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    Published on: November 25, 2008

    by Michael Sansolo

    If you’re anything like me, last week was a tough week as we watched the increasingly sad fate of some American institutions. Of course, I don’t mean General Motors, Ford and Chrysler. Rather, the stunning announcement that Marlena and John were both fired from “Days of Our Lives.”

    Now in the name of honesty I have to admit that I know nothing about “Days of Our Lives.” (FYI…Kevin made me watch the show just for this column. And, wow! A lot of stuff happens in seven minutes...which is about all I could bear to watch So much bad news, uncertainty and tears occurred that I thought I was watching the nightly news Wall Street report.)

    But apparently the big news is this: “Days of Our Lives” is an institution pre-dating television itself and the firings of two cornerstone characters were necessitated by budget cuts. And the problem at “Days” isn’t isolated to a single show. The entire genre of soap operas is having issues.

    Much of this, of course, is caused by the societal changes that we are all familiar with. Apparently the majority of women now in the work force are seeing enough drama during the day to avoid wanting anymore on television. What’s more, many of the women (and men) at home during the day now have the benefit of 2,000 channels of endless choices.

    Now you can watch real drama on any of the non-stop news, sports or relationship shows on the air instead of a masked gunman, a woman battling cancer, an unspecified emergency pregnancy, a complicated murder charge and a big time love triangle - all of which came up in my seven minutes of “Days.” (Maybe I should start watching…)

    There are great parallels here with the problems many of us face in industries that are also American institutions. We can question whether the soaps changed sufficiently to meet the desires of a new audience. We can ponder whether the story lines were relevant, the casting in step with today’s diversity and if the entire industry properly understood the impact of new competition. (Thank you, Ellen DeGeneres.)

    Incredibly enough, we can find some easy answers from another television show and one that prided itself on never giving lessons: “Seinfeld.”

    It might shock you to learn that “Seinfeld,” the show about nothing, has been out of production for a decade. That means the last time there was a new episode, Bill Clinton still had two years to go in the White House and the Yankees were world champs. Some other stuff changed, too, or so I’m told.

    The reason it seems that “Seinfeld” never left is its constant presence in re-runs. But that’s not the story. As reported in the New York Times this past weekend, “Seinfeld” has managed to stay one of most popular re-runs on television and is now reaching out to a whole new audience.

    To draw today’s college students into the world of “Seinfeld,” the program is marketed heavily on college campuses, including the use of a tour bus/museum to highlight some of the show’s more famous episodes and props. (Fusilli Jerry anyone?) A quick check of found more than 500 groups devoted to “Seinfeld,” many with more than 5,000 members.

    The result is continued popularity for a show 10 years after it produced its final episode. (One could say that “Seinfeld” remains the master of its domain. Not that there is anything wrong with that.)

    It has to make you wonder if other institutions could win with similar marketing efforts.

    Could supermarkets possibly re-introduce themselves to the younger generation by reaching out to them in new ways?

    Could new energy and unusual marketing excite new customers about stores and products?

    Are institutions condemned to crumble or could they be repositioned to win into the future?

    Will anyone ever catch the masked man on “Days of Our Lives”?

    I hope so. I just love a happy ending.

    Michael Sansolo can be reached via email at .
    KC's View:

    Published on: November 25, 2008

    Walmart yesterday agreed to pay a $1.4 million fine to settle a pricing lawsuit brought against it by the office of California Attorney General Jerry Brown. In addition, the retailer will refund customers who find future pricing errors in the amount of $3 per customer for products that cost $3 or more; mis-priced products that cost less will be given to shoppers for free.

    The original lawsuit grew out of random price checks done by state investigators, who found that 164 Walmarts in 30 California counties were guilty of scanning errors, with discrepancies between item pricing and the amounts actually charged.

    "Wal-Mart always strives for 100 percent pricing accuracy," Wal-Mart spokesman Greg Rossiter said in a prepared statement. "If we do find pricing discrepancies, we're committed to making it right for our customers, and we are instituting additional measures to do just that." These measures include a new pricing accuracy program in its California stores and the designation of employees to do price checks and handle customer complaints.

    KC's View:

    Published on: November 25, 2008

    The Austin American-Statesman reports on the expansion efforts being engineered by Sunflower Farmers Markets, the Colorado-based chain looking to lure shoppers who are simultaneously concerned with healthy eating and worried about their spending on food…and who find Sunflower to be a more palatable choice than companies perceived to be high-priced such as Whole Foods.

    By coming to markets such as Austin, Texas, the paper writes, Sunflower is undertaking an aggressive approach, since it puts it squarely in competition with Whole Foods and HEB. But CEO Mike Gilliland, who co-founded Wild Oats in 1987, says that his company’s frugality and attention to detail will allow it to be competitive and earn market share.

    "Twenty-five years ago, if you had the product and you were a big natural foods store, it was a big deal," Gilliland tells the paper. "All you had to do was open the door and people would pay whatever." But now, he says, "it's more of a precision business than it used to be in terms of we don't work on a lot of margin, so we have had to adopt a lot of big-grocery-store practices in terms of ... just really watching the pennies."

    KC's View:
    It seems to me that it is easier for Sunflower to communicate a value/values message to shoppers than for Whole Foods, which has long had a “whole paycheck” reputation.

    Gilliland tells a story about how, when he ran Wild Oats, he competed with the larger Whole Foods by being more nimble…which probably exactly how he plans to compete with the now merged Whole Foods-Wild Oats combination.

    Nimble may not guarantee that one will win, but it makes it a lot easier to survive.

    Published on: November 25, 2008

    The Boston Globe reports that the current economic tumult is resulting in the increased use of cash instead of credit cards – in part because less credit is available from troubled financial banking institutions, and in part because consumers are being smarter about their own debt loads.

    It could be a long-term shift. “Even when the economy recovers and credit loosens up,” the Globe writes, “analysts say more Americans - shaped by what could be a deep and long-lasting recession - are likely to stick with buying only what they can afford, just as their parents or grandparents did after the Great Depression.”

    Retailers are seeing the impact in how and when shoppers spend money, according to the story. One effect has been that people tend to be spending more on payday, because that’s when they are cash-rich. It also means that people are spending less overall, which is digging into retailers’ sales and profits.

    KC's View:
    Inevitably, lower sales and profits probably will mean layoffs in a number of places, which will lead to even less spending, and more layoffs, and the circle of decline will continue.

    It certainly seems as if the result will be a country with a healthier approach to money and debt. But it sure sounds as if it is going to be painful getting there.

    Published on: November 25, 2008

    The Austin Business Journal offers an overview of how HEB and Whole Foods have aggressively marketed the notion of reusable shopping bags, and how both companies have gotten traction with the environmentally themed efforts.

    In the case of HEB, it introduced the bags on Earth Day this year, giving away one free reusable polypropylene bag for every five plastic bags brought in by shoppers – giving away 150,000 bags almost immediately.

    Whole Foods, on the other hand, took a more absolutist approach, announcing that “it would stop using disposable plastic bags in all of its stores in the U.S., Canada and the U.K.” The company also hired singer Sheryl Crow to design a more stylish bag that it sells in its stores.

    Key to the programs’ success has been broader community support: “Why all this concern about how Austinites bag their groceries? According to the Environmental Protection Agency, in 2005 only 5.2 percent of the plastic bags discarded into nationwide municipal waste were recycled. And these bags can take 1,000 years to decompose, according to the EPA. Moreover, the EPA found that Americans throw away about 100 billion plastic shopping bags every year.

    “Keep Austin Beautiful has initiated a Web education campaign called Austin’s Got A Brand New Bag to promote the use of reusable shopping bags and disposable bag recycling. For example, consumers can read on its Web site where plastic shopping bags can be recycled at several Austin retailers including Central Market, HEB, Randalls, Walmart and Whole Foods Market.”

    KC's View:
    The smart thing about all these components is that they haven't depended on bag taxes or fees, and legislation hasn’t played a part in getting the community to change its habits. It has been more organic, more grass-roots…which, it seems to me, is the best way to do it.

    Published on: November 25, 2008

    There’s a fascinating interview in the Boston Globe with a woman named Bee Wilson, described as a “British historian and food journalist,” who has written a new book entitled "Swindled: The Dark History of Food Fraud From Poisoned Candy to Counterfeit Coffee.”

    According to the story, the book is “a creepy tour of several centuries of culinary fakery, misrepresentation, and outright criminality,” and looks at “food adulteration” in its various forms – moral and immoral, legal and illegal.

    There is an interesting exchange in the interview where it is pointed out that in some cases, consumers actually resist efforts to make food less adulterated. “Chicken tikka masala, which has become a kind of British national dish, may be an example of this,” Wilson says. “It's made to look bright red with the addition of food coloring, often in dangerous amounts. When steps were taken to regulate it, the tabloids screamed ‘Don't [mess with] our tikka!’ Adulterators count on us to acquire a taste for adulterated products.”

    However, Wilson also shows a refreshing attitude toward food, especially for someone highly critical of the food establishment: “I think there's danger in becoming so fixated on pure food that pleasure is lost sight of, especially since all food has impurities,” she says. “Pleasure is important.”

    KC's View:
    “Pleasure is important” is a sign that ought to be in every supermarket.

    Published on: November 25, 2008

    • The Food & Drug Council announced that “hundreds of union members will distribute handbills at 15 Bristol Farms stores” across Southern California beginning Saturday, Nov. 22, “asking the public not to purchase products made at Alta Dena Dairy's City of Industry facility.” According to the announcement, “Alta Dena Dairy is on the California Labor Federation's ‘Do Not Patronize’ list because it fails to make affordable health care available to its workers in the City of Industry and fails to observe other prevailing wages and benefits for its workers.”

    The Food & Drug Council is a coalition of unions in the retail food and drug industries throughout California and Arizona.

    • The Pittsburgh Business Times reports that “Giant Eagle is squeezing yet another promotional opportunity out of its fuelperks! program, partnering with Citizens Bank to enable the bank’s customers to generate a few more pennies per gallon off their fill-ups at Giant Eagle-owned GetGo convenience store locations.

    “Giant Eagle already counts Citizens as a partner as the grocer’s in-store bank, with 55 branch locations in the 97 supermarkets.

    “Now, the region’s dominant grocery store will give Citizens Bank members an added three cents off per gallon for each $50 they spend in Giant Eagle stores using their Advantage cards and their Citizens Bank debit cards. Currently, Giant Eagle Advantage card users generate ten cents off per gallon for every $50 they spend now.”

    USA Today reports on efforts by major food manufacturers to reduce or remove salt from the nation’s food supply.

    According to the story, “Some 663 products claiming ‘reduced sodium’ were introduced in 2007, vs. 449 in 2006. Through the first nine months of this year, 402 were introduced, says Tom Vierhile, director of Datamonitor's Productscan Online, which tracks new products. ‘A little less salt makes consumers think they're doing the right thing,’ Vierhile says.

    “But that's not all that's driving salt reduction. Aging Boomers are in search of low-salt foods. Parents are demanding less salt in kids' diets. And one food activist group is calling for the government to order salt reduction in foods by up to 50%.”

    And, in a related story, HealthDay News reports that 70 percent of US citizens who have high blood pressure aren’t doing enough to control it, either through changed eating habits, exercise or the use of medication. High blood pressure, the story notes, can lead to stroke and/or heart disease. And salt consumption is a major culprit in the creation of high blood pressure.

    Brand Week reports that Campbell is focusing its newest ad campaign for V8 juice at a group not often targeted by CPG companies – senior citizens, AKA “aging baby boomers.” The theme: drink V8 and one is less likely to act one’s age.

    KC's View:
    I understand why this is a smart move, but I have to be honest here. I am a regular consumer of V8 juice (especially the low-salt kind, since as an aging baby boomer I am concerned about my blood pressure), but in some ways this new campaign creates the image in my mind that it is roughly akin to prune juice.

    (I hate prune juice – in pat because of how it tastes, and in part because of what it traditionally has represented. The fact that in Klingon circles it is considered “a warrior’s drink” hasn’t changed my mind.)

    Then again, this might just be me being in denial about the whole age thing.

    Published on: November 25, 2008

    • Campbell Soup Co. said that its first quarter profits were off 3.7 percent, down to $260 million from $270 million from the same period a year ago. Q1 sales rose 3 percent to $2.25 billion from $2.19 billion last year.

    KC's View:

    Published on: November 25, 2008

    Lots of stories on MNB recently about the state of the economy, and yesterday we had a piece about food prices, which were going up earlier this year as energy costs skyrocketed but aren’t going down now that energy costs are plummeting.

    I commented: While I think that some manufacturers may try to keep their prices up for the time being, I also believe firmly that a lot of retailers will be putting pressure on those suppliers to lower their prices…and if they don't, they will increasingly be pushing private label alternatives to save shoppers money.

    If the industry doesn’t do this on behalf of shoppers, then a lot of consumers are going to develop their own strategies for lowering their food costs. Better to be on the side of shoppers than to be seen as exploiting them in tough times.

    One MNB user responded:

    Retailers typically encourage suppliers to delay or eat our own cost increases until we reach a breaking point. At that point, retailers often accept only part of each dollar of our proposed increases, or in the case of large mass merchandisers, take the increase but give part of their distribution centers to the competitors.

    Therefore, supplier increases are not taken or barely taken, sometimes for years. When commodity costs suddenly ease, retailers then demand and expect an instantaneous cost decrease against cost increases that never happened.

    You might want to inform the media that the largest single component of retail price is usually the retailer gross margin, not the food itself.

    Another MNB user wrote:

    As to the cost of food not coming down as fast as the price of gas: This is not a simple issue. Yes, the cost of gas and some commodities have come down a bunch to a bit for manufacturers. However, my company did not take price hikes until after significant profits were already lost as we hoped prices would adjust faster than they did.

    Furthermore, market conditions would not allow us to take price increases to fully reflect the ’temporary’ increases in cog’s during our “recent insanity” and maintain any semblance of sales.

    Additionally, let us not forget the margin creep (for many it has been a trot not a creep) that retailers have been taking. Everyday margins at most retailers have increased, ad charges have increased, ad margins have increased, while in many cases volume has decreased. Making reclamation centers profit centers, ad money as profit builders for the print but not for the sales of the products etc., charging fees for clerical errors, late trucks et al but not reciprocating when their people error. Not all retailers operate in the aforementioned fashion but enough do that the cost of doing business with them inflates the cost of goods to them. What would really serve consumers would be for all retailers to eliminate slotting and go back to stocking “worthy products” that deliver value and therefore profit. This would lower prices but that’s another issue. As you know, there are many issues involved in pricing, the cost of gas and commodities being only a part of the process.

    Pricing is an incredibly complex issue, and as with almost all other issues, not simple to solve or figure. In the end, the consumer tells us how much to charge.

    Still another MNB user chimed in:

    As someone who has spent 17 years in the consumer packaged goods industry, I wanted to comment on food prices & the expectation that now that fuel costs have come down, that food prices should automatically follow. This is an unrealistic—and possibly even unfair--expectation, for a number of reasons:

    1. Fuel is far from the only factor driving higher food costs. The cost of numerous commodity items – from shortening, to flour, to corn, etc.—continue to be high and are of course major contributors to the cost of consumer food products. With the continued population growth of countries like China & India and others (and don’t even get me started on Ethanol), there will continue to be a strain on the world’s food supply, and this increased demand & limited supply will continue to keep commodity prices high.

    2. Fuel & commodity costs escalated dramatically & for some time before a lot of consumer packaged goods companies could or would raise prices. Some waited in the hopes that those costs would come down in the short term (which they did not) while others were reluctant to pass those costs on to consumers until the point that profitability was being heavily damaged & there was no choice left. Manufacturers hate taking price increases if there is any way to avoid it.

    3. Many companies, mine included, only raised prices when the commodities got out of hand & not necessarily strictly because of fuel costs. Higher fuel surcharges for shipping are often “eaten” by the manufacturer & not passed on to the retailer & consumer. Yes, I know what you’re going to say—that higher fuel costs also impacted commodity costs because they have to be shipped to production facilities, etc., and that fuel costs impact production costs—and I don’t totally disagree; I just want to make the point that many fuel costs are not even passed on to the consumer.

    4. Not all price increases are created equal. Although my company had to raise prices, we did not raise them by the same amount that our costs went up—only to the level that we felt we & our customers could both live with. That translated into significantly lower profit margins. Now that one factor driving higher costs has finally fallen back a little, isn’t fair that we make a somewhat decent profit margin?

    My company makes a much thinner % profit margin today than it did 1-2 years ago, even with the price increase we took in the spring & the recent decrease in fuel costs. I’m sure we’re not the only ones. Is it fair to ask us to lower our prices & make even less? We have bills to pay, too.

    And another MNB user wrote:

    I think that someone should also consider what the Retailers them selves are doing. over the last two years we have seen Retailers take their margins up double digits. I believe the more significant part to why retails have gone up so much. Yes we have increased prices but not at the same rate that margins have increased. We are under constant pressure from our retailers.

    Once 25% to 35% GM are now 40% to 50% GM's. So regardless if we increased our cost or not, retails would be on the rise. If we as manufacturers attempt to keep the retails affordable, it means us digging even deeper on deals.

    Someone should look at the Retailers and not just the manufacturer.

    Points taken. The manufacturer is not necessarily the bad guy.

    Thanks to all of you for making sure that we don't over-simplify the issue.

    KC's View:

    Published on: November 25, 2008

    In Monday Night Football, the New Orleans Saints beat up on the Green Bay Packers 51-29.
    KC's View: