retail news in context, analysis with attitude

Published on: November 11, 2008

by Michael Sansolo

In the middle of last week, 10 students at my son’s college were arrested. Their crime: performing the Star Spangled Banner. It’s true.

Now the odds are that you had a reaction to that previous paragraph, but the reaction might be entirely wrong without understanding the context of the arrests. Here are the details that matter.

1. My son wasn’t involved. (Sorry, I’m a parent and it was the first question I asked.)
2. The students launched into the anthem after hearing the results of Tuesday’s election. Many of them had voted for the first time and they were feeling patriotic. In fact, there were reports that many in the crowd were crying while the anthem was played.
3. The problem wasn’t that they played the anthem. The problem was they played it in the streets of Rochester, NY, at 1 a.m. One of the students admitted later that bringing cymbals into the street after midnight should have convinced someone that this was a bad idea.
4. My son’s college is a conservatory with only 500 undergraduate students. That means the students performed the anthem really, really well, but it also means an enormous percentage of the student body was arrested that night. If the same percentage had been arrested at a major state school, the number of detainees would have topped 1,000.
5. Everyone was released without fuss.

In short, context tells us everything. Without knowing the facts around an event, we have no idea how to act or react. Context is why we greet gasoline prices dropping to $2 per gallon with glee this year when just a few years ago we would have been stunned at such high prices. Similarly, it’s why we look at the Dow Jones hitting 8,500 with dismay when for most of history that amount was unthinkably high.

(Likewise, there were many times in my life when the notion of college students solemnly performing the National Anthem would have been equally shocking.)

Context matters in our industry too. Providing the entire story is part of the narrative we have to give our employees and our customers to make sure they understand why things are the way they are. Whatever the challenge is—economics, health and wellness, the environment or more—too often we neglect the story. We don’t give context and the absence hinders us from greater gains.

For instance, right now shoppers are rightfully worried. They hear, see and feel the economic news and they worry about how to make ends meet. They look at rising food prices and look at their budgets and try to figure out what’s happening. If we give them context, the story changes.

Context is how we tell them to save money while shopping for food. Context is when we position meals, not ingredients and when we display the range of choices in stores. Context is when we put together the picture of good health and how eating better can work.

Luckily, there are examples of context out there. There are great retailers who talk about meals and health in a way that consumers understand. Walk into a Wegmans and see the displays of entire meals featuring all the ingredients you need to make them. Look at the signs in Whole Foods talking about the path products take in getting to the stores. Look at the product information in Trader Joe’s giving every item a unique and interesting story. Look at the clear definition of price value in Walmart, Aldi and more.

Context means the story is told well and with context facts suddenly make sense. Context is the difference between 10 kids being arrested for playing the Star Spangled Banner and 10 students being detained briefly for being a public nuisance at 1 a.m.

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

Published on: November 11, 2008

The Nielsen Company has released a new survey saying that 86 percent of US consumers believe that the nation is currently in a recession and that 54 percent think it will last longer than 12 months. Just 18 percent of those questioned said that they thought the recession would be over within a year, with the greatest pessimism expressed by people between the ages of 25 and 29 years of age – presumably young enough that they may not remember previous recessions.

However, people with better memories aren’t much more optimistic, with only seven percent of consumers age 65 and over believe the recession will be over within the year, and 63 percent of consumers in this age range saying they don’t believe the recession will be over within 12 months.

Other interesting revelations from the survey:

• More women (91 percent) than men (82 percent) feel the US economy is in recession. Men were markedly more optimistic than women about the recession’s end, with 27 percent of males responding affirmatively, compared to only 11 percent of females. When asked about the state of their own personal finances over the next 12 months, 39 percent of females responded “not so good” compared to 28 percent of males. Only 16 percent of women surveyed think their job prospects over the next 12 months will be good, compared to 26 percent of men.

• Thirty eight percent of U.S. consumers consider the economy their biggest concern over the next six months, with older Americans even more worried - - 48 percent of consumers age 50–54 and 52 percent of those age 55–59 cited the economy as their greatest concern.

• Increasing fuel prices came in a distant second place at 10 percent, followed by debt (nine percent), increasing utility bills (seven percent), increasing food prices (five percent) and job security (five percent).

Published on: November 11, 2008

In Minnesota, the Star Tribune reports that CVS is counting on its Minute Clinic offering to draw “first time customers to its stores and clinics,” and therefore give it an advantage in the chain drug store and retail pharmacy competition.

According to the story, “With a goal of delivering 1 million flu shots this year, the company recently launched a high-profile advertising campaign that, for the first time, puts its MinuteClinic outlets front and center. National TV ads promoting the flu vaccinations began airing in October and showed up during such marquee broadcasts as the Major League Baseball playoffs.”

There currently more than 550 Minute Clinics in 27 states, the Star Tribune notes.

Published on: November 11, 2008

Interesting column by marketing expert Barry Curewitz in Advertising Age, in which he suggests that “”as everyone struggles just to stay above water, now is exactly the time to redistribute your resources to develop unique products that deliver a new consumer experience and create a franchise capable of long-term, significant growth.”

Curewitz writes: “Line extensions, brand expansion, true innovation: There's a place for each strategy in every brand portfolio. Introducing line extensions in a mature category is a pre-emptive measure to maintain share of shelf, not stimulate significant growth. Brand expansion works so long as the equity is protected or enhanced and the new products support the initial positioning and identity. Innovation, while risky, offers many more learning experiences for the company as well as much greater growth. Interestingly, there is usually a direct correlation between the resources needed for these initiatives and the potential upside. That's why it's important to include each of these strategies in your plan.”

Published on: November 11, 2008

Kraft CMO Mary Beth West, in an interview with Advertising Age makes an interesting observation about how to position the eat-at-home experience for shoppers at a time when they are looking for less expensive options to eating out:

“The cooking thing isn't something people revel in,” she says. “Eating is something that they do revel in. Some of the learning we've done over the past year shows that the difference between food recipes from the top of the database to the bottom [is how they're titled]. ‘Learn to cook stir-fry’ is fast to the bottom; ‘Easy stir-fry in 15 minutes’ is at the top.

"’Cook’ implies time and skill they may or may not have. But they know they have to put dinner on the table. They don't reject putting a little of themselves into it, but ‘cook’ sounds like a process, more time. What's a sauté? Framing it more as a food solution and an idea of getting dinner on the table is what it's all about. Despite the economic environment, people don't have any more time than they did a few months ago. But helping them be able to feed a family with food they feel good about is a big idea.”

Published on: November 11, 2008

Forbes reports that “a study released today in the Proceedings of the National Academy of Sciences contains controversial claims about menu items served at McDonald's, Wendy's and Burger King.

“Using a technique that identifies carbon and nitrogen isotopes in meat, co-authors A. Hope Jahren and Rebecca Kraft tried to determine the animals' diets and in what conditions they were raised. Based on the high levels of carbon and nitrogen isotopes found in the meat products, the authors claim that the cattle and poultry were predominantly fed corn, which makes them as fat as possible in as short a time as possible, and were raised in extreme confinement.”

According to the story, “Farmers use nitrogen-enriched fertilizer to rapidly maximize their output. This is particularly true of corn crops; in 1940 a farmer could expect 70 to 80 bushels of corn per acre. Today, that number has reached 200 bushels. This corn, in turn, has been used to feed livestock and poultry for quick and efficient growth. In 2007, the U.S. produced 48.7 billion pounds of commercial red meat, 90.6 billion eggs, and 8.1 billion chickens, according to the USDA … Based on the carbon isotopic signatures found in the sample meat, the study's authors argue that the cattle had been strictly confined and fed predominantly corn.”

As for a response, “Burger King declined to comment on the study. A spokesman for Wendy's said the company has ‘very strict procedures in place’ to protect animal welfare. A spokeswoman for McDonald's declined to comment and instead referred to a statement issues by the American Meat Institute, a trade association.

“Janet M. Riley, senior vice president of public affairs for AMI, said that carbon and nitrogen isotopes are naturally occurring and are expected to be found in the environment and humans. She also said that while the study's authors had called for greater transparency regarding information about livestock feeding and production practices, consumers ‘appear satisfied’ with the amount of information currently available.”

Published on: November 11, 2008

• Safeway and OfficeMax announced a partnership that will put OfficeMax products into some 1,600 Safeway stores around the country, using co-branded aisle displays to highlight roughly 300 SKUs.

• The Houston Business Journal reports that HEB’s newest store in the metro area “will be the grocery chain’s first LEED-certified store in the local market,” gaining certifications from the US Green Building Council.

• The Wall Street Journal this morning reports that food retailers are engaged in a concerted effort to “take the gross out of grocery carts.

“Though hardly Public Enemy No. 1, shopping carts are gaining a reputation as one of the dirtiest public places, with some found to harbor such microbial villains as the diarrhea-causing Campylobacter and the potentially deadly Salmonella.

“Cleansing-wipe dispensers have been appearing next to shopping carts at grocery stores for some years now. But a host of other products have emerged to appease germophobes who shop. These new offerings include protective covers that minimize infants' contact with the seat, full-cart liners and portable, snap-on handles carried by consumers. Grocers hope the efforts boost perception of their stores<’ especially at a time when they are looking for any and all differential advantages.”

Published on: November 11, 2008

• The Cleveland Plain Dealer reports that after several weeks of testing, Wooster, Ohio-based Buehler’s Fresh Foods has gone live with a new online shopping program for its Edina store, and plans to expand the initiative to other locations in the 13-store chain next year. The program, which features a store pick-up model rather than home delivery, was developed with MyWebGrocer.com.

The offering costs shoppers $7.95 per order, or $24.95 per month for an unlimited number of orders. The service fee is waived for the first order of $25 or more.

Published on: November 11, 2008

• Supervalu said that its Q2 profit dipped to $128 million, from $148 million during the same period a year ago. Sales rose less than 1 percent to $10.23 billion from $10.16 billion, and same-store sales were down 1.3 percent.

• Starbucks announced that its fiscal fourth quarter profit was $5.4 million, down precipitously from the $158.5 million earned during the same period a year ago. Q4 sales rose to $2.5 billion, from $2.4 billion.

• PriceSmart, the membership club company with outlets in Central America and the Caribbean, said that its Q4 revenue was $292.0 million, compared to $230.1 million in the prior year. The Company had 25 warehouse clubs in operation as of the end of fiscal year 2008 compared to 23 warehouse clubs in operation at the end of fiscal year 2007. Operating income in the fourth quarter of fiscal year 2008 was $12.9 million compared to operating income of $2.1 million in the fourth quarter of fiscal year 2007.

Total revenue for fiscal 2008 increased 26.0% to $1.1 billion from $888.8 million in the previous year.

• Tyson said that its Q4 net income rose 50 percent, to $48 million, from $32 million, in the period a year earlier. Sales in the quarter rose 9.5 percent, to $7.2 billion from $6.57 billion.

Published on: November 11, 2008

…will return.

Published on: November 11, 2008

In Monday Night Football, the Arizona Cardinals defeated the San Francisco 49ers 29-24.