retail news in context, analysis with attitude

Published on: November 4, 2008

by Michael Sansolo

As we draw to the end of a politically charged season, let’s try to do something very hard. For a second, let’s put aside partisan feelings and recognize the one essential truth of this campaign:

Whatever the outcome of today’s election, history will be made. Either the United States is about to have its first non-white president or its first non-male vice president. Whether we have President Obama or Vice President Palin, something big has happened. Change is guaranteed.

Now for another second put aside your partisan feelings about which of these outcomes you prefer and think about the enormity of the very real change this means to your business.

In short, the world we live in has changed, but in many ways the world of our children and grandchildren has just arrived. For a host of reasons, from immigration patterns to birth rate realities, the United States is continuing its long pattern of demographic change. By 2042 the Census Bureau projects the United States will no longer have a majority population group.

The workforce of the future, the shopper of the future and the leadership of the future are guaranteed to look much different than the past. For the food industry, the changes are profound, which is why we have to look at this election beyond partisanship and try to assess the meaning.

A recent article at Salon.com examined the demographic shift of the 2008 campaign. Three leading population experts were asked a key question about the candidacy of Barack Obama. Simply put, could a bi-racial candidate have risen to this level in any previous year?

(Though the question wasn’t asked, it could be raised about female candidates too. Hilary Clinton clearly drew more votes than any female candidate in history. And while Sarah Palin may be treading ground already walked by Geraldine Ferraro, it’s apparent that her role in the campaign was far greater than her predecessor.)

The demographers’ response was clear. The difference in 2008 is the difference in the population. Generation Y, the most racially and ethnically diverse in American history, is now becoming an enormous part of the working and voting population. And their diversity makes the presence of a bi-racial candidate (or president) a less surprising and more acceptable issue.

In other words, candidate Obama likely had no chance of success as recently as 2004. In 2008, he might end this very day as President-elect.

Inside your business you have to consider the reality this represents. How your company will recruit, train and promote a more diverse workforce is an essential question for the future. How your company will merchandise and serve a more diverse shopper base is equally important. New holidays, new tastes and new customs will all matter more tomorrow than it does today.

I personally had a vivid reminder of this while moderating a panel of students at Oregon’s Portland State University recently. I have had the pleasure of doing this many times in the past and have long ago grown accustomed to seeing young women vastly outnumbering young men in these programs. So it was hardly surprising that three of the four students on this panel were women.

But this panel was different. These four bright young students, all wonderful candidates for jobs and advancement in their careers, were a demographic mix that demands the industry’s notice. Three were African-American and the fourth of Hispanic roots.

The future is here and it looks very different than past. Except for this: companies that adapt and grow quickest will win big.

See, not everything is changing.

Good news! Because “Content Guy” Kevin Coupe is in Argentina with a crazy schedule, Michael Sansolo will be contributing an extra “Sansolo Speaks” this week to take the pressure off Kevin. So keep an eye out…

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

Published on: November 4, 2008

Florida Today has good news for Aldi, not such good news for competitors that include Save-A-Lot and Walmart that traditionally depend on a low price message to attract customers.

According to a pricing survey, “Aldi offered the lowest total price for our groceries, which included breakfast cereal, chicken breasts, lettuce, wheat bread, paper plates and toothpaste -- but just barely. The grand total was $35.92.

“Save-A-Lot, with stores in Palm Bay, Melbourne, Cocoa and Titusville, was second at $36.54, just 62 cents ahead of Aldi … Wal-Mart, the world's largest retailer, was third with a tab of $41.90.”

Also according to the story, “Publix, not known as a discount grocery chain, often appeals to customers willing to pay a little more for more in-store services such as pharmacy, bakery or meat department, and a greater selection of nationally recognized brands.

“Publix spokeswoman Maria Brous said the shopping comparison was only a snapshot of Publix prices, and the results could vary, depending on the day and the products purchased. She noted that Publix has several discount programs, and if customers are willing to take the time and look for coupons and others specials, they might spend less at Publix than at other supermarkets.”

Published on: November 4, 2008

Interesting confluence of stories this morning as two major newspapers find different trends taking hold in the marketing world.

The Wall Street Journal reports that because “the roller-coaster stock market and plunging housing prices have left many consumers afraid,” some marketers are responding with “a softer approach to peddling their wares, playing up comforting images in their ads and focusing on family and the warmth and safety of home. Some marketers are even reviving old advertising to remind consumers of happier times.”

Among the companies taking this approach: Pillsbury, Unilever, MasterCard and Ikea.

The Journal adds, “It's a tug-on-the-heartstrings playbook Madison Avenue has used before, most notably after the Sept. 11, 2001, terror attacks. In times of trouble people want things that are familiar, even in advertising.”

However, the New York Times is seeing the marketing world through a different prism.

Columnist Stuart Elliot writes, “Election Day will bring an end to the negative political advertising that has inundated the country. But it will not mean an end to negative advertising.

“That is because marketers of consumer products, borrowing a page from the electoral playbook, are becoming more willing to run aggressive ads in which brands attack their competitors by name. A major reason for the growing popularity of such ads is the faltering economy, on the theory that when times are hard, you should hit your opponent harder.”

Among the companies embracing this form of marketing are Dunkin’ Donuts (which takes aim at Starbucks), Apple (which is being a little more pointed in its popular series of ads targeting Microsoft’s Vista operating system and the PC universe in general), and Campbell Soup (which takes potshots at Progresso on behalf of its new Select Harvest line of soups).

Of course, such attack ads can result in two different responses. In the case of Starbucks, it has publicly said that it does not plan to engage in a marketing war with Dunkin’ Donuts. Microsoft, on the other hand, is fighting back for the first time with a series of ads portraying PC users in a far more sympathetic light.

Published on: November 4, 2008

• PepsiCo announced this week that it plans to invest $1 billion (US) in its China strategy over the next four years, as part of what CEO Indra Nooyi said was the company’s “broader global strategy of investing in high-growth developing markets.”

• The Boston Globe carries a story saying that Tyson Foods, the world’s biggest meat company, wants to get even bigger and is planning to expand on a global scale.

“Our company, as I would view it today, is in kind of a consolidation stage, getting ready for our growth overseas," says former chairman Don Tyson, who controls much of the company’s voting stock. Tyson notes that the goal is to bring its corporate meat production model to developing nations and transform rural economies in places like China and India.

However, the story also notes that such a move would transform the company’s balance sheets and bring some luster to a stock price that has been lagging.

Published on: November 4, 2008

Amazon.com announced yesterday that it is launching a new packaging initiative designed to make it easier for customers to open the products they acquire from the e-tailer, as well as to make them more environmentally friendly.

Called “Frustration-Free Packaging,” the program focuses on two kinds of products – those encased in hard plastic “clamshells,” and those secured with plastic coated wire ties. Nineteen products are included in the initiative, from suppliers that include Fisher-Price, Mattel, Microsoft and electronics manufacturer Transcend. The products are exactly the same -- Amazon has just streamlined the packaging.

Jeff Bezos, founder and CEO of Amazon.com, said in a statement, "It will take many years, but our vision is to offer our entire catalog of products in Frustration-Free Packaging.”

The initiative is beginning in the US this year, and will expand to the company’s international sites in 2009.

Published on: November 4, 2008

• The Washington Post this morning reports that the US Department of Agriculture (USDA) “is proposing stricter grazing standards for cows certified to produce organic dairy products, closing loopholes that allowed some operators to cut corners. Regulators found that some producers, though certified organic, were cutting corners on the standards because the current rule doesn't define what ‘access to pasture’ means. Some dairies didn't give grazing time to cows that had just given birth or wouldn't let cows out to pasture in the rain.

“The Oct. 24 proposal specifies that organic livestock, those raised free of hormones, antibiotics or pesticide-treated grain, must be allowed to graze in a pasture at least 120 days a year. Thirty percent of the cows' feed must be from such grazing, rather than being fed organically produced food in a feedlot or an indoor facility. The change, eight years in the making, is significant because consumers pay up to twice as much for organic milk, whose sales are growing but are only about 6 percent of the $17 billion spent annually on milk.”

• Food Lion’s Bloom division apparently has found a promotion to love.

The company announced that it is sponsoring an attempt to break the Guinness World Record for most couples kissing simultaneously at Furman University’s Paladin Stadium in Greenville, S.C. The Bloom attempt, dubbed “Kissletoe 2008,” will be the featured halftime event during the Paladins’ final home football game, against archrival Georgia Southern University.

This is no small effort. According to the company, “The existing record of 6,980 couples (13,960 participants) was set in Tuzla, Bosnia and Herzegovina, on September 1, 2007. However, Greenville’s attempt to break Tuzla’s kissing record faces significant logistical hurdles, and Bloom invites community members to bring a date to Furman’s November 15 football game to cheer the Paladins and take part in this potentially historic event. Guinness verification requires all qualifying kisses to be on the lips and last at least ten seconds.

“To pack the minimum 13,962 sweethearts into a stadium that seats 16,000, Bloom will distribute thousands of two-sided, boy/girl, Kissletoe invitations to Furman University students beginning November 5, along with a 15-foot, giant sprig of mistletoe that will be hoisted outside of the school’s student center that day. Additionally, Bloom will distribute promotional Kissletoe air fresheners, both at the game and at the seven Upstate Bloom supermarkets located in Anderson, Greenville, Greer, Mauldin, Seneca and Simpsonville.”

Published on: November 4, 2008

• Publix Super Markets announced that its third quarter sales were $5.8 billion, up 3.7 percent from the same period a year ago, on same-store sales that increased 1.2 percent. Q3 net earnings, which the company said were affected by a “difficult operating environment,” were $201.8 million, down 18.9 percent from the $249 million recorded a year ago.

