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    Published on: December 2, 2008

    The National Bureau of Economic Research (NBER) announced yesterday that it has concluded that the US economy officially is in recession.

    In fact, NBER said that the US has been in recession since December 2007…but that it only reached that conclusion last Friday and made public yesterday.

    According to the NBER statement, “A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators.” The Bureau said that last December marked the end of an economic expansion that started in November 2001.

    According to the New York Times this morning, “the downturn is already longer than the average for all recessions since World War II,” and is “likely to set a new postwar record for length and likely to be more painful than any recession since 1980 and 1981.” And as uncertain as most forecasters are about the length of the current recession, they are equally uncertain about its depth.

    KC's View:
    I, for one, am gobsmacked.

    Though to be fair, while the economists have been dithering and debating about whether or not the nation has been in recession, consumers – and pretty much anyone else who could read headlines – has been operating under the impression that we were in a recessionary economy for most of the past year.

    Published on: December 2, 2008

    by Michael Sansolo

    In a sharp departure, today’s column comes without any metaphors, sarcasm or irony. This week, it’s all about greatness in various forms that we forget to see every day.

    Since I live just outside of Washington, DC, I take for granted that my daily travels take me through places that countless tourists come to visit each year. More correctly, I forget to look. But this past weekend I shed my local blinders and entered the newly re-opened National Museum of American History. Some exhibits demand I write about them.

    The first has always been the centerpiece of the museum, but is now redone magnificently. It is the original flag that flew over Fort McHenry in Baltimore in 1814 during a 25-hour naval bombardment. It was the sight of that flag at dawn that inspired a local lawyer, Francis Scott Key, to write a poem we know as the Star-Spangled Banner. (Although I did not know until this weekend that the poem only became the National Anthem in 1931. Somehow, I thought it was much earlier than that.)

    The flag used to hang in the entrance hall of the museum in poor condition and with little drama. In fact, it became a more interesting exhibit when it was taken down and moved to a space age clean room where workers suspended on horizontal gantries work to meticulous clean and refurbish the flag.

    In a clear example of building interest in something old, the flag is now housed in an incredible hall. There you are reminded of the strange path the flag took through history; how pieces of it were cut off in the 1800s as souvenirs and it was owned by a Baltimore family that stitched an initial into it. But you also learn about the fragile state of the young republic and why the battle of Baltimore was so incredibly important.

    (There is even a relevant business lesson here - that if you want to build new interest in something old, one way to do so is by positioning and explaining it differently.)

    Down the hall from the banner you see a time of even greater peril and when - to my mind - even greater words were written. There, on temporary exhibit, is Abraham Lincoln’s handwritten copy of the Gettysburg Address, with prose so insightful and moving that it resonates more than 150 years later.

    But not all heroes are as famous as Key and Lincoln and not all settings are as memorable as a battlefield. Sitting between the exhibits is a replica of a 1960s era lunch counter, where a group of black students, moved to action by the start of the civil rights movement, staged a memorable sit-in.

    However, my personal favorite moment on this visit through history came a few blocks away at the World War II memorial. Despite my proximity to these sites and my parents’ regular visits to our house, I realized I had never taken them to see a memorial to their own generation. It’s an oversight I’m glad I corrected in time.

    At the memorial, I heard my parents’ stories of that time. Of my mother’s cousin who spent his 21st birthday in a foxhole on Normandy Beach during the D-Day assault, wondering if he would ever see his 22nd birthday. (He did and I wonder how that story resonated with my 21-year-old daughter.) I heard my father tell of friends, such as the one who was among the first to set foot on Iwo Jima and survived to tell. Or the one who was a sailor on the US Indianapolis, the famed ship that delivered the atomic bomb and then sunk, only to have its crew set upon by sharks while they waited for rescue.

    I got to see my father, now in his 80s, stand by the monument to Pacific Theater battles and look down at the etching in the marble for Okinawa, the first battle in which he was involved. I got to see my mother read the inscription honoring the war at home, in which every family and every child was brought into the war effort through saving, rationing and some form of sacrifice.

    As we left, I looked out of at the city of Washington, thinking about the troubles we currently have. And I thought about the lawyer on the ship, the President at the battlefield, the students at the lunch counter, my mom’s WWII victory garden and my 18-year-old dad sailing back and forth across the Pacific - and I thought that maybe we have it in us to get through.

    Maybe we just have to open our eyes a little more often.

