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    Published on: November 3, 2008

    The New York Times reports that the economic downturn is having an impact on the sales of natural and organic products:

    “It turns out that when times are tough, consumers may be less interested in what type of feed a cow ate before it got chopped up for dinner, or whether carrots were grown without chemical fertilizers — particularly if those products cost twice as much as the conventional stuff … The sales volume of organic products, which had been growing at 20 percent a year in recent years, slowed to a much lower growth rate in the last few months, according to the Nielsen Company, a market research firm. For the four-week period that ended Oct. 4, the volume of organic products sold rose just 4 percent compared with the same period a year earlier.”

    And, the Times writes, “If the slowdown continues, it could have broad implications beyond the organic industry, whose success spawned a growing number of products with values-based marketing claims, from fair trade coffee to hormone-free beef to humanely raised chickens. Nearly all of them command a premium price.

    “While a group of core customers considers organic or locally produced products a top priority, the growth of recent years was driven by a far larger group of less committed customers. The weak economy is prompting many of them to choose which marketing claim, if any, is really important to them.”

    KC's View:
    No big surprise here. It would be a much bigger shock if the economy hadn’t any impact at all on sales in this segment.

    That said, I’d pay attention to the point made by both The Hartman Group’s Laurie Demeritt and IRI’s Thom Blishok to the Times - that many customers are not so much dropping their interest in the category as making decision, setting priorities and looking at where tradeoffs are acceptable.

    This is where good, credible information sharing by the retailer can make a huge difference in the customer decision-making process. Rather than not being involved in the process and letting third parties help shape the shopper mindset, retailers should be in the thick of it, embracing the situation and the possibilities that it offers to create dialog and connections between the store and the shopper.

    Published on: November 3, 2008

    Not only is the current economic tumult having an effect on how much people are spending, but also how they are actually spending it.

    Business Week reports that “for consumers reeling from a series of economic body blows, debit cards are increasingly becoming the plastic of choice. Some use the cards, which pull money directly from a bank or other account, as a budgeting tool to limit spending. Others are embracing them out of necessity as banks clamp down on credit. All told, debit purchases are expected to climb 13% in 2008, to $1.2 trillion, according to The Nilson Report, an industry newsletter—compared with a 3% rise, to $1.9 trillion, for credit-card transactions.”

    While debit cards traditionally have been less profitable for banks than their credit card brethren, Business Week> notes that the major debit card companies are working overtime to address that, whether by imposing fee structures that will penalize the consumer and add to the bank’s bottom line, or by creating loyalty programs that they hope will lead to greater usage – even over-usage – that will result in penalties….that will add to the bank’s bottom line.

    KC's View:
    Since we, as taxpayers, are contributing money that is designed to help so many banks avoid bankruptcy and closure, at some point we, as taxpayers, perhaps should pull a Howard Beale and say we’re mad as hell and are not going to take it anymore.

    We own them. At least part of them. And it seems that at some level, we ought to be treated better.

    Published on: November 3, 2008

    Retailers that display Christmas merchandise at a time when kids are more concerned with what they are going to wear for Halloween can be somewhat vexing to some customers. But Wegmans figures that if it explains the rationale, the practice will at least be a little less annoying.

    Channel 13 News in Rochester, NY, reports that “Wegmans says over the years, they’ve received so many complaints from customers about putting out Christmas merchandise so early, that they put up a sign explaining why they do so.

    “The sign says that Wegmans knows some people like to get their holiday shopping in early, and some like to wait until the last minute, so they put the merchandise out around this time of year so people have a choice.” Wegmans also believes that this year will be one during which customers will be grateful for the opportunity to spread out their purchases a bit.

    KC's View:
    It is all about creating a dialog between the retailer and the shopper, something that Wegmans is exceptional at doing at almost every level.

    Published on: November 3, 2008

    A new study by Deloitte LLP entitled “Food and Product Safety and Its Effect on Consumer Buying Habits” suggests that questions about product safety can have a significant impact on consumers’ shopping habits, with 58 percent of those surveyed saying that they altered their decision-making in response to allegations about unsafe products.

    While the survey looked at a number of product categories, including toys and consumer electronics, food was the area where safety questions had the biggest implications – 54 percent of those surveyed said they are more concerned about fresh food safety than they were just 12 months ago.

    The study also says that these are not sort-lived changes – they tend to last or an average of nine months, and increase the probability that the customer will never return to buying that specific item.

    Sixty-five percent of survey respondents said they were worried about the safety of imports, with 73 percent saying they were worried about Chinese exports,

    More than eight out of ten people surveyed said they wanted more safety-related information on food labels, with 67 percent saying they wanted country-of-origin labeling (COOL).

    KC's View:
    This is the case for transparency.

    It seems to me that the people in the industry who fight against COOL run the risk of fighting the last war…that if this many customers indeed are calling for such labels, it is an enormous mistake to fight it. This doesn’t mean accepting whatever regulations the government wants to put into place, though it may be too late to fight this particular battle; industry leaders might have been better off getting ahead of the wave instead of hoping that it wouldn’t catch up with them.

    Published on: November 3, 2008

    The Washington Post reports that Sholom Rubashkin, the former head of a kosher Iowa meatpacking plant, has been arrested on federal conspiracy charges “involving harboring illegal immigrants for financial gain and aiding and abetting document fraud and aggravated identity theft.”

    According to the story, “The Rubashkins and other company officials were charged Sept. 9 with more than 9,000 misdemeanor violations of state child labor laws over an eight-month period ending with the May 12 raid. The charges involved 32 minors, some younger than 16, who allegedly were exposed to dangerous chemicals and were operating meat grinders, circular saws and other heavy machinery.

    “During the raid at the Postville plant, among the country's largest suppliers of kosher meat, agents detained 389 undocumented workers. About 300 have pleaded guilty to federal charges of identity theft. Most of those received five months in prison and were ordered deported.”

    KC's View:

    Published on: November 3, 2008

    The Associated Press reports that some vineyards are switching to wine bottles that are lighter in weight – sometimes as much as 14 percent lighter - hoping that the move will both save on shipping costs as well as be perceived as environmentally friendly because of the glass not being used.

    However, the AP concedes that not everyone is in favor of the move, and that there is some resistance to lighter bottles by traditionalists who feel that heavier bottles impart a stronger sense of quality and tradition.

    KC's View:
    The people resisting the lighter bottles are probably the same stubborn folks who have been fighting the idea of screw top bottles, resisting the inevitable move into the future.

    Oh, wait. I’m one of those stubborn, hard-headed people.

    But I think I have less of an issue with lighter bottles than with screw tops. And, to be grudgingly honest, I’m beginning to be swayed by the high-quality wines that I’ve had from screw top bottles lately.

    Nice to know that an old dog can, indeed, learn new tricks.

    Published on: November 3, 2008

    The Food Marketing Institute (FMI) Board of Directors issued a press release on Friday saying that the board of directors has endorsed the recommendations of the Produce Traceability Initiative (PTI) and its plan to create a standardized system for electronic traceability for produce.

    The PTI Steering Committee is chaired by Cathy Green, COO, Food Lion.

    According to the announcement, “Participants will adopt a standardized system of case bar-coding for all produce sold in the United States to allow product to be quickly and efficiently tracked throughout the distribution chain. This will maximize the effectiveness of the industry’s current traceability procedures, improve internal efficiencies and assist retailers, wholesalers and producers when they need to quickly trace back a product.

    “The program will build on current internal traceability systems by using the existing international standards from GS1, the not-for-profit standards organization. It will also provide the capacity to achieve external traceability by standardizing and incorporating the Global Trade Identification Number (GTIN) and a lot number, which will bring new connectivity between companies across the supply chain.

    This information will be labeled on each case in human-readable form so that it can be read and understood by personnel throughout the supply chain. The machine-readable barcode will also appear, which each member of the supply chain will be able to scan and maintain in their computer systems.”

    KC's View:

    Published on: November 3, 2008

    Crain’s Chicago Business reports that Walmart has doubled its market share in Chicago over the past year, as its big box stores lure in thrift-minded consumers.

    The biggest threat, of course, is to Jewel and Dominick, which, Crain’s notes, both lost high-end customers to Whole Foods before the economic crisis hit, and now are losing low-end shoppers to Walmart.

    KC's View:
    Look for Walmart to build on this advantage with several of its Marketside small format stores, placed strategically around the city to blunt the likelihood or the effectiveness of a long-rumored invasion of the city by Tesco’s Fresh & Easy format.

    Published on: November 3, 2008

    • The Providence Journal reports that Trader Joe’s has opened its first Rhode Island store, in the town of Warwick.

    • The Kroger Co. announced that it is “doubling fuel discounts on gift cards purchased in its stores through the end of the year. Starting November 1, gift cards for popular restaurants, stores and entertainment outlets purchased in Kroger stores will accumulate fuel discounts at double their purchased value, earning customers 10 cents off for every $50 in gift cards.”

    Advertising Age reports that Kmart decided not to wait until Black Friday – the day after Thanksgiving – to launch its traditional Christmas sales event. Rather, it began the sale yesterday – November 2.

    According to the story, “The retailer, part of Sears Holdings, said it will offer the deals exclusively in the home-electronics category to help customers kick-start their holiday shopping. The category has become an area of particular concern for retailers, as consumers pull back on discretionary items.”

    KC's View:
    Kmart could have started its Christmas sales on Labor Day. Or the Fourth of July. Won’t matter much.

    Dead retailer walking.

    Published on: November 3, 2008

    • Drugstore chain Rite Aid said Friday that its October sales inched up to $2 billion from $1.99 billion during the same period a year ago, on same-store sales that were up 2.9 percent. Excluding the Brooks Eckerd stores that the company acquired in June 2007, Rite Aid said its same-store sales grew 4.1 percent.

    • CVS Caremark said third-quarter net income rose to $732.5 million, from $686.6 million. Q3 revenue edged up to $20.86 billion from $20.5 billion.

    KC's View:

    Published on: November 3, 2008

    Got a number of emails responding to the coverage here of Starbucks’ new loyalty card program.

    For example, MNB user Baronda Bradley wrote:

    I did some quick math … After purchasing the $25 loyalty card, at $4 per cup of coffee, you have to buy 63 (62.5) cups of coffee to break even in one year. If you order $5 cups instead, you only have to buy 50. Here's hoping that the program DOES give you time to spend another $275 to $277 minimum additional dollars' worth to prove your "loyalty"--too bad they didn't think your past loyalty was worth something already.

    MNB user Ken Wagar wrote:

    Question? If I have to pay $25 for a Starbucks Gold Card to get “Top Shelf” Treatment, what kind of treatment do I get otherwise?

    And another MNB user wrote:

    I have no problem with a rewards program, although this offer is far from compelling. But when a retailer implies that one type of customer will receive better treatment than the rest I think they are beginning down the proverbial slippery slope. Gold card members will receive “top shelf” treatment, while the vast majority of customers who make up the bulk of their business will be treated with somewhat less than top shelf service. Yeah, that makes a lot of sense.

    Let me pose an argument here.

    We accept that best customers will get better treatment from airlines. In fact, those of us who are “best customers” expect it.

    So why is it acceptable in one venue and not another?

    Just asking.

    On the subject of Walgreen going to a centralized fulfillment strategy in some of its stores, which seems to mean that some folks would have to wait 24 hours to get a prescription filled, MNB user Anne Maas wrote:

    Reading this immediately raised concern. I have been filling my prescriptions at Walgreen's for at least 20 years. When other companies have reduced their prescription costs I have remained loyal to Walgreen's. I consistently have positive experiences with them and I receive my prescriptions promptly. When I travel I know that I can locate a Walgreen's and have a prescription filled without hassle, if necessary.

    I cannot imagine not being able to receive a prescription the same day that a doctor calls it in or I request a refill. If a doctor is calling it in, typically I need to get started on it immediately. If I'm refilling a prescription, I have a tendency to disregard the fact that I'm getting low and panic when I realize I just used the last of one and need my refill the same day. Of course I can train myself to plan ahead, but I know there will be times when it just won't happen.

    If I am unable to obtain my prescriptions in the same day that they are ordered I will be forced to take my business where I am confident that they will be.

    I do realize that the article states that one-third of all prescriptions will be filled at a central facility, so possibly mine will not be affected. I'd be curious to know what will determine which are filled at the store level vs. the central facility.

    MNB user Gary Cohen wrote:

    Our local Bel Air (Raley’s) recently switched to a similar model…if you bring in or call in a prescription, they ask if you can pick it up the next day…and then the prescription is processed in some central location and shipped to the store. The problem I have with that is 2-fold: as a traveler, I usually need to take care of my prescriptions “today” as opposed to “tomorrow.”

    Also – it seems that when they fill the prescriptions at the central location, for their convenience they only use one size prescription bottle. So sometimes 30 days worth of pills fills up 1” of the bottle and the rest is empty space; on other pills, 30 days worth fills 2 of their bottles. The local, in store pharmacist, however, often uses the actual manufacturer’s packaging of 30 days worth of pills, cutting down on a tremendous amount of waste.

    I vote for the old fashioned way of filling prescriptions locally and today.

    MNB user Mike Smith chimed in:

    I feel as you do about waiting 24 hours for a prescription to be filled. If I just left the doctor’s office and feel rotten, I will find someone who will fill the prescription in a reasonable amount of time. I am currently a Walgreens customer and not real happy with how long it takes now to get a prescription filled at my local pharmacy.

    Seems to me that Walgreen ought to pay attention to these sorts of emails. Because what the company seems to be suggesting is a move backwards, not forward, that puts efficiency and operational needs ahead of customer priorities. Almost always a mistake.

    Regarding drive thru Flu shots, one MNB user wrote:

    Doesn't that defeat the purpose of a retailer conducting them? Don't they want to attract the people to actually set foot into the store and make additional purchases? I'd be hard pressed to think that the flu shots standing on their own are a huge profit center. Retailers want people in their stores. Stressing health and wellness themes like flu shots is one example of a tool to drive some traffic. Drive thru flu seems contradictory to me.

    Unless the retailer’s goal is to establish a relationship with the shopper that is based on his or her convenience and needs, not the retailer’s.

    Sure, some impulse purchases may be lost. But what is gained in terms of long-term credibility and loyalty?

    I noted on Friday in “OffBeat” that the Christian Science Monitor soon will cease publishing a print edition and will move to a pure online model, which seems like a pretty good reflection of the kinds of changes occurring throughout the culture these days – changes that all businesses need to understand and adapt to.

    MNB user Louie Yan responded:

    Perhaps the daily paper on our doorstep will evolve into a custom piece that includes news categories that we select when we subscribe. You may want everything to do with retail and macroeconomics, I may want worldwide soccer and local business coverage. Still timely - I don't think a few hours will really make a difference in the news categories we follow, except for the world's markets, which we follow electronically anyway - and with the reassuring, tactile and olfactory satisfaction of newsprint.

    Except that newsprint is only reassuring to people of a certain age. (I’m that age. I love newspapers.) Younger than that, and they have no allegiance to the form.

    News will be customized, but it all is going to be electronic. And we’re going to do our own customization, every day.

    Another MNB user wrote:

    I couldn't agree with you more about the appeal of the daily newspaper. For as long as I could read, I've been reading newspapers. The Pittsburgh Post-Gazette, The Pittsburgh Press, The New Tribune (Beaver Falls, PA), The Beaver County Times, The Dominion Post (Morgantown, WV) and The Atlanta Journal & Constitution. In college, my roommates could never understand how or why I would get up so early after a late night out (uh studying) to get the paper. My wife swears that I wake up at the sound of the paper hitting my driveway at 5AM. I continue to subscribe to the liberal AJC even though I'm a conservative.

    It’s sad what an addict will do for his daily fix.

    I’m with you. It just so happens that we have a 20th century addiction in a 21st century world.

    MNB user Philip Herr wrote:

    My visceral reaction to the idea of shutting down the print version is violently negative. There is just no way to replace the reassurance of a newspaper in your hands. But then I thought a bit and had a more rational reason to reject the argument as well: If the NYT stops publishing a paper edition does that reduce it to the same level as the Huffington Post or The Drudge Report? What is to distinguish the "gravitas" from the "dreck"? My point is that anyone with a point of view can set up a website. But it takes a vast organization to carry off news-gathering and dissemination with accuracy and (some) objectivity. So if the paper goes, will the credibility?

    Two responses here.

    First, I am proof positive that anyone with a point of view can set up a website, I figure I earn whatever credibility I have … and live with the fact that some people find me more credible than others.

    Second, you and I probably equate paper with credibility more than a young person would. After all, they trust Jon Stewart’s newscast as much as anyone else’s. (And who wouldn’t?)

    Responding to my praise for San Francisco 49ers head coach Mike Singletary, one MNB user pointed out:

    I was a fan of that Singletary coaching move on Sunday too, until I learned today that he chose to "dropped trou" at halftime of a game to make a point about the way the 49ers were playing. Not effective at all, and poor judgment in my opinion. He should be disappointed that it got out to the media, because it's an embarrassment to him that he made the decision to do that.

    He's been an assistant coach long enough to know that the pampered, whiny players of today aren't affected by these scare tactics (unless Commissioner Goodell is involved). They will still get paid their guaranteed money, and unless treated with kid gloves, no one will listen to a coach using those coaching techniques.

    He was an all time great, and played when the money wasn't as big, and when players stayed with the same teams (more often than today's game). Unfortunately, he is already showing signs of being a major risk as a head coaching hire, and is no doubt auditioning for a job other than the 49ers next year (because it will be Mike Holmgren's job if he wants it).

    It is tough being an anachronism, whether you’re in football or newspapers. That may be what Singletary is finding out.

    And finally, regarding the late, lamented baseball season and World Series, MNB user Carla Baughman wrote:

    Thank you for rooting for the Rays! As a Giants fan, I was able to see two former Giants (Pedro Feliz and Scott Eyre) win the WS and feel I can share in a bit of that post season joy (though watching the Phillies take down the Dodgers was almost more joyful).

    The Rays are a great story and have nothing to hang their heads over. That said, they just don't play baseball the correct way... their pitchers don't hit.

    Have to agree with you on that one. The designated hitter is a crime against the natural order of things.

    I noted last week that my record during the baseball post season suggests that one never should take me to Vegas. I got more than a dozen emails saying that I’d be a perfect person to take to Vegas…because they would just bet against by instincts.

    One guy even compared me to the William H. Macy character in “The Cooler.” (Which, by the way, is a great movie.)

    Which seemed sort of tough.

    Could have been worse, though.

    He could have compared me to Alec Baldwin’s character.

    KC's View:

    Published on: November 3, 2008

    In Week Nine of National Football League action…

    NY Jets 26
    Buffalo 17

    Dallas 14
    NY Giants 35

    Detroit 23
    Chicago 27

    Houston 21
    Minnesota 28

    Green Bay 16
    Tennessee 19

    Arizona 24
    St. Louis 13

    Baltimore 37
    Cleveland 27

    Tampa Bay 30
    Kansas City 27

    Jacksonville 19
    Kansas City 21

    Miami 26
    Denver 17

    Atlanta 24
    Oakland 0

    Philadelphia 26
    Seattle 7

    New England 15
    Indianapolis 18

    KC's View:

    Published on: November 3, 2008

    Studs Terkel, who won both a Pulitzer Prize and hearts of his fellow Chicagoans for a lifetime of creating oral histories and indelible portraits of a rich and diverse American experience, died last week at age 96.
    KC's View:

    Published on: November 3, 2008

    The New York Times reports that “Chinese regulators said Friday that they were widening their investigation into contaminated food amid growing signs that the toxic industrial chemical melamine has leached into the nation’s animal feed supplies, posing health risks to consumers throughout the world.”

    To this point, concerns about melamine contamination had been focused on dairy products, including baby formula, and eggs. The dairy contamination alone was said to have sickened more than 50,000 Chinese children and killed four, and had resulted in recalls across the globe of foods containing Chinese dairy. In addition, melamine – which is added to products to artificially increase the appearance of protein – had been blamed for pet food that had sickened or killed hundreds of pets,

    The Times reports: “The pet food case led to a vast recall in the United States and in other parts of the world, and it also incited a lengthy food safety crackdown in China, with regulators boasting that they had closed down thousands of illegal or substandard food factories and slaughterhouses.

    “Still, the Chinese government never made clear last year or even this year how extensively it had tested its own food and feed supply for melamine, even though melamine dealers acknowledged that it was common to sell melamine scrap to food and feed producers.”

    According to the Times, a spokeswoman for the US Food and Drug Administration (FDA) “said that the agency was constantly adjusting a nationwide sampling of products being tested for melamine as new potential threats were brought to its attention. The F.D.A. and state and local authorities have been sampling products in Asian food markets across the United States since mid-September for traces of melamine.”

    KC's View:
    Expanded testing, maybe. But adequate, appropriate testing? Not convinced here, not by a long shot.

    This continues to sound like minor league efforts to address a major league problem. I cannot shake the impression that it is entirely likely that US officials did not decisively deal with this problem because of political concerns – that they did not put the consumer first.

    Our tax dollars at work. Or not.