Published on: November 4, 2008

Tony Tarracino, the former mayor of Key West, Florida, and the owner of Captain Tony’s Saloon there, has passed away at age 92.

Tarracino’s greatest claim to fame may have come from the song “Last Mango In Paris,” composed about him and sung by Jimmy Buffett:

I went down to Captain Tony's
To get out of the heat
When I heard a voice call out to me,
"Son, come have a seat"

I had to search my memory
As I looked into those eyes
Our lives change like the weather
But a legend never dies.

He said, "I ate the last mango in Paris
Took the last plane out of Saigon
Took the first fast boat to China
And Jimmy, there's still so much to be done…

Published on: November 4, 2008

I love it when I get emails like this one from an MNB user:

Just arrived in Phoenix, and made sure I sought out a new Walmart Marketside store. I must say, VERY IMPRESSIVE! I think they got it right, especially when compared to the Fresh & Easy I visited next.

Marketside was colorful, branded mdse, fully stocked, and very inviting. The F&E I visited was dull, drab, spaces on the shelf, and this very “generic” looking appearance with all the white shelves and boxes and trays that the products arrive in and are shelved as such.

No, like you, I am not writing off F&E yet. But seeing only 2 shoppers in the F&E, and probably 25-30 in the Marketside speaks a lot. My only wish is that I had a Marketside in my neighborhood…

Thanks. As Dean Martin used to say, keep those cards and letters coming in…




Responding to emails about the new Starbucks loyalty program, and criticisms that the company seemed to want to treat some customers better than others, I asked yesterday why this is an acceptable approach when practiced by airlines but not be a retailer.

MNB user John Cockrell wrote:

The difference to me is that all airlines have some form of program that treats their best customers in a preferred way so as a non-preferred airline customer I don’t have a choice. In order for the Starbucks plan to work all of the other coffee shops need to do the same. My stop for coffee in the morning is based on convenience and reasonable taste not brand loyalty. If I have to wait longer at a Starbucks while a preferred customer gets their drink ahead of me then it will be the last time I stop at a Starbucks.

If that happens, Starbucks deserves to lose your business. But I’m not sure that is the intention.

MNB user Cal Sihilling wrote:

The differences to me for airline programs is that frequency of use is the differentiator and you pay for the privilege based upon that usage, nothing extra. Does Starbucks run the risk of alienating high frequency customers not willing to buy the card to support those willing to buy the card? Sounds like a way to take $25 out of someone's wallet to me.

I agree with you that charging someone $25 for best treatment doesn’t sound good. And you’re right – if this program isn’t properly and carefully positioned, Starbucks runs the risk of alienating customers.

Though I have to admit that I pay to belong to one airline club and to the Clear airport security system…and am quite happy that this entitles me to better service, which is helpful because of my travel schedule.

But my broader question remains.

What’s wrong with food retailers treating best customers better? Not faster service, necessarily…though I could make an argument that stores should offer express lanes for people with the biggest orders, not the smallest. Or people with earned “gold card” membership, not cherry pickers. But best customers should have access to offers and promotions that lesser customers don't.

BTW…Dorothy Lane Markets has for years done an exceptional job of putting its customers in tiers and rewarding best customers in such a way that people yarn to be in that category rather than taking offense when they are not.

And Hannaford Supermarkets has come up with a checkout system in its newest stores that moves people with the biggest baskets through in a faster way.

It may be more a matter of will than ability.




Finally, one MNB user sent me the following email:

No matter what people say about you covering topics other than food, I for one am always grateful. Without MNB, I would not have known about the death of Studs Terkel.

“The Good War” by Studs Terkel is one of the finest books about WWII ever written. As a first generation American and child of holocaust survivors my view of WWII was always about the impact it had on the tiny remnants of my family. Interviews in “The Good War” include survivors, soldiers (all sides) and Japanese-Americans put into internment camps in the US. It was eye-opening time for me driven solely by Studs Terkel’s global perspective of WWII impacts.

Studs Terkel’s ability to present all sides of a story as well as generate a clear message through the words of others was a rare talent and one that will be missed. I believe that I will spend tonight paging through “The Good War” as a way of mourning the loss of such a great writer.

Thanks. The goal here always is to offer something a little different – in content, in context, and in tone. Sometimes, I actually get it right.

Published on: November 4, 2008

• In Monday Night Football action, the Pittsburgh Steelers thumped the Washington Redskins 23-6.

• Yesterday I reported in this space that Tampa Bay beat Kansas City 30-27, and also that Jacksonville defeated Kansas City 21-19.

Oops.

Obviously, that was a mistake. Kansas City may stink at 1-7 for the season, but it isn’t able to lose twice on the same Sunday.

In fact, it was Jacksonville that lost to Cincinnati, 21-19.

Sorry about that.

That’s what I get for trying to write football scores at 6 am in Puerto Madryn, Argentina…