers. Here they are:

    “The current market turmoil adds to an already difficult retirement savings picture for Americans, who are increasingly shouldering the burden of managing and funding their own company-sponsored retirement savings plans as firms eliminate traditional pensions.

    “Even before the recent downturn, older Americans were on track to continue working longer. Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Over the next decade, the number of workers who are 55 and older is expected to increase at more than five times the rate of the overall work force…”

    The good news, I suppose, is that the labor pool may be deeper (if a little older) than expected. The bad news is that nobody may have any money with which to buy anything,

    And just when you think things couldn’t get any crazier…

    The world may be going to hell in a hand basket, but the Association of Lebanese Industrialists has its priorities in order.

    This organization is engaged in an effort to get the European Union to declare that hummus and tabouleh are traditional foods that originated in Lebanon; the lobbying is a result of concerns that Israeli companies are claiming these dishes as their own.

    The owner of a hummus bar in Tel Aviv tells Bloomberg that he has never claimed that hummus was an Israeli dish, just that it has become a staple in the Israeli diet. Besides, he says, he thought hummus came from Egypt.

    Can't we all just get along?

    Yet another story connecting eating behavior to health…

    The BBC reports that a new study says that “eating meat and dairy products may increase the risk of prostate cancer.”

    Meanwhile, there is a new Italian study saying that eating dark chocolate regularly may help lower levels of inflammation, which is strongly associated with heart and blood vessel disease.

    Go figure.

    On behalf of a lot of other people, I’d like to say that while I appreciate the efforts of various scientists to figure out the impact of specific foods on health and longevity, I’m pretty much getting tired of all the information that only seems to lead to one conclusion:

    No matter what we eat, eventually we’re gonna die. And in the end, as we try to choose between the stuff that’s good for us and the stuff that’s not so good, we’re probably going to make some good decisions and some bad decisions, and at least 50 percent of the time it’s going to be accidental.

    So I don’t know about you, but I think I’m just going to try to eat and drink sensibly but adventurously, get as much exercise as I can, and hope that the odds work out in my favor.

    I have to recommend a movie that, quite frankly, isn’t doing that well at the box office but deserves to be a hit. “Ghost Town” is a terrific little comedy featuring one of the funniest men on the planet, Ricky Gervais, as an antisocial dentist living in New York who “dies” for seven minutes while under general anesthesia for a colonoscopy. For reasons never quite explained, he awakens able to see and talk to virtually every ghost living in Manhattan – and isn’t very happy about it, since all the ghosts have specific demands about they people they left behind.

    The biggest demand from a character played by the always watchable Greg Kinnear, who plays a ghost desperate to make sure that his widow (played by the even more watchable Tea Leoni) doesn’t marry a guy he thinks doesn’t deserve her. Kinnear enlists Gervais for his cause, which creates tension, misunderstandings, and even some slapstick humor. But the upshot is a highly entertaining movie with some lovely performances. Go see it. You won’t be sorry. And you’ll laugh a lot.

    One other movie recommendation this week. If you’ve never seen “That Thing You Do,” the Tom Hanks-directed movie about the rise and fall of a sixties rock ‘n roll band, go out and rent it immediately. I hadn’t seen it in a awhile, but bumped into it on cable the other night and couldn’t turn it off. It is pretty much a perfect film – funny, romantic, and capturing very specifically a time in the nation’s cultural history. It also offers some pretty good business lessons…such as, always make sure you have a second act. Because there are few things sadder than a one-hit wonder.

    Could there be any more tone-deaf guys in American business than the clowns at AIG who decided that it made sense to spend more than $400,000 on a junket just days after the US government – and, by extension, the US taxpayers – bailed these bozos out of a disastrous financial situation.

    I don’t care how long the junket had been planned. It was lousy timing, and I, as a taxpayer, am offended.

    Tone deaf. That’s what these AIG guys are. They – and all the other executives who have been bailed out of bad situations by the US government – better figure out that this stuff is unacceptable, and that’s there’s a new sheriff in town.

    That new sheriff, by the way, is you. And me.

    It may just be coincidence, but as I flew around the country this week as the economy seemed to be falling apart, I noticed that planes and airline terminals seemed to be a lot less crowded than they were just a few months ago.

    On the one hand, that’s sort of nice. On the other hand, considering the headlines, it is sort of alarming.

    One quick note on the economy. How many stadiums and arenas do you think will have to be re-named in the coming year because the firms that bought the naming rights have gone out of business because of the financial collapse?

    I’m thinking six. Morgan, my favorite bartender, who works at Etta’s Seafood in Seattle, thinks the over-under is four. But I think he is being overly optimistic.

    In Seattle for a couple of quick meetings this week, I had a chance to grab dinner last night at the one Tom Douglas restaurant I’d never been to – Serious Pie, where I had one of the best pizzas I’ve ever eaten, made with cherry bomb peppers and sweet fennel sausage. The appetizer was really unusual, made with roasted pumpkin, prosciutto and arugula pesto, and was delicious. And the wine was one that the waiter described as a cheap Italian table wine – the 2006 Placido Chianti, which was perfect with the meal.

    Next time you’re in Seattle, Serious Pie is worth of serious consideration.

    BTW…Serious Pie is a small and crowded place with shared tables. To show you how small the world is, I found myself sitting next to a young couple that ended up telling me that she worked her way through school at the Price Chopper in Torrington, Connecticut, and that his father is a longtime Nestle employee in upstate New York.

    Go figure.

    My wine of the week – the 2007 O’Reilly’s Pinot Noir from Oregon. I had the first glass because I couldn’t resist a Pinot Noir with an Irish name. I had the second glass because it was smooth and delicious.

    That’s it for this week. I hope that on Monday, when I turn out my next MNB, the Dow Jones won’t be below 5,000. The way things are going, you never know.


    KC's View:

    Published on: October 10, 2008

    In game one of the best-of-seven National League Championship Series, the Philadelphia Phillies defeated the Los Angeles Dodgers 3-2.
    KC's View: