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    Published on: October 14, 2008

    by Michael Sansolo

    If you are anything like me, you spent most of the last week consumed by a single news story. Of course, I mean the incredibly close pass the Cassini spacecraft is making by the moons of Saturn. What could be more compelling?

    Wait. Maybe I got that wrong. Perhaps you missed the space news because you were reading about OJ’s trial, Britney Spears’ comeback or the baseball playoffs.

    Whatever it was, the bottom line is that despite the gargantuan nature of the economic news unfolding around us daily, life goes on, the sun rises and sets and other issues still require our attention. Issues like dealing with the environment, addressing health and wellness and the looming tidal wave of challenge in America’s (and your company’s) workforce.

    That last issue may seem a strange one to be on the list, especially in light of the current economic news. With unemployment up and 401ks down (in the toilet, that is), suddenly it’s hard to believe that finding good labor will ever be a problem again. But it will be and sooner than you can imagine.

    Economic cycles come and go without much warning, while demographic issues are much more predictable. There is no changing the simple facts that the Baby Boom generation is aging and the workforce challenge that aging cohort creates could be beyond anything we’ve had before.

    The demographic numbers are simple. The 77 million of us boomers swelled the population like no group before. And even though Generation Y—today’s teens and young adults—are slightly larger in total number, their impact on the workforce remains far lower than that of the Boomers. And therein lies the problem. Boomer retirements can create an unthinkable level of pain.

    There is an easy test you can do within your company. Look at your management team and consider how many Boomers there are in top and middle management positions. The odds are most everyone will be above the age of 45 simply because there are just so many Boomers. Then ask yourself: what happens when they all go? How are you going to replace that enormous layer of leadership and institutional knowledge?

    It’s a problem that goes far beyond your company or even this industry. Already, the military is talking about the looming retirement of boomer officers; airlines talk the same about their corps of pilots. And while today’s economic crisis might get this massive generation to think seriously about delayed retirement, the delay won’t last forever.

    (Because we live transparency here at MorningNewsBeat, it’s important to make clear my conflict of interest on this subject. I remain a consultant for FMI on the new Future Connect conference planned for May 2009 and aimed at the very issue of developing the next generation of leadership. You can get details about the meeting at ww.fmi.org)

    The simple truth of this demographic tidal wave is that if companies don’t start building skills in the next generation the tidal wave will bury us. As it is, the supermarket industry doesn’t have the greatest reputation as an employer, so the task is doubly hard.

    Then again, opportunity may exist in all these dark clouds. Tough economic times and consumers facing the need to cut back on spending tend to focus everyone on the basic needs of families. You can put off buying the next iPod or Wii (perish the thought), but you can’t put off buying food.

    That also means that the emerging generation might go looking for jobs in industries with some stability. The challenge the supermarket industry faces is whether we can change our ways to match the needs of this new generation so that we attract rather than repulse the good new talent.

    Better start soon!

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

    KC's View:

    Published on: October 14, 2008

    Interesting piece in BrandWeek about how, while the current economic downturn is bad for a lot of people and companies, some are prospering – like those brands that provide people with things that they eat, drink, smoke or wash yourself with. At least, that’s the opinion expressed by Marc Babej, partner at the New York-based strategy firm called Reason.

    Gary Stibel, CEO of New England Consulting Group, suggests that it is private label that is "positioned to move and grow … Kroger and CVS are two examples of brands that are doing a great job of promoting their own labels."

    And, “production of snack foods, tortillas and confectionary products are expected to grow next year, per industry research firm IBISWorld, Los Angeles,” BrandWeek writes, continuing, “Then there's beer. It seems only logical that watching the Dow plummet into the abyss would drive some to drink. The U.S. beer industry is expected to post its second consecutive year of case sales gains, per the Beverage Information Group's 2008 Beer Handbook. Wine and spirits are also expected to continue to grow though consumers may be less likely to trade up as had been the trend.”
    KC's View:
    I think it is foolish at this moment to assume that any brand is “safe.” Categories may be safe, in the sense that people do have to eat. But that doesn’t mean that broader events, or the introduction of a new player (like a Walmart private label) can’t or won’t throw a category into turmoil.

    Published on: October 14, 2008

    The Wall Street Journal suggests in a column that Internet shopping may play an even bigger role in consumers’ lives this holiday season than in the past, as they use their computers to search for better deals on a wide variety of items – hoping that despite the economic downturn, they can get more for their money during the end-of-year shopping rush.

    Suggestions made by the Journal:

    • Take advantage of the moment right now to polish your website – looking for things that will increase its “stickiness” and build sales. In some cases it might be improved graphics and expanded selection; in other cases it will be a free shipping offer. But now is the time to start figuring that out – and to determine how you are going to track how site visitors are going to respond to the changes.

    • Figure out how to better use search engines such as Google and Yahoo to direct people to your site.

    • Work email. Hard. The Journal writes, “Lots of companies send out regular messages to customers who sign up for email lists, giving them special offers and letting them know about new products or providing other information. It's important for businesses to keep up that contact during the holidays.” Or, you can ask your customers for suggestions about items or services they’d like to see in the store, creating a greater feeling of community and transparency.

    • Develop strategies hat will allow you to tap into social networking sites, described as “the hottest trend on the Web … services that allow people to connect with friends, family and colleagues, as well as interact with people around common interests. Social sites could prove crucial to marketers around holiday time, since shoppers often turn to people they know for help with making gift decisions.”

    KC's View:
    This last strategy is particularly interesting, since a retailer wrote to MNB just a few days ago to say that they were doing precisely this – and using services like Twitter to communicate with shoppers and even watch and learn as people talk about their store.

    I’ll be honest here. I’m not entirely comfortable with all the social networking stuff…maybe because I’m luck enough to be part of the vibrant and engaged MorningNewsBeat community. But I also know I have to learn…

    So, I’ve gotten online at Twitter.com and am trying to develop a dialog there. Right now, it is all monolog … but that’s because I didn’t give Twitter access to my address book. That would have opened up about 20,000+ of you to emails from them, and that wouldn’t have been fair or smart of me.

    But I’m telling you now. So if you Twitter, or want to, come on and join the party. We can figure this all out together.

    Published on: October 14, 2008

    The New York Times this morning reports on one positive trend to emerge from the economic uncertainty of the moment: “Home economics, that lost art in which generations of students learned to keep a household going on a tight budget, is making a comeback. Only this time, lessons in pinching pennies are being taught not in the nation’s classrooms but in its stores.

    “While it might seem counterintuitive for stores to teach shoppers to cut their spending, several chains have concluded that providing such knowledge can spur loyalty and keep customers from trading down to cheaper competitors.”

    Some examples cited by the Times:

    • “Stop & Shop grocery chain is offering ‘affordable food summits’ where consumers are taught how to lower their grocery bills.”

    • “Walmart hired a ‘family financial expert’ who has used online chats to teach several thousand shoppers how to save money for college, whittle away debt and sell a house.”

    • Hy-Vee “offers ways to feed a family of four for $8 or less. To make pork chop dinner, Hy-Vee recommends four pork chops, one package of apple sauce, some frozen vegetables and ‘Hy-Vee 5 cheese Texas toast.’ Total cost: less than $2 a person.”

    KC's View:
    Customer dynamics are changing in fundamental ways. Retailers need to get in line with these shifts and cater to these shoppers in new ways, or risk irrelevance.

    Published on: October 14, 2008

    The Seattle Post-Intelligencer reports that restaurant chain Applebee’s is being sued by a woman claiming that its menus are understating the calorie and fat counts of various items said to be suitable for people on Weight Watchers - sometimes by as much as half.

    According to the paper, the litigant is looking for the suit to achieve class action status.

    Applebee’s management reportedly has not replied to the charges, either in court or the court of public opinion. The Post-Intelligencer notes that similar suits have been filed against the chain in other states, including Kansas.
    KC's View:
    An MNB user directed my attention to this story and noted correctly that he had predicted weeks ago that it would be a short leap from legislation requiring calorie and fat counts to be posted to the filing of litigation by some consumer.

    He’s right, but that doesn’t mean that the woman is wrong. And even if she is a scheming troublemaker represented by an ambulance chasing shyster, that doesn’t mean that transparency is a bad idea.

    The unhappy fact of living in 21st century America is that we are far too litigious a society. But it is an equally unhappy fact that sometimes the people filing lawsuits have just cause, and that the defendants are, in fact wrong. Sorry to say so, but there it is.

    Yes, it would be better if companies would be transparent about things like calorie and fat count, and if legislation was not needed. Scandalous as it may be, though, I will not presume that either side is right or wrong. Let’s see how the case turns out.

    And yes, I know our system says that one is innocent until proven guilty. But I’m not a juror in the case. Just a cynical pundit.

    I’ve lived too long to have blind faith in anyone. Or anything.

    Published on: October 14, 2008

    USA Today this morning carries a story saying that three Attorneys General – from Connecticut, Delaware and New Jersey – have sent letters to 11 companies asking them not to use the chemical bisphenol A (BPA) in their manufacturing of baby bottles and baby formula containers, saying that the chemical is potentially harmful to infants.

    The moves by the state officials add more voices to the ongoing debate about BPA.

    As previously reported here on MNB, there have been a series of studies linking BPA with health problems that include diabetes and heart disease. However, the US Food and Drug Administration (FDA) has published a draft assessment saying that BPA does not pose a health hazard when people are exposed to small amounts, and that conclusion has been confirmed by European Food Safety Authority (EFSA) Authority, Health Canada, the World Health Organization, Health and Consumer Protection Directorate of the European Commission; the European Chemical Bureau of the European Union; the European Scientific Panel on Food Additives, Flavorings, Processing Aids, and Materials in Contact with Food; and the Japanese National Institute of Advanced Industrial Science and Technology, as well as the Grocery Manufacturers Association (GMA) and the American Chemistry Council.

    However, that hasn’t stopped the Canadian government, Consumers Union (CU), the Consumer Federation of America (CFA) and Walmart from disagreeing with the FDA decision; in Walmart’s case, it is not selling children’s products containing BPA.

    Connecticut Attorney General Richard Blumenthal described the FDA as “asleep at the switch, in fact resistant to respecting the scientific evidence that grave harm can result in use of this product.”

    The FDA has said that it continues to evaluate its draft risk assessment.

    KC's View:
    It isn’t hard to imagine that at some point the FDA is going to change its mind on this issue. Not sure if it will be politics or science that prompts the change, but maybe it doesn’t matter. Not when infant health is involved.

    Published on: October 14, 2008

    • Supervalu announced yesterday that its Albertsons chain of supermarkets is reintroducing an “online shopping program to help shoppers save both money and time -- essential commodities in today's economic environment and time-starved society. By going to ‘http://www.albertsons.com,’ shoppers have the opportunity to create a grocery shopping experience that focuses on three simple things: quality, value and convenience … The program, originally launched in 1999, allows shoppers to select groceries, health and beauty care products, flowers, party supplies and food-related gift items online at http://www.albertsons.com and then have them delivered to either the front door or ready for pick up at a designated store. Albertsons is committed to providing the highest quality and freshest items to its online shoppers, knowing that these will be key to retaining customers.”
    KC's View:

    Published on: October 14, 2008

    Forbes reports that Spartan Stores is acquiring 17-store VG’s Food Centers, a privately held Michigan-based grocery chain. Terms of the deal were not disclosed.

    • The St. Louis Business Journal reports that Schnuck Markets is buying three Illinois grocery stores owned by The Homer Group. According to the story, “the O’Fallon Hart Food & Drug and the Bethalto Park N Shop will operate under the Schnucks banner while The Godfrey Park N Shop will close … This acquisition brings the Schnucks Metro East store total to 14 and company total to 105. Schnucks declined to disclose the financial terms of the deal.”

    • In Missouri, the News Press reports that two Price Chopper stores and one Homeland Foods store in St. Joseph will be converted to the Apple Market banner that, like the other two, is affiliated with Associated Wholesale Grocers.

    The stores have been acquired by two independent retailers, Mike Decker and Todd Euler, who tell the paper that they wanted to be both efficient and streamlined in their approach. However, despite the name change, the stores are not expected to be altered much – Decker and Todd say they plan no significant changes in the SKUs they carry.

    KC's View:

    Published on: October 14, 2008

    • Supervalu Inc. this morning released its second quarter results, reporting net sales of $10.2 billion compared to $10.2 billion last year, and net earnings of $128 million compared to $148 million last year. Second quarter retail food net sales were $8.0 billion, even compared to a year ago, with same-store sales down 1.3 percent.

    • PepsiCo reported that its Q3 net income decreased to $1.58 billion, from $1.74 billion during the same period a year earlier. Sales were up to $11.2 billion, from $10.2 billion a year ago. The company announced that it an efficiency and cost-cutting move, it will eliminate 3,300 jobs during the next three years and close as many as six plants.

    • Johnson & Johnson said that its third quarter profit was up 30 percent to $3.31 billion, from $2.55 billion in the year-ago period. Revenue climbed 6.3 percent, to $15.9 billion from $14.97 billion.

    KC's View:

    Published on: October 14, 2008

    Commenting on a story saying that Walmart was going to ramp up its private label activities, I suggested that there was no reason that the Bentonville Behemoth couldn’t do what companies like Trader Joe’s and Costco have done to great success. Which prompted one MNB user to write:

    I think you hit the nail on the head with the mentions of Trader Joe’s and Costco in your view section…with Walmart coming out with a new smaller format that isn’t branded Walmart, they have another venue for private label that doesn’t conflict with their core strategy. Sam’s Club is another corporate banner that can benefit from increased offerings in PL as well.

    MNB user Bob Vereen wrote:

    If Walmart would check out the Aldi private-brand strategy, it could add value to its low priced national brands--i.e., excellent quality at very attractive prices. I eat cereal every morning, and Aldi's cereal is every bit as good as any of the national brands, and priced from 20 to 30% cheaper, and even 15% cheaper than national brands on sale.

    It is my opinion that Walmart already has one of the world’s great retail brand names – everybody knows exactly what it stands for. If you like what it stands for, there is no reason you wouldn’t at least try certain products bearing that name. They’ll have to be inexpensive compared to national brands, and they have to be of equivalent or better quality.

    But done right, there is no reason this can't be a home run for Walmart.




    Responding to yesterday’s story about Food Lion’s new marketing program called “Dinner For Under $10,” which on a weekly basis will pull together in one place all the ingredients for a single meal – all that sell for under ten bucks, MNB user Sharese S. Alston wrote:

    I think this is a phenomenal idea! I will be honest. I don’t usually shop at Food Lion. In our area, there are only a few and it seems they have trouble competing price-wise with others like Acme and Super Wal-Mart. Most of their items are $.50- $1.00 more, so I don’t usually frequent their shelves. BUT as a single mother, I personally would visit weekly just to get new ideas for reasonable meals. Why not? Even if I don’t purchase and make the meal that night, I think the knowledge would be useful and I could save the idea for future use. Kudos to Food Lion for thinking outside of the box.

    Another MNB user wrote:

    I saw this commercial on TV this weekend, makes me wonder if Food Lion is reacting to KFC, or vise versa?

    THE KFC $10 CHALLENGE (0:30)

    KFC challenges Americans to see if they can create a family meal for less than $10. With Colonel Sanders’ secret herbs and spices, KFC knows families can’t recreate this delicious meal for any price. For busy families on a budget, KFC’s 7-Piece Value Meal is the only value offer that is a real family meal for less than $10 as it includes chicken, a side and biscuits for $9.99.


    Not sure if this is a specific reaction, but at the very least Food Lion has to be applauded for being aggressive about share of stomach. Which as you all know, is a big theme around here…

    Another MNB user chimed in:

    As both a consumer and one who is involved in the industry, I think this is a great idea. Have one designated spot in the store so the consumer knows where to go every week - have all of the items assembled and recipe cards - showing what you need to buy for the recipe and what you should have on hand. To increase loyalty Food Lion could incorporate their weekly specials. Perhaps once a month they could do tastings on the recipes.

    From your lips to Food Lion’s ears…




    We had a story yesterday about how questions are being raised in the Colorado media about a pricing program being used by Nash-Finch at its Avanza store there.

    The deal is this. Nash-Finch advertises item prices, which is also displayed on the shelves, but adds 10 percent to the basket total at checkout. There are signs posted in the store that explain the program, and the 10 percent surcharge is clearly indicated on register receipts, suggesting that this actually lowers prices for shoppers, but local media reports say that at least some customers are complaining that they have been deceived.

    MNB user Al Kober wrote:

    The big question is “What is Cost”? The can be defined by many factors. Costs before rebates, Cost before accruals and the beat goes on….

    And MNB user Tom Thomas wrote:

    Read thru the 9 News article, and also the responses to the 9 questions posed to the Nash Finch representative regarding their pricing structure, and still am not clear: Did Nash-Finch lower prices across the store in conjunction with implementing the 10% surcharge? Shouldn’t this have been one of the 9 questions to clarify the structure, along with a net price comparison against the other markets?

    This is precisely problem. It is not clear. Not transparent. Which is why Nash-Finch is feeling some heat.




    On the subject of retailers starting up their own farms, one MNB user wrote in to say that it actually is an issue with greater implications:

    Food security is a very growing TREND. Search the Internet for Urban Farming, CSA’s, sustainable cooperatives, farmer’s markets…you’ll be surprised…especially Urban Farming. One acre of land is equivalent to a football field (minus the end zones). 20 urban houses, each with a 15’ X 30’ garden is the equivalent of 1/5 an acre – you can grow a lot of vegetables if you coordinate with your neighbors - and - eat fresh and canned fruits and vegetables all year long…




    Finally, commenting on a story about Walmart’s political activities yesterday, I wrote:

    There was news coverage this weekend about how GOP vice presidential candidate and Alaska Governor Sarah Palin went shopping at a West Virginia Walmart, picking up a number of items (like diapers for her infant son) while simultaneously trolling for votes.

    She made the point while shopping that Democratic presidential candidate and Illinois Sen. Barack Obama doesn’t visit and understand places like Walmart and West Virginia. But it may be fair to suggest that Palin doesn’t entirely understand Walmart and some of its priorities – since she walked out of the store carrying products in two enormous plastic bags, not the reusable canvas bags that Walmart sells and that illustrate the company’s environmental agenda.


    Which led MNB user Kevin Tryon to write:

    Your obsession with reusable shopping bags is fogging your view of reality.

    Reusable bags are great for regular shoppers, but stating that Governor Palin “doesn’t entirely understand Walmart and some of its priorities” based on the fact that she walked out the store with two plastic bags is more obtuse than tangential. If Walmart is so hip on reusable bags why do they even offer plastic bags? Are we all supposed to carry around reusable bags when traveling on business just in case we plan on doing a little shopping? Do you?

    Once again, give me a break (or give it a rest).


    I’ll take these in order.

    Yes, I am a little obsessed with replacing plastic and paper bags with reusable canvas sacks. Guilty as charged. And cheerfully so.

    I wasn’t being entirely serious about Palin’s shopping habits, though I do think it is reasonable to suggest that any politician who is getting criticized for her environmental record could have done worse than to use a canvas shopping bag.

    Walmart offers other bags because not everyone has been converted yet. But if you watch the TV ads, that’s what they show…because it is consistent with the chain’s broader environmental priorities.

    Yes, I do carry canvas bags in my car. All the time. As noted above, I’m a little obsessed.

    And I’m afraid I’m unlikely to give it a rest, at least not for very long. Or at least not until I’ve convinced the rest of the world to do things my way.

    I’ll just try not to be too tiresome about it.

    But here’s a deal, Kevin. Just to make it go down a little easier…send me your snail mail address, and I’ll send you a limited edition MorningNewsBeat canvas shopping bag when they become available. Which will be any day now.

    Okay?

    KC's View:

    Published on: October 14, 2008

    • In Monday Night Football action, the Cleveland Browns stunned the previously undefeated New York Giants, beating them 35-14.

    • In the Major League Baseball playoffs, the Tampa Bay Rays smacked around the Boston Red Sox and beat them 9-2, taking a 2-1 lead in the best-of-seven American League Championship series.

    And, the Philadelphia Phillies defeated the Los Angeles Dodgers 7-5 to take a 3-1 lead in the National League Championship Series.

    KC's View:
    Great line yesterday from an MNB user Dan Jones, who complained (jokingly, I think) that while I wrote about baseball and football, I neglected to “mention the NHL’s 80 game pre-season kicked off this weekend.”

    Sorry about that. I guess hockey just isn’t on my radar.

    Though this could change, since my 14-year-old daughter has started attending hockey games. I think, however, that she’s more interested in the hockey players than the game itself. Which is probably an even better reason for me to start paying attention…

    BTW…I’m still rooting for the Dodgers to make it…but if it ends up being the Rays vs. the Phillies, I’m going to betray my National League bias and start rooting for the Rays. Because they are just too great a story not to go all the way.