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

    KC's View:

    Published on: December 2, 2008

    In Oregon, Willamette Week reports that Whole Foods is using its ongoing battle with the Federal Trade Commission (FTC) as a way to try to gather information about a local competitor, nine-store New Seasons Markets.

    As has been reported, the FTC is attempting to unravel the acquisition of Wild Oats by Whole Foods, despite the fact that the $565 million deal closed more than a year ago. The FTC charges that the deal violates antitrust laws, and is pursuing the matter in the courts even though virtually every Wild Oats store has been converted to the Whole Foods banner.

    According to the story, New Seasons CEO Brian Rohter has written in his blog that “you … are probably trying to figure out what this could possibly have to do with us. That’s a great question. Since we’ve been minding our own (local) business and have never expressed an opinion one way or the other about this merger, we were wondering the same thing.

    “As it turns out, because of their legal dispute with the FTC, Whole Foods has an opportunity to try and force us to give them copies of some of our most confidential financial records – for instance what our sales are, week by week, at each of our stores. They’ve also demanded all of our files that detail our strategic plans, all of our marketing plans and all of our studies about where we are considering opening new stores … I have to believe that any reasonable person would agree that it’s really over the top for Whole Foods to be asking for this information, especially since we have nothing to do with their lawsuit. It takes away the level playing field, creates an unnecessary risk for our business and has the potential to have a negative impact on our network of local , ranchers and suppliers. It also could permanently damage the fragile regional food system that we’ve been working to create and, in the end, could reduce options for Portlanders who choose to shop at locally owned stores.”

    Willamette Week, which post copies of the legal documents served by Whole Foods’ attorneys, notes that New Seasons is fighting the motions at considerable cost.

    And Rohter writes in his blog that “We’ve been able to build a successful local business being David against their Goliath, and we’re happy to keep doing that, but we do object to having one hand tied behind our back. Whole Foods says that we should give our information to their lawyers and they claim the lawyers won’t let anyone else in the organization see them. That’s like trusting the fox to guard the henhouse – and we don’t have any faith it’s going to work like that.”

    KC's View:
    Being an independent businessman myself, I feel strongly that Rohter and New Seasons are absolutely right on this one. I wouldn’t give Whole Foods a damn thing…and I’d do my level best in both the courts and the court of public opinion to fight them. And I might consider throwing all my computers and paper files in the Willamette River to protest what is clearly an unfair attack on my ability to compete.

    It never occurred to me that Whole Foods might be able to use the FTC imitation of a rabid dog to its own advantage. But if it is doing this with New Seasons, doesn’t it seem likely that it is happening elsewhere, to other small retailers?

    It seems as if the FTC is subverting justice on a variety of levels.

    Published on: December 2, 2008

    • The Wall Street Journal this morning reports that local authorities and a lawyer representing the man trampled by Black Friday crowds at a Long Island, NY, Walmart, all are saying that the company should have had better crowd control measures in place. Other reports are saying that Jdimytai Damour, the victim of the human stampede, was not adequately trained by the retailer to cope with the crowds.

    The Journal writes that “Wal-Mart defended the precautions it took at the Long Island store. The retailer said it set up barricades, hired third-party security guards and had extra staff on hand. Security is handled on a store-by-store basis, according to Wal-Mart spokesman David Tovar.”

    The attorney representing Damour’s family said a decision has not yet been made about a possible lawsuit, though New York State laws may restrict options here.

    KC's View:

    Published on: December 2, 2008

    Consumers Union issued a statement yesterday saying that “while the U.S. Food and Drug Administration’s (FDA) new report on its current food safety activities shows some progress, it is not enough to adequately protect the American food supply.

    ‘While it is positive that they are establishing five offices in foreign countries, the discovery last week that melamine is contaminating infant formula in the U.S. as well as in China indicates that much more action is needed. FDA should immediate ask companies to recall the contaminated batches of formula.

    ‘The FDA needs a complete overhaul, including but not limited to vastly increased funding, far greater staff and much more frequent inspections of both domestic and foreign food processors.”

    Furthermore, Consumers Union said, “FDA must also become more proactive and precautionary, rather than reactive. The recent findings of melamine and cyanuric acid in infant formula – revealed to the public not by FDA but by a Freedom of Information Act request by reporters – demonstrates the agency’s failure to exercise adequate precaution. If these two chemicals are combined—a possibility FDA is not so far considering— they can be extremely hazardous to infants. Despite this hazard, and despite the fact that the agency has known about the melamine in milk products from China since September, FDA has not yet requested any recalls of contaminated batches of the formula. Consumers Union calls on FDA to request a company recall of any formula with melamine or cyanuric acid.”

    KC's View:
    We repeat a sentiment made ad nauseum here on MNB … FDA continues to drop the ball, then deny that it has dropped the ball, then question what dropping the ball really means.

    If these are our tax dollars at work, I’d like to ask for an audit.

    Published on: December 2, 2008

    The Ventura County Star reports that in Southern California, the Ventura City Council has voted to put a referendum in front of voters in November 2009, allowing the public to decide on whether big box stores ought to be banned from the city.

    According to the story, “The initiative aims to keep the world's largest retailer from coming to Ventura by banning any new store selling groceries that is larger than 90,000 square feet. A Wal-Mart store without groceries would be allowed.

    “Big grocers also could face special conditions if they decided to move into an existing but vacant store.

    “Although the initiative never mentions Wal-Mart by name, proponents, including residents and grocery unions, began crafting the measure after news surfaced that Walmart wanted to replace the now-closed Kmart on Victoria Avenue with a store of its own.”

    KC's View:
    Don't know the community, so it is hard to comment very much about this measure. But on the face of it, I can't imagine why it is better to have a vacant building that used to house a Kmart than it is to have an operating, thriving Walmart.

    Published on: December 2, 2008

    The Times of London reports that Starbucks, already slowing its US store growth plans and closing more than 600 stateside units, also is cutting back on its global expansion efforts. The “wheels have come off the Starbucks juggernaut,” according to the Times, and the company is specifically being careful with its growth efforts in the UK.

    KC's View:

    Published on: December 2, 2008

    • The Toronto Globe and Mail reports that “Canada's two largest grocery chains, Loblaw Cos. Ltd. and Sobeys, are putting a lid on the use of plastic shopping bags.

    “Loblaw said Thursday it will no longer provide free bags at checkout counters of its corporate locations and participating franchise stores across the country as of next April. The plastic bags will be available only on request, and will cost five cents each. Sobeys said it will charge five cents per bag, but only in the Toronto area, in response to the city's proposed waste reduction bylaw. It said its program will be in place by June 1, expected to be the first day of Toronto's waste diversion charge.”

    USA Today reports this morning that the likelihood that the UK’s Woolworths will go into bankruptcy is considering so strong that “Prime Minister Gordon Brown stepped in and vowed the British government would do everything possible to ensure that Woolworths' 815 stores would stay open, and its 30,000 employees would have jobs through Christmas.”

    Critics say that while at some level Woolworths is a victim of economic hard times, it also has not kept pace with evolving consumer needs and is not the kind of state-of-the-art retailing entity able to survive.

    KC's View:

    Published on: December 2, 2008

    • Supervalu-owned Save-A-Lot announced yesterday that Bill Gillispie has been hired as senior vice president of marketing and merchandising. Gillispie is a former executive with retailers that include Scotts Food, Cub Foods and Jewel.

    Tom Lenkevich, a former Save-A-Lot licensed owner and an executive with companies that include Meijer and A&P, has been hired to be Save-A-Lot’s new senior vice president of retail operations.

    Andrea Wagner, formerly with Kroger and HEB, has been hired as vice president of consumer-brand strategy.

    Vanessa Foster, previously with The Cartoon Network, has been named to be Save-A-Lot’s director of communications and community relations.

    • Campbell Soup Co. said that it has promoted Keith Olscamp, the company’s Vice President – Retail & Broker Sales Operations, to be its new Vice President Business Development and Industry Relations.

    KC's View:

    Published on: December 2, 2008

    • Ingles Markets said that annual sales for the just-completed fiscal year were up 13.6 percent to $3.24 billion, on same-store sales that were up 13.5 percent including gasoline sales, and eight percent excluding gasoline. Annual net income totaled $52.1 million compared with $58.6 million for fiscal 2007.

    Ingles’ Q4 sales totaled $842.8 million, a 13.0 percent increase compared to the same period a year ago, on same-store sales that were up 13 percent including gasoline sales and up 7.8 percent excluding fuel sales. Fourth quarter net income totaled $10.5 million, compared with $14.2 million for the fourth quarter of fiscal 2007.

    • Tesco PLC reported yesterday that its third quarter sales were up 11.7 percent, with international sales up 28.1 percent, compared to the same period a year ago.

    UK same-store sales for Tesco were up two percent.

    Tesco said that it will respond to the global economic slowdown by reducing its capital expenditures during the upcoming year from the equivalent of $6.6 billion (US) to $5.9 billion (US).
    KC's View:

    Published on: December 2, 2008

    Got a number of emails responding to Monday’s commentary, ‘Black Friday…In More Ways Than One,” which looked at the death of a Walmart employee last weekend when he was trampled by crowds looking for deals early Friday morning.

    One MNB user wrote:

    Your comments, while recognizing the real problem here about our society, you then as usual, cruse right into the solution of placing the responsibility of alleviating the problems on to “BIG BUSINESS” which in some way reminds me of a recent economic fix (that also did not work) where “BIG GOVERNMENT” stuck their nose and our $$ in as well. Once again the devil is in the details and the more you people keep glazing over the root causes of why are society is breaking down or why our sense of humanity has diminished or why our economy is failing despite the unconstitutional Government intervention, then the deeper the pain will be felt for the most vulnerable who are lied to repeatedly by “do-gooders” like yourself with your quick and easy fixes. Just keep ignoring the root cause of all of these problems because you’re in charge now with nobody left to blame.

    Not sure where to start responding to this. My goal yesterday was to point out a broader problem, not to assess blame…though there is plenty to go around. And it doesn’t really matter who is to blame – the retailer will be held accountable, will face lawsuits in this matter, and therefore needs to preemptively come up with solutions (not just for PR reasons).

    I’m also not sure what phrases like “you people” and “you’re in charge now” mean. Except that there seems to be a bit of hostility here.

    As for being a “do-gooder,” I’m not nearly a good enough person to qualify.

    This was not the only criticism I received. Another MNB user had some thoughts about my commentary on a different story yesterday:

    I’m not sure that it necessarily is a done deal that Obama will support “card check” legislation. The theory, expressed in both editorials and on Sunday morning television shows, is that the new administration won’t want to add to the cost burdens of businesses at this point in time, even if convinced that it would help the working class. In addition, these seems to be a sense that it will be critical for Obama to gain some “street cred” with conservatives and Republicans, and that backing off this legislation – especially at the current time – would be a good way to gain cooperation that will be more helpful in the long run.

    I hope that this reasoning plays out. Taking away the secret ballot would be a significant mistake and upset whatever balance of power there is between management and labor.


    This MNB user wrote:

    Kevin, if things don't continue to be good at Morning News Beat and I hope they continue to grow and prosper for many years, but if they don't you can always go work at Disney Land because I really believe you live in a fairy tale land sometimes. When you make a statement regarding the secret ballot like maybe Congress and the President-elect won't want to impose additional costs on businesses, then you do live on a fairy tale lane. The unions gave Obama ONE HUNDRED AND FIFTY MILLION DOLLARS mainly on the premise of eliminating the secret ballot. They are dancing in the streets.

    I wish life would be a bowl of cherries as you sometimes fantasize. As far as balling out the big three auto companies, I totally disagree with giving them a dime. In the early 80's when Lee Iacocca went to Washington, he had plan, he executed it, and it was successful. These guys fly to Washington ask for money with no plan. Giving them money would just prolong the inevitable. I agree with Mitt Romney, let them go chapter 11 and reorganize and try to get to profitability. Before the government gives them any money, I would rather see them give any tax payer that wants to buy a new American car $10,000 or whatever the number is and make them work for the money and at least the hard working taxpayer gets something for his. How much would the sales increase be if we divided the $25 billion dollars by a certain rebate number. Finally, I haven't heard a thing from the UAW of how they are willing to help fix this mess. Shouldn't they come to the party as well?


    To be fair, I didn’t precisely say that I thought that Obama would defy the unions – just that I thought it was possible (other people far smarter than I think so, too) and a good idea. But I’m not betting on it.

    As for the Big Three, I haven’t supported a bailout….if anything, I’ve expressed ambivalence about it, and have been extremely critical of the auto companies and the unions.

    That said, I hope MNB continues to be viable for a long time, too. I’m too old for fairy tales.




    More email on the Black Friday trampling death, as one MNB user wrote:

    I called my sister who lives in the NY metro area. I asked why did New Yorkers have to live up to their reputation of being uncaring and self-centered? (Having grown up in the NY area I know most New Yorkers are kind caring people – but the stereotype still holds for most of the country.) Your article is correct what happened at Walmart was bound to happen. For years there have been reports of pushing, shoving, grabbing, cat fights and fist fights. We’ve been out-of-stock on sale merchandise so often we’ve help create the mob mentality of get it now and get what’s mine or there won’t be any for me. Add in a bad economy and “the mob mentality” and we have a tragedy. My condolences to the worker’s family.

    I might be getting old (ye old calendar check says I am) but I remember my years as a buyer (technically I still am a buyer but not for a retailer.) Isn’t there anyone today working as a merchant that knows that people will still shop when the price is right, especially when times are bad? I was always amazed how customers instinctively knew when our prices were cut to the bone to stimulate sales and sales we got – profit was something you worried about another day. They know we’ll “drop our pants” as we panic looking at daily sales numbers and on-hand inventories. Yes “the industry” has done a fine job of teaching the consumer to wait us out, we’ve shown them how low we’re willing to go – they’ll wait. None of this is new, go back to other hard times and learn – those who don’t learn from history are destined to repeat it… We are all consumers, just look at yourself, your family and friends to see the trend.

    Sorry the for cynicism but I worked retail for many years. I’m wondering how much today’s retailers care about their workers on the line and what the companies have done to help create Peace on Earth. Good will to men. (Other than sell a sign that says it…) Apparently greed isn’t just on Wall Street.


    MNB user John Hall wrote:

    I have wondered why retailers haven’t used the system of issuing numbers to those in line and allow a set amount of customers in the store at one time. This would truly reward those who waited in line for hours and hold back those who cause the rush at opening time. This has solved the mass chaos problems at major sporting events and concerts and help to eliminate fights and injuries. I am totally confused at how a retailer could place themselves in a position of culpability of fights, injuries and now even deaths.

    Let’s face it, the Black Friday mobs are only interested in the hot deals and not their fellow man. Issuing tickets may not a popular way to start the holiday gift season but it will maintain order and eliminate what we are seeing. Has anyone even talked about the amount of people in the store at this time and what the local fire code for the store is?

    This will only get worse unless something is done to maintain a reasonable amount of order. Of course this may start a whole new side business of scalping…


    MNB user Mark E Monroe wrote:

    Our culture has lost touch with what is important? Ya think? I guess in typical American fashion, we recognize these things about a decade too late.

    The U.S.A as we knew it will never again exist in our lifetimes (the borrow and spend game is over)…the sooner people wake up and realize that (and start saving), the better off they’ll be…


    Another MNB user wrote:

    If any advertised item out of stock had to be covered by a rain check redeemable for 30 days it would eliminate the hunt. You could still put a time limit on when they are to be issued but it would restore order. Would it hurt the retailer that only stocks 5-10 of the ad –Yes – but it would be more civilized.

    MNB user Jackie Lembke wrote:

    Not much else can be said about human nature and the tendency for a crowd to become a mob when a single person knows better (I hope). The bargains on Friday weren’t worth the rare chance to sleep in, so I skipped the frenzy and spent a lovely day doing very little. I plan to continue that tradition for years to come.

    Wise person.

    Even Michael Sansolo had some thoughts:

    Much as we'd all like to quickly solve issues like the Black Friday death at Walmart, the truth is we can't. There are no magic ways to change the behavior of crowds and I really doubt we'll see the end of these limited type offers. But steps can be taken.

    Nearly 30 years ago, 11 people in Cincinnati were trampled to death by a surging crowd rushing for seats to a rock concert. In the aftermath of that tragedy, Cincinnati banned open or festival seating, but few others followed. Instead, most venues changed crowd control outside their events and at entry points. In 2004, Cincinnati rescinded its ban to be more competitive in attracting top acts.

    Retailers face the same dilemma now. No one is going to unilaterally surrender the Black Friday Frenzy, no matter how unprofitable those sales might be. And it's hard to believe that manners and decorum will return to the gathering crowd. But if rock concerts could get this right, somehow there must be a lesson for retailers. Too bad we didn't study Cincinnati's sad lessons earlier.





    On the subject of the FDA’s efforts to restructure its food safety efforts, one MNB user wrote:

    Unless the FDA defines its mission (stated mission is to protect citizens…but seems that mission really is to promote business at citizens’ risk) nothing changes but added money spent.

    Key word is lack of trust!

    Couple points:

    1. Bribes are common business practices in Asian countries…no trust there.
    2. Do we really want to pay foreign regulators to do the FDA’s job (if we can’t trust FDA, how do we trust who they hire).
    3. The reason we formed the FDA was because the private sector could not be trusted…what has changed?


    KC's View:

    Published on: December 2, 2008

    In Monday Night Football action, the Houston Texans defeated the Jacksonville Jaguars 30-17.
    KC's View: