retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: October 30, 2008

    Now available on iTunes…

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, brought to you by Webstop, your first stop for retail website design services.

    Consider, if you will, the hamburger.

    Now, what is a hamburger, really? Meat and a bun. Put them together, and you’ve got a hamburger in its most basic form.

    Of course, there are a lot of different variations on the hamburger. We all have our favorites.

    I like mine with lettuce and tomato.
    Heinz 57 and French fried potatoes.
    Big kosher pickle and a cold draft beer.
    Good god almighty, which way do I steer?

    But putting this lyrical approach to the hamburger aside for the moment, I know there are a number of hamburgers that I love.

    For example, when I was a college student in Los Angeles, I used to love middle-of-the-night visits to the Original Tommy’s at the corner of Rampart and Beverly, where the double chili cheeseburgers were so potent that I once dripped a little chili on my car and it ate away the paint. I have to admit, though, that I haven't been there in a long time…I’m not sure what the chili would do to my stomach these days, and so I have to concede that the Tommy’s burgers may be better in memory than in reality.

    In more recent days, there are lots of places that I go to where they serve a great burger. For example, there are two places in Seattle – Etta’s, which one of my sons says makes the best burger he’s ever eaten, and Lola’s, where they make an incredible lamb burger. Closer to home, there’s a place called the River Cat Grill that makes a wonderful pesto burger that I love…served with tomato, mozzarella cheese and, naturally, pesto. And a place called Napa & Company makes a Wagyu burger with gouda cheese that is melt in your mouth good…the only problem being that they’ve priced it beyond the point where I can afford to buy it.

    Michael Sansolo likes to say that his favorite burger is an In ‘n Out, and I have to admit I’ve become a fan, just as I also like Five Guys burgers a lot, especially the grilled onions and the Cajun-style French fries. I recently went to a place called The Counter which is quite good because of the way they customize virtually every component of it…and one my favorite places is Burgerville, which serves its outstanding burgers with Tillamook cheese and amazing berry smoothies.

    I mention these last ones because they all essentially are fast food burgers, and yet they transcend the fried hockey pucks served at some fast food joints…proving that speed and convenience don’t have to mean low quality.

    I fully expect that you have your own list…and if you send me your favorites, not only will I post them on the site, but I’ll do my best to visit them. And, the first 25 people who submit best burger joints that I’ve never heard of will get a free limited edition MorningNewsBeat canvas shopping bag.

    Now, why have I gone through this burger litany? Simple.

    Go back to where I started. Viewed as a commodity, a hamburger is just meat and a bun. But with a little innovation and imagination, a burger becomes something more, something special. It becomes something that gives the place that sells it a differential advantage.

    The same thing goes for many of our stores and many of our products. Even in a time of economic duress, it continues to make sense to apply innovation and imagination to how we create and market them.

    I was talking to a guy from the private label industry this week who told me that his company’s sales were pretty flat, and he said that the problem is that “what we’re selling isn’t anything special.”

    I’m pretty sure he’s right. That is the problem.

    Because in 2008 and beyond, I don't know how you sell products that aren’t special in some way, that don't offer some sort of advantage, whether it be nutritional, environmental, psychological, spiritual, or whatever. Because if your products aren’t special in some way, it is likely that at least one of your competitors will sell products that are.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: October 30, 2008

    Advertising Age reports on a new survey from Information Resources Inc. (IRI) saying that consumers are likely to be extremely careful about their spending during the upcoming end-of-year holiday season; while actually spending is projected to remain roughly the same as last year, the expectation is that consumers will seek out private label items, hunt relentlessly for bargains, and are more likely to use available cash than credit cards.

    Among the revelations in the IRI report:

    • “69% plan to spend about the same on holiday meals this year, nearly twice as many (20%) plan to spend less than more (11%).”

    • A whopping 91% said they would put private-label foods on the family table, and 51% said they would use private-label products whenever possible -- numbers well above the usual 30% to 35% preference for private label in such polls,” according to Thom Blischok, president-innovation and consulting for IRI.

    • 94% of consumers said that spending time with family will be more important than last year, and 80 percent said holiday meals and entertaining would be a higher priority.

    • “69% of shoppers saying they're more likely to make lists of needed items and 58% saying they will use newspaper coupons and seek out more in-store deals compared to last year.”

    • “About 21% of shoppers plan to shop earlier this year -- mainly to find better deals -- compared to 10% who plan to shop later.”

    According to the Ad Age story, “Blischok predicted big-box stores such as Wal-Mart and Costco could be the big winners this year, possibly drawing shoppers from department and specialty stores by convincing consumers they can save enough on food to cross the aisle for gifts.”

    KC's View:
    It is no shock that things are going to be tougher for retailers this year.

    I’m a little surprised that just 10 percent of those surveyed say that they plan to shop later this year, since it would be my expectation that there are going to be a ton of sales and bargains the week before Christmas, especially if things are going as badly as most people think they will. IRI may have a better sense of this than I do. We’ll see.

    But while this may be heresy in some quarters, I think it is entirely possible that a Christmas less focused on gifts and “stuff,” and more focused on family and quality time, could be a good thing. It isn’t a matter so much of reduced expectations as shifted expectations.

    And, by the way, this could be really good for retailers that decide to market their services and products around celebratory themes.

    Published on: October 30, 2008

    The Los Angeles Times reports that an independent panel of scientific advisors has told the US Food and Drug Administration (FDA) that its reasoning was flawed when it issued a provisional ruling that the chemical bisphenol A (BPA), used to make plastic for food packaging, baby bottles and other consumer and medical goods, is safe.

    According to the Times, “The margins of safety defined by FDA as 'adequate' are, in fact, inadequate," the report said. The advisors found that the FDA had not considered all available, credible scientific evidence, and urged the agency to essentially go back to the lab.”

    The FDA has not yet responded to the rebuke.

    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.

    The Grocery Manufacturers Association (GMA) responded to the report by issuing the following statement from GMA Senior Vice President and Chief Science & Regulatory Affairs Officer Robert E. Brackett, Ph.D.:

    “Recently, a subcommittee of the Food and Drug Administration (FDA) Science Board was asked to review the FDA’s safety assessment for BPA. While we are currently evaluating the subcommittee’s report, we are confident that the risk-analysis approach utilized by FDA and a host of regulatory agencies around the world to evaluate the risk associated with BPA exposure is scientifically sound and appropriate … While we appreciate FDA’s process for reviewing the safety of BPA, it is important to note that the subcommittee is an advisory group only, and that its report is the first step in a multi-step review process. That is why we support FDA’s advice to consumers that there is no need to change their purchasing or eating patterns and that food and beverages using packages that contain BPA are safe to consume.

    “We call upon the FDA Science Board to consider the full weight of the evidence and opinions of other regulatory bodies from around the world as it considers the subcommittees report. We look forward to reviewing the committee’s full report and to working with the FDA and other stakeholders to continue to evaluate the safety of BPA.”

    KC's View:
    We’re playing a game of “who do you trust” here.

    Walmart or the FDA?

    The problem for the federal government is that I suspect more people believe in Walmart.

    Published on: October 30, 2008

    The Conference Board said this week that its Consumer Confidence Index was 38 in October – down from 61.4 in September and, in fact, the lowest number recorded by the Index since its inception in 1967.
    KC's View:
    Holy s…..!

    Published on: October 30, 2008

    The Express News reports that HE Butt has opened a new H-E-B Plus store in San Antonio, Texas, the largest in the company, “a combination food and general merchandise emporium that seems to leave no shopper unforgotten. It offers everything from fresh and organic foods to furniture, prepared meals for harried shoppers and the largest selection of baby items in any H-E-B.

    “And the $40 million store also includes elements that seem designed to compete with many rivals, ranging from Wal-Mart and Super Target to Whole Foods and big-box linen-and-bath retailers.”

    KC's View:
    I have nothing but the utmost respect for the folks at HEB, but at the very least they have to be a little concerned about whether this store is properly positioned to compete in a down economy. I have no doubt that the marketing and merchandising folks are taking these concerns into account…but it is a tough time.

    Published on: October 30, 2008

    Reports out of the Netherlands say that public prosecutors there are once again calling for three deposed Ahold executives – including the former CEO Cees van der Hoeven and former CFO Michiel Meurs – to serve jail time because of their roles in the $800 million accounting fraud that roiled the company beginning 2000 and 2002.

    The three executives were given suspended sentences back in 2006, but under Dutch law the prosecution can continue to appeal and seek harsher punishment.

    KC's View:

    Published on: October 30, 2008

    • The Chicago Tribune reports that on Wednesday Walmart “unveiled its new design for remodeled stores — a look that ties each section of the store together with a fresh use of light and color. Gone are the high shelves stuffed with so much it was hard for shoppers to find what they sought. Now, Wal-Mart Stores Inc. is showing softer colors, understated shelving and employing a design intended to keep customers from having to dart all over a tremendous store to gather their purchases … The bright design fits with the company's economic-downturn strategy of offering affordable fun — from DVDs to prepared meals — that families are opting for instead of eating out and going to the movies.”
    KC's View:

    Published on: October 30, 2008

    Crain’s Chicago Business reports that McDonald’s is changing its food packaging so that it emphasizes food, freshness and the company’s “I’m lovin’ it” marketing theme.

    “Nutrition information, pictures of ingredients and ‘I'm lovin' it’ are printed on the sides -- de-emphasizing the tag, which earlier was featured prominently at the top of each package,” Crain’s writes. “To subtly indicate freshness and quality ingredients, the new food bags have pictures of potatoes, lettuce, wheat, eggs and even farm machinery.”

    The new packaging should start showing up this month, and will be available in all 118 countries that McDonald’s serves by 2010.

    KC's View:
    I’m not sure that McDonald’s is ever going to be mistaken for fresh food. But this is a smart approach by a company that always has been a canny marketer.

    Published on: October 30, 2008

    Barrons has a story saying that some supermarkets and drugstores may be impacted by the credit crisis: “Drugstores and supermarkets are defensive, but many companies carry a fair amount of leverage and some are more susceptible to a weak consumer than others. Tight credit markets could likely force each company to rethink their capital structure, use of free cash flow, and possible even capital-expenditure plans.

    “Liquidity is a bigger issue than covenants. An analysis of our retailers indicates that covenant constraints are unlikely to be a large concern over the next year given the defensive nature of the group and current flexibility. The highest-risk companies in our space Supervalu and Whole Foods Market would still need a 19% to 41% drop in earnings before interest, taxes, depreciation and amortization to violate a covenant.”

    Marketing Daily reports on the continuing trend toward “functional foods,” especially in thee weight loss segment, noting that food and beverage companies - including Kellogg’s, Unilever, Coca-Cola, Nestle, and PepsiCo - are looking to address consumers’ desire for products that will solve various health problems and promise specific benefits.

    • The Wall Street Journal reports that Starbucks CEO Howard Schultz told journalists this week that the company is seeing improvement in its same-store sales figures, and believes that the iconic coffee company may have hit bottom in September.

    The Journal also notes that Starbucks “has formed a partnership with Product (Red), an effort co-founded by U2 frontman Bono to fight AIDS in Africa. During the holiday season, Starbucks plans to donate a nickel to the organization whenever customers buy one of three Starbucks holiday drinks. The company expects that will generate millions of dollars for the organization, said Michelle Gass, a Starbucks senior vice president.

    KC's View:

    Published on: October 30, 2008

    • Procter & Gamble announced that its CFO, Clayton C. Daley Jr. will leave his post on Jan. 1 and retire next September. He will be succeeded by Jon R. Moeller, currently P&G’s vice president and treasurer.

    KC's View:

    Published on: October 30, 2008

    • Kraft Foods reported that its third quarter net profit rose to $1.4 billion, from $596 million a year earlier. Sales rose 19.4 percent to $10.46 billion.

    • Procter & Gamble reports that its first quarter earnings were $3.35 billion, up nine percent from $3.08 billion earned during the same period a year ago. Q1 sales also rose nine percent to $22 billion, and organic sales, which exclude acquisitions, divestitures and foreign exchange, were up five percent in the period.

    • Unilever said that its third quarter net profit was $2.12 billion, up 63 percent from the same period a year ago, on sales that were up two percent to $13.5 billion.

    KC's View:

    Published on: October 30, 2008

    …will return.
    KC's View:

    Published on: October 30, 2008

    The 2008 Major League Baseball season has finally concluded, with a game five that started on Monday night, was suspended because of rain, and finally picked up last night and resulted with the Philadelphia Phillies defeating the Tampa Bay Rays 4-3, and taking the best-of-seven series 4-1.
    KC's View:
    Congratulations to the Phillies and their fans, who have been waiting a long time.

    My record was absolutely perfect during baseball’s postseason. Since the Mets were out of it, I rooted for the Cubs. And then the Dodgers. And then the Red Sox. And, finally, the Rays.

    The lesson is clear.

    Never take me to Vegas.

    Published on: October 30, 2008

    Terrific little piece in the Boston Globe about a new convenience-driven service being offered around the country – drive-through flu shots.

    It seems that at hospitals, clinics, schools and, next week, at voting locations, people are able to drive up, get a quick flu shot without getting out of their cars, and then depart, better prepared to face the diseases that the cold weather inevitably brings.

    “Forget Fast Food America,” the Globe writes. “Try Drive-Through America. With a bumper crop of flu vaccine expected this year - more than 140 million doses - and the clock ticking to get it into people before influenza strikes, disease fighters are no longer content to rely on doctors to dispense shots in their offices.”

    For some things, drive-ins are an absolute match made in heaven," Robert J. Thompson, a professor of pop culture at Syracuse University, tells the Globe. "The drive-in fast-food operation was a perfect match. Drive-through surgery? No. Drive-through flu shots? Yes."
    KC's View:
    Nothing to add to this. Just an interesting take on how the world continues to change.