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: December 23, 2008

    by Michael Sansolo

    It’s hard to imagine many people looking back on 2008 with nostalgia. More likely, most of us will be fighting over who gets to slam the door on this year. It was, after all, a year of problems that never seemed to end.

    We watched tidal wave after tidal wave of issues this year. We went through a period of skyrocketing oil prices and ripple aftershocks in food prices caused by higher costs for transportation and in many key ingredients. We demonized ethanol as the political campaign moved through the farm states, only to have the year finish with plummeting oil prices, supply concerns from OPEC and the specter of deflation on some products.

    And that was the good news.

    If you want to capture the year in one image do a Google search on the Dow Jones Industrial Average and examine the entire year’s movement in a single chart on your computer. There you will see in clear graphics how Jan. 2, 2008, was clearly the high water mark of the year when the Dow was sitting nicely above 13,000.

    Worse yet, you see that despite all the hand wringing that dominated the news through the summer, the Dow still finished trading above 11,000 on Sept. 26th. Two weeks later, on Oct. 10th, it dropped to 8,400.

    It happened that fast.

    Or did it. One of my favorite quotes comes from The Sun Also Rises in which one of Hemmingway’s characters is asked how he went bankrupt. He replies, “Two ways. Gradually and then suddenly.”

    That’s how change usually happens.

    Yes, those two weeks this fall were awful, but it was what happened over the years in the financial community that made the stunning collapse possible. Similarly, what happened to the automotive companies didn’t happen overnight, it took years of missteps, quality problems and poorly designed cars. And the shattered trust many of us now have in collected institutions didn’t happen overnight either. It took loads of time.

    Kevin is fond of reminding us repeatedly in MNB that trust, once lost, doesn’t return easily. He’s right.

    So ask yourself, where does the shopper put his or her trust in you and how are you going to avoid violating it? How are you going to work to be more efficient than ever so that prices, now in the spotlight like never before, are as good as possible? How are you going to make sure that the critical elements of trust, such as quality, consistency and safety aren’t violated, despite the tough times? How are you going to provide a viable, competitive option even in the toughest of markets?

    Ask yourself what you are doing every day, every week and every month to guard your reputation and the trust your shoppers put in you. Ask yourself what you are doing to avoid having problems blow up in your face both gradually and overnight.

    In truth we have no idea what’s coming next. We didn’t see the incredible roller coaster of 2008 before it all happened and we can’t possibly see what is ahead in 2009, 2010 and beyond. All we can do is try our best and somehow how for a little luck. After the year we had this year, I think we deserve it.

    Happy New Year everyone.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .
    KC's View:

    Published on: December 23, 2008

    Add “The Boss” to the list of musical artists offering exclusive CDs through Walmart.

    That’s right. Bruce Springsteen will issue a new CD on January 13th, a “greatest hits” collection that is designed to take advantage of the Super Bowl appearance of Springsteen with the E Street Band, as well as build interest in their new album, “Working on A Dream,” which will be released on January 27. And the new “greatest hits” album only will be available at Walmart and Walmart.com.

    Two notes. One is that the “greatest hits” album will only feature Springsteen’s work with the E Street Band, and will not have any previously unreleased material. And, the new album, ‘Working On A Dream,” will not be a Walmart exclusive.

    KC's View:
    Well, I’ve already downloaded the title track of Springsteen’s new album, ‘Working On A Dream,” to my iPod, and it is terrific. Rolling Stone says that the whole thing ought to be wonderful, especially an eight-minute track entitled “Outlaw Pete.” So count me among those who will download the new album as soon as it comes out.

    As for the Walmart deal…well, why not? A bunch of other groups have proven that Walmart can be a potent force in the music industry, so it probably makes sense for Springsteen to test it out … though one would think that the Bentonville Behemoth would represent a bunch of things that he would find antithetical to his image.

    Published on: December 23, 2008

    The Baltimore Sun reports that “after years of food poisoning episodes, tainted imports and unrealized promises of reform, the incoming Obama administration has been saying the embattled Food and Drug Administration would finally get what it needed to make the nation's food supply safer.

    “But now, some of the leading champions of rebuilding the FDA and the food safety system acknowledge that big reforms are likely still years away. ”

    The delay is simply a matter of priorities – issues of economic policy and national security currently are on the front burner, and the federal budget is stretched about as thin as it ever has been; by necessity, these factors will push off addressing food safety issues.

    As a result, the Sun reports, “instead of assuming more direct control of the inspection system, the government seems likely to remain heavily dependent on growers, food processors and others in the industry to police themselves and the food supply.”

    KC's View:
    It seems to me that the time may be ripe for the incoming Obama administration to identify a proven innovator and leader from the business community – not necessarily the food industry – who can come in and study the current bureaucracies and processes and make intelligent recommendations for an overhaul that will create a structure that is both efficient and effective. Regulations have to have teeth, but also have to be contextual – common sense and transparency have to play key roles in how the agencies work.

    Is this a food czar? I don't know if that is precisely the role. But I do think that while matters of economics and foreign policy play out across the headlines, the Obama administration ought to take advantage of the first year in office to do some serious studying of how the current system works, where changes need to be made, and how best to accomplish the overall goal – which to have a safer food supply.

    Published on: December 23, 2008

    In the UK, the Telegraph has an interview with Andy Bond, CEO of Walmart’s Asda Group, who, according to the story, “believes that the economic slowdown has transformed consumers and brought an abrupt end to the era of conspicuous consumption. People will no longer overpay on food, no matter what their income or social class. ‘There has been a fundamental shift that will see the emergence of a new breed of consumer,’ says Mr. Bond.”

    Bond says that, in the 15 years since he joined Asda, he has never seen the economy in such bad shape. "We probably haven't seen an economic situation like this in our lifetime," he tells the Telegraph. "We are going into a very tough time. I am very concerned about unemployment … The decline has happened pretty quickly so getting your arms around that has been a challenge. Retail is about selling stuff but there are a lot of other risks associated with that now, such as the risks of suppliers going bust.”

    If there is good news for Asda, the paper says, it is that “somehow Asda fits with the new classless economic climate.”

    KC's View:
    I love the phrase, “classless economic climate.” It seems to perfectly capture what is going on right now as consumerism enters a new phase. I’m not so naïve as to think that this will be a permanent shift – it may be 2010 or it may be 2020, but one can imagine headlines proclaiming “the new prosperity” – but I do think we’re only at the beginning of this process.

    That said, I continue to believe – and you probably can count on me harping on this throughout 2009 – that retailers need to focus on both value and values. They are not the same thing, but they both deserve attention…

    Published on: December 23, 2008

    Italian researchers have concluded that one or two glasses of wine each day may have the effect of raising the amount of heart-healthy omega-3 fatty acids in a person's blood.

    The story, from Reuters Health, says that “omega-3 fatty acids, found in oily fish like salmon and mackerel, are thought to protect the heart by lowering triglycerides (a type of blood fat), reducing inflammation and preventing heart-rhythm disturbances, among other benefits. For its part, wine may boost blood levels of ‘good’ HDL cholesterol, reduce the chances of blood clots and improve the function of the blood vessel lining.

    “Some lab research has suggested that moderate amounts of wine, or other types of alcohol, may also change the body's metabolism of omega-3 fatty acids.”

    KC's View:
    Bless the Italian researchers who working so assiduously on this problem.

    Published on: December 23, 2008

    Reuters Health reports on a new study, conducted by the Massachusetts-based Rippe Lifestyle Institute, which manages the Breakfast Research Institute, saying that…hold on, now…breakfast is the most important meal of the day.

    According to the study, people who eat breakfast on a regular basis – provided it isn’t a doughnut or high-calorie pastry, but rather is something with “low energy density,” like fruit and high-fiber grains - tend to maintain a healthier regular weight and have a high-quality diet overall.

    “The findings,” the story says, “give some support to past studies finding that breakfast eaters are less likely to be overweight -- and that eating a high-quality breakfast, rather than grabbing a pastry, is the key. Research has shown, for example, that people who eat a bowl of cereal for breakfast have a lower average weight than either those who skip breakfast or those who sit down to a plate of steak and eggs.” Choosing a healthier breakfast, according to the study, tends to be a predictor of the likelihood that a person will choose healthier food the rest of the day.

    KC's View:
    I love stories like this that essentially confirm stuff that moms have been saying for decades, if not centuries. And they didn’t even have any research grants.

    Published on: December 23, 2008

    Reuters reports that Cencosud, a leading Chilean retailer, has declared itself “up and ready” to compete with Walmart, which has made a $2.7 billion offer to acquire D&S, the nation’s largest supermarket chain.
    KC's View:

    Published on: December 23, 2008

    • Walgreen reports that its first fiscal quarter profit was down 10 percent to $408 million, from $456 million during the same period a year ago. Q1 revenue grew seven percent, to $14.95 billion, on same-store sales that were up 1.7 percent. Walgreen blamed the profit decrease on expenses related to opening more than 200 stores during the quarter.
    KC's View:

    Published on: December 23, 2008

    Excellent question from MNB user David R. Schools…

    In the last two MNBs you have advocated laws against the use of plastic bags, laws mandating the listing of calorie content in restaurants, laws prohibiting the selling of tobacco in stores with a pharmacy, yet you also advocate the Bentonville Behemoth's right to crush small business with a survival-of-the-fittest mentality. How come the market gets a chance to work on behalf of the BB but not when it comes to pet peeves?

    Well, if you’re going to ask for consistency…

    Seriously, though, I think you make a good point that requires me to consider my own points of view.

    Regarding Walmart’s Chicago expansion efforts, I think my position is more related to the fact that we’re in a recessionary economy that is short on both jobs and new revenues, and that this makes it harder to reject Walmart’s efforts to build…especially since one store in Chicago has generated more than $10 million in sales taxes over two years.

    Over the years, I think I’ve been a little conflicted about the whole notion of communities rejecting certain retailers. On the one hand, I think voters/taxpayers ought to have the right to determine the shape of commercial development in their communities…but I also think that it is incumbent on smaller retailers to find new ways to compete against big box stores, and that too much time is spent whining about level playing fields. This may be harsh, but “compete” is a verb…it requires retailers of all shapes and sizes to find ways to differentiate themselves in the marketplace. That’s harder to do now that the nation is in an economic decline and “always low prices” sounds irresistible to so many people. Bu it remains a critical component in the competitive wars.

    As for the other issues, you make a fair point…though, in fairness to me, I think I’ve said over the years that I would always prefer a non-legislative response to these issues. In the case of plastic bags, there is a larger environmental cause that needs to be addressed…and in the case of nutritional postings, there is a public health issue that requires some sort of public policy solution. Both have long-term economic implications, I think…and it becomes the responsibility of government to address them, I think.

    The San Francisco law, which bans the sale of tobacco in stores with pharmacies, is a different issue. I’m not sure that the law is even constitutional…but I do think that there are legitimate marketing questions being posed here. How can a store that sells products presumably health-oriented also sell tobacco? Is this a marketing disconnect? But you’re right about this being a case where market forces ought to determine the outcome…and my bias against tobacco probably made my thinking less clear.



    By the way, the general feeling in the MNB community seems to be that the tobacco ruling in San Francisco is unlikely to survive various appeals.

    One MNB user wrote:

    This local ruling will not stand. I don’t see how government can prohibit some retail stores from selling a product while allowing other stores to sell. Either all sell or none sell.

    Another MNB user chimed in:

    It seems to be a noble idea, I suppose the local government has all the other problems solved, like the homeless problem, potholes, crimes---and has nothing better to do.

    Why not throw in artificial sweeteners, high fructose corn syrup, caffeine, caffeinated drinks, energy booster drinks, wine, beer, liquor, candy bars and peanuts. Some other locale might want to outlaw condoms that contain latex since someone might be allergic.

    Grocery Stores should only sell meat, produce, food; no soda pop, no GM, no DVDs, no money transfers, no lottery tickets and certainly no tobacco. After all, you are redeeming/selling items on the Women, Infant, & Children (WIC) program, and pregnant or nursing women should not be exposed to tobacco items. Oh yeah, since you redeem Food Stamps, you should only sell edible, food stamp-eligible food items.

    And so it goes, soon, why would anyone want to do business in San Francisco?


    Well, I’d move MNB World Headquarters there in a second…mostly because it is one of the world’s greatest cities. Even with all the restrictions, regulations and laws.

    Another MNB user wrote:

    It's the government picking winners and losers--driving customers away from drug stores and into supermarkets or wherever else tobacco products are available. Does that really seem fair to you?

    Not when you put it that way.

    And another MNB user wrote:

    Tobacco today. “Unhealthy food” tomorrow…

    I’m not sure that this is true or fair. There is a difference between food that isn’t good for you and a product that has been chemically engineered to addict and kill you.

    MNB user Don Brandt wrote:

    Twenty-five years ago, the Breeze Family, owners of 3 central Illinois pharmacies, decided that selling tobacco was contrary to their mission to help heal their customers, so they just stopped selling any tobacco products. They took a tremendous amount of grief over their decision and it cost them a lot of money; but they stuck with their principles. I had and still have a tremendous amount of respect for the Family and the courageous stand they took in a small Illinois town so many years ago.

    The same decision has been made in recent months by a number of food retailers. And this is probably the way the decision ought to be made.

    However, there was one email supporting the San Francisco legislation:

    In response to the numerous e-mails you will receive suggesting this is somehow in infringement on Constitutional rights or property rights, I wanted to offer this response in advance.

    The sale of certain items requires a license. For the sale of alcohol these may include limits on hours of operation, where a store can be located and to whom an operator may sell. All these are reasonable. Bars and restaurants have licenses allowing the public to eat food and drink alcoholic beverages on their premises. Reasonable conditions include requiring sanitary standards and not giving those same customers exposure to certain dangers like over-capacity and airborne carcinogens.

    Dispensing pharmaceuticals is certainly a licensed activity. If a government body has a say in the issuance of that license, it seems clear to me that tobacco products run contrary to the mission of a pharmacy. Not allowing those sales in such an establishment that is licensed for purpose of health and wellness is clearly reasonable.


    Well, when you put it like that…I may have to rethink my position yet again.

    Damn.




    MNB user Greg Seminara had some thoughts about Walmart efforts to acquire Chile’s largest supermarket chain:

    D & S represents a long-term opportunity for Walmart, because now is a tough time to be in the retail business in Chile. Copper accounts for 56% of Chile’s exports. In recent years the price of copper has skyrocketed and created a wonderful sense of affluence in Chile. Anyone who visits Santiago will tell you of its beauty and great stores run by D & S and Cencosud (Jumbo). The price of copper has collapsed by more than 50% and Chile faces a grueling recession.

    Walmart would be better off striking a deal with Cencosud, (which) also maintains a strong #2 position in Argentina where WM is small, and a strategic presence in Brazil, which is Walmart’s latest success story. Walmart and D & S have been talking for years, maybe the pain in the marketplace is finally forcing D & S to sell. Latin America is prone to “Boom/Bust” cycles, so an opportunity to buy D & S is an investment in the future for Walmart.





    And finally, one email came in about yesterday’s story noting that the editorial staffs of Progressive Grocer and Gourmet Retailer are being trimmed and merged, which I said was yet more evidence of the encroaching death of traditional media.

    Another great example of the real world -- Adapt to the needs of your customer or you go away.

    Which brings us back to the Hemingway line quoted by Michael Sansolo above.

    When this happens, it happens “two ways. Gradually and then suddenly.”

    It is the great question facing every business as we move from 2008 to 2009.

    What are the great and fundamental changes taking place in society, in culture, in government, and, most importantly, in the consumer population, that will affect how and where they will buy products, and what they will buy, and how much they will spend?

    Yes, it is important to think about tomorrow’s coupon and next week’s sale and next month’s new product introduction.

    But there are bigger things occurring that we have to thinking about and acting upon.

    They are happening gradually. And suddenly, they will have happened.

    Companies need to decide where they will be, and what kinds of businesses they will run, in order to be relevant to these new consumers.

    KC's View:

    Published on: December 23, 2008

    In Monday Night Football action, the Chicago Bears defeated the Green Bay Packers in overtime, 20-17.
    KC's View:

    Published on: December 23, 2008

    Today marks the final MNB of the year, as we take a holiday break to catch our breath, spend some time with loved ones, and recharge the batteries for 2009.

    In my case, all the kids actually will be under one roof for a few days, and I plan to enjoy it. I’ll probably test out a few new wines, and will watch “Love Actually” – my favorite Christmas movie – at least twice. (I’m particularly big on Christmas movies that actually have nothing to do with Christmas but take place during the holiday, such as “Die Hard,” “Lethal Weapon,” and, of course, “On Her Majesty’s Secret Service.”) I also will spend some time rehabbing my knee, working on a couple of non-MNB writing projects, and sleeping late, so I come back refreshed and energized.

    I hope you have the chance to take a breath and do whatever makes you happy, and that you enjoy both peace and joy during the final days of what has been an eventful year that many people no doubt are glad to see end.

    BTW…because I’ve already gotten questions about this … when I serve a wine on Christmas with the steak that Mrs. Content Guy and the kids have asked for, it will almost certainly be the 2004 Mosaic Meritage – one of my favorites.

    As for New Year’s Eve…well, we haven't worked out the details yet…though we’re leaning towards heading to Mario Batali’s new restaurant, Tarry Lodge, for a plate of pasta and glass of wine…simple but celebratory. If we act like 2009 is going to be better than anyone expects, maybe the karma will work in our favor. After all, we may not be able to control all the events that influence out lives, but we can control our attitudes and establish the karma of our own lives.

    As John Lennon once sang:

    Instant karma’s gonna get you
    Gonna knock you off your feet
    Better recognize your brothers
    Everyone you meet
    Why in the world are we here
    Surely not to live in pain and fear
    Why on earth are you there
    When you’re everywhere
    Come and get your share…



    I’m not going to write a standard end-of-year column. I rant on a weekly basis in “OffBeat,” and that’s enough time spent looking backward. As Jimmy Buffett sings, “there is too much to see waiting in front of me…”

    I’m going to focus on the coming year. How I’m going to be different. How I can provoke you to think about issues differently. How, together, we can be change agents.

    MNB will return on Monday, January 5, with all new stories and commentaries, but the same attitude that has gotten us this far. (Between now and then, of course, the MNB archives will be open for business.)

    Have a great holiday, whichever one you celebrate and however you celebrate it.

    Be safe. See you next year.

    Sláinte!!
    KC's View: