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: November 20, 2008

    Now available on iTunes…

    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, brought to you by Webstop, experts in the art of retail website design.

    We all know that the world is changing. There’s economic change, which is in the headlines every day. There are industrial changes, as the nation and even the world grapples with what kind of change should be facilitated, and what kind should be left to evolve on its own. There’s environmental change, though there are some people still don't believe in it. And there’s technological change, which we can see all around us.

    The thing is, we all know that these and other changes are taking place…but I wonder how may times we wander by the clues and signposts and don't pay attention…and maybe even act as if the status quo still existed.

    Give you an example. Last Sunday, Mrs. Content Guy and I were doing a little early Christmas shopping, and she pulled me into one of those stores that only gets opened during the holidays and that sells calendars with a wide variety of themes for the coming year. We started to thumb through the selection, looking for something that might appeal to the kids, when I looked at her and said, “Wait a minute. Our kids don't use paper calendars. They have cellphones and computers for that.”

    She looked at me quizzically and said, “Y’think?”

    And I responded: “When was the last time you used a paper calendar?”

    Advantage, Kevin. (That doesn’t happen very often, let me tell you.) We walked out, and went to a store that seemed more relevant.

    By the way, a note here to any parents, grandparents, aunts or uncles thinking of buying calendars for…well, anyone under the age of 65. Don't do it, unless the person being given the gift is Amish. Do it, and you immediately label yourself an old fogey.

    There are other examples, some of which have been cited here before, of things that many of us take for granted as being part of our lives that young people have little or no use for. Wristwatches, for example. I feel naked without one on my wrist, but most kids just use their cellphones. Or paper phone books, which are completely irrelevant to an online society. Think how many trees we’ll save when we can stop printing those babies. CDs…which young people never buy because they simply download their music. And I suspect it won’t be long before DVDs go the same way, replaced by downloading services that will be faster, cheaper and of higher quality. And it was just a few weeks ago that I told you how my new Kindle has replaced the physical book, and can, if I want it to, replace the newspaper or a wide variety of magazines.

    The big question is this: How are you gearing up your business not just to face, but embrace these changes?

    Give you an example of a food company that is doing so…

    Domino’s Pizza has established an alliance with the folks at TiVo, the digital video recording service, that will allow people to order directly from their local Domino’s via the television while you are watching TV. It is just another menu item on the screen…I can record one thing, watch another, schedule other recordings for coming weeks, and order a large pepperoni with extra cheese.

    Talk about one-stop shopping. Y’think kids aren’t going to take to this like a duck to water?

    They won’t find it to be cool, by the way. They’ll just see it as an expected and intuitive use of technology that makes sense and makes their lives a little simpler.

    Now, to be fair, the Wall Street Journal story about the Domino’s-TiVo deal notes that the pizza retailer has, in fact, been slow to take advantage of the possibilities offered by cell phones and the Internet. But this is a good way to catch up. Fast. It is only one way, however, and Domino’s better have a lot of irons in the technology fires if it is going to remain relevant for the next generation of consumers.

    So next time you check your watch to see what time it is, consult a calendar hanging on the wall to see if you have any plans, and then look in the Yellow Pages to order a pizza that you can eat while watching a DVD, keep one thing in mind.

    You are standing on the precipice of obsolescence.

    Careful. Don’t fall.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: November 20, 2008

    “Frugality,” Forbes writes, “is making a comeback.”

    The magazine reports that, “fearful that economic conditions could get worse and stay that way, Americans are showing an enthusiasm for thriftiness not seen in decades. This behavioral shift isn't simply about spending less. The New Frugality emphasizes stretching every dollar. It means bypassing the fashion mall for the discount chain store, buying secondhand clothes and furniture, or trading down to store brands.

    There's more business for repairmen and less for salesmen. Consumers are clipping more coupons and swiping their credit cards less … That kind of scrimping may be good for stressed family budgets, but it's bad for the nation's overall economy - and that has the potential to reinforce the miserly mood. Yet with home prices, 401(k)s and job stability suffering, such frugality is likely to be more than a fad.”

    KC's View:
    The real question is whether the business community is in touch with these sentiments. I don't mean in the sense that retailers run sales to appeal to people with less money to spend and less inclination to spend it. But I mean really in touch.

    It was interesting yesterday that when the CEOs of the Big Three automakers went to Washington to plead for a bailout, one of the things they were most roundly criticized for was flying their corporate jets from Detroit to DC. Separately. Talk about tone-deaf. (No surprise, by the way, that former Home Depot CEO and current Chrysler CEO Robert Nardelli would do this…since he’ll probably give up his perks when they’re pried from his cold dead fingers.)

    There also was a story in Media Daily about how The Nielsen Company has canceled its annual client meeting in March 2009 because of economic concerns. According to the story, the event “has grown to be something of a boondoggle in recent years--in which Nielsen wined, dined and entertained clients, and spent more time promoting its vision and new products than discussing serious methodological issues surrounding its measurement of media audiences.”

    Boondoggles no longer are appropriate. Serious conversation, contextual thinking, and a no B.S. approach are what is called for.

    Published on: November 20, 2008

    A new report from information provider SPINS says that while the current economic environment is having a negative impact on growth, the outlook remains positive for the natural products industry, which it says posted sales of $13.4 billion during the year ending October 4 – up 12.2 percent – in conventional food, drug and mass retailers. During the same period, organic product sales were up 13 percent.

    According to the report issued by SPINS, “the organic growth continues to be solid at +7% in the recent 12 weeks. While the top sellers will continue to attract the majority of the sales, there are a number of extremely fast growing categories that will provide retailers and manufactures with additional organic expansion opportunities, especially in body care and pet products … While there are a number of negative economic factors that will challenge the industry for the next few years, positive drivers offer significant counter pressures. These positive drivers will continue and strengthen over time, offering significant fuel for continued growth which should begin to accelerate once the consumer and the economy regain their stability.”

    It is not, however, a projection that is universally accepted. The San Jose Mercury News reports that Mintel International is out with a study saying that “sales growth of organics — up 142 percent in the past five years to $5.2 billion — will lose steam because so many Americans are struggling financially. It says sales will drop during the next six years, in part because of the competition between certified organic and more loosely defined ‘natural’ products.

    KC's View:
    While the SPINS logic seems to make sense at some level, it has to be said that very little that is going on with the economy right now seems to be logical … and so, while SPINS might be right, it also might have no idea what it is talking about.

    After all, almost each day brings a new low or a new challenge, and it is hard to say with certainty when and where the bottom will be reached. Phrases like “once the consumer and the economy regain their stability” could be relatively meaningless.

    Published on: November 20, 2008

    The New York Times reports that the recent announcement by New York City Mayor Michael Bloomberg that he wants to legislate a six-cent fee for each plastic bag handed out by the city’s retailers is getting mixed reviews.

    The fee, according to the Times could both “raise as much as $16 million a year for the city in its economic slump and … steer New Yorkers toward greener practices - switching to bags they can use over and over.

    “Yet even those who agree with the idea say the weaning from such a symbol of waste could be particularly difficult, if not painful, in a city with New York’s quirks. In interviews over the past week, many shoppers said the city’s largely carless, minimalist style did not easily lend itself to toting canvas or heavier plastic bags around like another accessory. Many also pointed out that the plastic bag is hardly a throwaway — indispensable, they said, for cleaning up after pets, camouflaging the smell of a dirty diaper, hiding an open can of beer or simply holding other trash … There are, indeed, logistical issues that may make it impractical for many New Yorkers to bring their own reusable bags along when they shop. Most people walk or take the bus and subway, so they have no car trunk in which to carry a number of them. Because so many purchases are spur of the moment — as easy as spotting a storefront and remembering you need candles or toothpaste — sometimes the backpack, briefcase or humongous handbag that can store them are not handy.”

    The Times notes that it has received hundreds of comments about the proposal on its website, with some people saying it was about time the city came into the 21st century, while others decried a move that they see as incompatible with the way the city lives.

    KC's View:
    It is a small sampling, to be sure, but it just so happens that the city’s excellent Fairway Market has a poll up on its website in which it asks shoppers if they would prefer to pay six cents extra for each plastic bag, or would rather have them banned completely – and 85 percent of respondents say they’d prefer an outright ban.

    I’m obviously a big proponent of the reusable canvas bags, but I do have to acknowledge that plastic bags may get greater usage in New York than elsewhere. It is, after all, a city with a pooper-scooper law, and a lot of people I know use those bags to clean up after their dogs. Which makes the streets of the world’s greatest city a lot more livable.

    Published on: November 20, 2008

    Advertising Age reports that the latest edition of the University of Michigan's American Customer Satisfaction Index is out, and it shows a 0.1 percent drop during the third quarter of the year.

    According to the story, “Overall customer satisfaction was 75. The index is scored from 1 to 100, with any score above 80 considered superior. Manufactured goods tend to have a higher overall score because they lack a service component. Of the four industries surveyed in the third quarter, personal care and cleaning products remained at 85, a record high; food edged up 3% to 83; apparel fell 2% to 80; and athletic shoes stayed at 79. The overall satisfaction composite is lower because it reflects other industries not highlighted in this report, like personal computers, airlines and hotels.”

    KC's View:
    One of the points made by Ad Age in its piece should be taken very seriously – that is a time of economic decline, it is more important than ever to satisfy one’s customers. After all, anything you can do to keep the customer from walking out the door and patronizing someone else is worth doing.

    That’s not always a high priority in these hard times, but it needs to be.

    Published on: November 20, 2008

    MSNBC reports that it is widely expected that price-driven promotions will be generated by Internet retailers earlier than ever during this recessionary holiday season. However, “more than ever, shoppers need to pay attention to the fine print on the screen, and stay alert for deals that are changing daily and sometimes hourly. There may be great offers available because of the struggling economy, but if you blink — or don’t click — in time, you could miss out.”

    It also is expected that while free shipping may continue to be a draw for consumers, many retailers may raise the price level at which free shipping will kick in.

    •The Wall Street Journal reports that “online spending growth in October fell to its lowest rate since 2001, in a sign the sector has been hit by the slumping economy and indicating a challenging holiday season for online retailers. Online retail spending grew only 1% in October from a year ago, following a downward trend that started late last year … The spending slowdown is happening as mid-to-lower income families that make less than $50,000 a year have stopped spending online.”

    KC's View:

    Published on: November 20, 2008

    Meijer announced that it is “again releasing its holiday ads early as it focuses on helping customers drive the most value from their holiday shopping trips. The company announced plans today to post all special holiday sale pricing a full nine days before the Thanksgiving holiday on its website,”

    The reason: "Economic conditions are motivating consumers to spend more time searching out the best values in retail," says Jeff Handler, senior vice president of marketing for Meijer.

    KC's View:

    Published on: November 20, 2008

    • The Washington Post reports that Walmart has “signed a contract to help power hundreds of its stores using wind energy, one of the largest investments in the field by a U.S. retailer … The company said the purchase will result in the reduction of about 139,000 metric tons of carbon dioxide, the equivalent of what 25,000 cars would emit.”
    KC's View:

    Published on: November 20, 2008

    • Starbucks announced this week that it is joining with Nike, Timberland, Levi Strauss and investor coalition Ceres to found a new group, Business for Innovative Climate and Energy Policy (BICEP), that will “lobby for policies that encourage energy efficiency, renewable energy use and green job creation, while discouraging higher-polluting technologies.”

    • Published reports say that Hy-Vee’s new Heartland Pantry store has opened in Lincoln, Nebraska, a small-store format designed to appeal to residents of a neighborhood where the company had previously closed a supermarket. The store is said to have all the basics, though without many of the specialty items usually carried by a traditional Hy-Vee store.

    • In Ireland, the Independent reports that Superquinn is changing its “Fresh Thinking” advertising slogan in favor of one that is seen as more customer focused. “You’re the business” is the new slogan, scheduled to be rolled out next week.

    • Friendly Ice Cream Corp. announced this week that it is banning trans fats from its menu, following a trend already established by chains such as McDonald’s and Wendy’s, and adhering to legislation adopted by a number of communities.

    KC's View:

    Published on: November 20, 2008

    • Royal Ahold said that its third quarter net profits were down to the equivalent of $244.5 million (US), from $268.3 million during the same period a year ago. Q3 revenue was up to the equivalent of $7.3 billion (US), from $7 billion (US) a year ago, with sales in Ahold’s US stores up 5.9 percent to $5 billion (US).

    • BJ’s Wholesale Club said that its third quarter profit was up 24 percent to $28.2 million, from $22.7 million during the same period a year earlier. The company had previously announced that third-quarter sales rose 13.4 percent to $2.4 billion, with same-store sales up 11.9 percent.

    KC's View:

    Published on: November 20, 2008

    We keep getting emails about our coverage of Meijer’s decision to measure cashier productivity, pushing for speed at the checkout and in the process reducing talk between the cashier and the shoppers. Both Michael Sansolo and I questioned this decision, wondering whether the company is sacrificing effectiveness for efficiency.

    MNB user Tom Redwine wrote:

    I was enjoying the responses … and couldn't help adding to the mix. I've had some experience on the Point of Sale side of the business, so when I'm a customer, I do my best to greet my cashier with a smile and ask how they're doing! Sometimes I get a little too much information (not that it isn't interesting, but I really didn't need to know about the new tattoo that's itching), but at least I get a response, and quite often a smile in return. Once in a great while I'll find that I've helped to "reboot" their smile and their attitude for the next customer.

    Another MNB user wrote:

    The happy medium to "checker chatter" lies somewhere between mechanical time-and-motion study efficiency and intrusive gabbling (such as the store employee in question was doing.) What shoppers want from a retail (or restaurant) transaction is courteous, respectful - possibly even a shade deferential - behavior. We don't want a buddy, we don't want our purchasing decisions judged. What we do want is to be treated like we're important, to be treated with the kind of care with which a store employee would (presumably)speak to a boss or a teacher.

    Responding to our story about the possibility that the practice by 26 states that allows retailers to keep some of the sales taxes that they collect – to compensate them for the process – could end because of the states’ need for more revenue, MNB user Barry Scher wrote:

    Keep in mind that there are indeed various costs involved in administering the sales tax collections for states and retailers should be compensated. However, it may be prudent for retailers to do their best to quantify the expense line for sales tax collections to elected officials as best possible in order to present a solid case for at least some reimbursement factor as opposed to none at all. More and more states are saying "prove your costs in collecting the sales tax for us" and without facts and figures, retailers can expect the states to eliminate totally or severely cut the vendor's allowance. So to recoup your costs, retailers have got to present a better argument backed by hard numbers.

    And, reacting to yesterday’s story about the new Kroger Fresh Fare store, MNB user Todd Hale wrote:

    My wife Connie and I visited Kroger’s new offering in the Cincinnati market last night. It is a very nice format and hats off to Kroger for picking the right location for their more upscale format. It will be very interesting to see what impact this format will have on the Fresh Market located just across the street. My bet is on Kroger!

    Good bet.
    KC's View: