retail news in context, analysis with attitude

Published on: January 7, 2009

Amazon Fresh, the component of the e-tailing icon that delivers fresh as well as packaged products to homes and businesses in the Seattle region, is polling area customers to find out where it should expand next…though it is only a matter of what Seattle zip codes will get the service.

On Amazon’s website, it poses the following offer to shoppers:

"Between now and January 15th, cast your vote for which zip code we should deliver to next. Based on customer feedback, we're opening voting between 98199, 98117, 98107, and 98115. Results aren't real time, but we will post them almost daily. Only valid residential addresses will be tallied. The zip code that gets the majority of votes will be where our trucks will appear next. We expect to open the winning zipcode the week following the vote. All our new delivery areas will require an AmazonPrime membership to use the service."

Published on: January 7, 2009

Bloomberg reports that a lawsuit filed in San Francisco charges that when Walmart decided to get out of the online video rental business and refer all its customers to Netflix, the two companies were conspiring to create a monopoly that would result in higher prices.

Walmart initially got into the online video rental business because it saw that Netflix had established a credible and growing enterprise, and Blockbuster had decided to expand into an online service to supplement its brick-and-mortar stores. However, it didn’t take long for Walmart to decide that an independent entry didn’t make sense, and it threw in with Netflix.

Published on: January 7, 2009

CVS announced yesterday that its ExtraCare loyalty card holders earned more than $1.8 billion in savings and rewards during 2008.

The press release regarding the savings read, in part, as follows:

“By using an ExtraCare card, CVS/pharmacy shoppers earn ‘CVS/pharmacy dollars’ called Extra Bucks on nearly all purchases. Some Extra Bucks offers are instant coupons that print when you purchase specially advertised products, and quarterly Extra Bucks rewards are issued to cardholders in January, April, July and October. All cardholders earn 2% back on non-prescription purchases and $1 Extra Buck for every two prescriptions purchased. These rewards are issued to cardholders at the end of each quarter on the bottom of your receipt and by email to cardholders that have provided an email address at CVS.com … Cardholders have until February 15 to receive their personal savings out of more than $69 million in Extra Bucks currently being paid out to CVS/pharmacy shoppers. Extra Bucks rewards can be redeemed for up to 45 days following the date of print. With so many people looking for simple ways to save money, Extra Bucks make it easy to get everyday essentials, including health, beauty and household needs, without breaking the bank.

The release goes on:

"’Who couldn't use a few Extra Bucks?’ asked John Barron, Director of Relationship Marketing at CVS/pharmacy. ‘CVS/pharmacy shoppers have been using the ExtraCare program to save money year after year, and these everyday savings really add up. With more than $69 million in Extra Bucks being given to cardholders this month, we are reminding all of our customers not to toss out their receipts without first checking the bottom, or they might be throwing away free money’.”

Published on: January 7, 2009

The Associated Presshas a story about Kroger’s use of dunnhumby USA’s data mining technology, and how it uses targeted promotions to drive sales and profits. “Kroger uses dunnhumby's consumer analyses, which the data firm augments with customer interviews, to guide strategies for promotions, pricing, placement and even stocking variations from store to store,” the story says, noting that Kroger is getting up to 50 percent redemption rates on its targeted promotions, versus one-to-three percent redemption of traditional paper coupons.

In a growing economy, you might get lucky because there is more money around," says Simon Hay, CEO of dunnhumby USA. "But if there is less money around, the question is how can you be absolutely certain that you've got the right offers in the right places?"

Published on: January 7, 2009

The New York Times reports this morning that UK retailer Marks & Spencer, having just suffered its worst fiscal quarter in a decade, plans to close 27 of its stores and eliminate 1,230 jobs. According to the story, “The job cuts include 450 head office employees, about 15 percent of that work force. Another 780 staff in 25 '’underperforming'’ food-only shops and two of the retailer's smaller department stores will also face redundancies.”

Company CEO Stuart Rose said that he expects the current challenging economic environment to continue for at least 12 months.

Published on: January 7, 2009

Bloomberg reports that bookseller Borders Inc. is replacing its president/CEO. George Jones is out, replaced by Ron Marshall, the former CEO of food wholesaler/retailer Nash Finch and most recently CEO of Wildridge Capital Management.

Borders has been in serious trouble lately, with holiday sales down and its share price down 96 percent in 2008.

Published on: January 7, 2009

• The Wall Street Journal reports that “Chipotle Mexican Grill Inc. plans to open restaurants in Europe, beginning in London late this year, as the upscale fast-food chain continues expanding while higher-priced competitors are floundering amid a sharp pullback in discretionary spending … Although most of its growth will continue to be in the U.S., Chief Executive Steve Ells said Chipotle may open restaurants in other European cities.

Published on: January 7, 2009

• MyWebGrocer said yesterday that it has marked the one-year anniversary of its grocery advertising network with measurable results – Kellogg’s online advertising, according to the company, resulted in double-digit product sales growth.

Published on: January 7, 2009

• Santa Fe Springs, California-based Superior Grocers announced the following senior management changes:

Phil Lawrence, senior vice president of operations, has been promoted to Chief Operating Officer.

Eddie Whalen, executive director of Warehouse and Transportation, has been promoted to Vice President, Distribution.

Eunice Min, executive director of Human Resources, has been promoted to Vice President, Human Resources.

Will Macias, executive director of Meat & Seafood, has been promoted to Vice President, Meat, Seafood and Bakery Divisions.

Brad Maehara, director of Grocery & Liquor, has been promoted to Executive Director, Grocery, Liquor & General Merchandise Divisions.

Tedd McCowan, director of MIS, has been promoted to Executive Director, Information Technology.

Published on: January 7, 2009

The Los Angeles Times reports that Alfred Shaheen has died at age 86.

Shaheen was responsible for popularizing and upscaling a garment that has been worn by Elvis Presley, Tom Selleck, and the Content Guy (and this is likely the only time that those three people will ever be mentioned in the same sentence).

Shaheen, the Times writes, “revolutionized the garment industry in postwar Hawaii by designing, printing and producing aloha shirts.”

Published on: January 7, 2009

Had a piece yesterday about a story in the Wall Street Journal saying that smarter decisions by consumers could actually be bad news for retailers and the nation’s economy.

The argument is that a new thriftiness being embraced by many American families, is “a major reason the downturn may not soon end. Americans, fresh off a decades-long buying spree, are finally saving more and spending less -- just as the economy needs their dollars the most.

MNB user Daniel P. Wallace wrote:

The model for development of the Asian economies was: high savings rate, low consumption, accumulate capital, which lowers the cost of investment AND drives down the currency, increasing the attractiveness of exports, then invest that capital in export-oriented industries in order to import wealth.

The American people sometimes need to be whacked over the head. It took $4.00 gas prices to shift the national attitude toward fuel economy. It appears to take an economic jolt this bad to turn us into savers. The reality is that as a nation we've been spending beyond our means for decades, which cannot help but impoverish us. The shift from consumption to savings is another step on that road - unfortunate, but necessary. It will make near term recovery harder but will help in the long run. It is a trailing indicator of the end of American economic hegemony.

Another MNB user wrote:

The paradox of paradigm shift…normal is currently being redefined…

You got that right. We’ve been saying that here on MNB for more than a year.

MNB user Cleve Young wrote:

I just don’t get why the ‘experts’ are so worried about the supposed new ‘Thrift’ culture taking hold. For one I’m still dubious as to how long and strong the conversion to a thrifty lifestyle will be. But even granting that a certain amount of thriftiness embeds itself into our culture how can that be a bad thing for retailers? Yes, in the very short term it will pinch sales for many retailers, but after a short time people will continue to spend their money. And while growth in personal income may not be great and in some cases negative, on the whole it’s not like the available money consumers have to spend is going down in double digits.

The biggest factor here is the heightened sense that the unknown is so close at hand. I firmly believe people will spend the same amount, but it will be spent differently. So instead of the $35,000 car it is a $25,000 car with the other $10,000 going towards???? It’s all of those question marks that make retailers and ‘experts’ uneasy, because at this point they simply don’t know what the answer is. And when they don’t know the answer they worry and postulate, often to their own detriment. As you so often say those who succeed will be the retailers who anticipate and fill the coming needs.

And while I’m certainly no financial genius I have lived enough life to have figured out some basics of money management. If I borrow lots to buys lots then I end up with less. All of the money you pay for interest and for ‘stuff’ you don’t really use is all money that could be applied to things you actively use. So a great big house with huge interest payments and a big 4-wheel drive dual-cab truck to haul groceries with is all wasted money I could be spending on stuff I use (and want). So I can be ‘frugal’ and still have more and live better. So once I make the transition to a ‘frugal’ life and I’m buying more with a higher life satisfaction, please explain to me again how this is a problem for retailers? Maybe they need to get used to not just selling me ‘stuff’ but rather ‘stuff which has value to me’.

MNB user Jim Swoboda wrote:

Our country and our citizens, in general, have been spending money like drunken sailors (maybe that is a disservice to drunken sailors) and that can not continue. Getting not only business balance sheets cleaned up, but those of consumers, can only result in a strong future. Yes, our nation is a nation of consumers. But far too much so.

A better balance between living and spending within one's means (both government and citizen) would be a good place to be. Getting to any good place usually involves some pain and this time is no exception.




Responding to our story about Massachusetts considering Internet sales taxes, and our feeling here that national Internet sales taxes may be inevitable during this economic slowdown, one MNB user wrote:

Trust me, once states start taxing internet sales you will see Internet company quickly go out of business as currently the have two advantages over B & M, and that no tax and free shipping. Once gone, so are they.

Another MNB user wrote:

Here’s a novel idea, look at every single line item in the budget and decide if it is necessary. State legislatures have now gotten in on the earmarks, so let’s cut every single discretionary expense, realizing that we are going to have increase unemployment benefits temporarily…

Internet sales taxes should be way down the list of things to look at or consider.

Yet another MNB user chimed in:

Why do you think this in 'inevitable'? Taxing the internet is an absolutely insane and unmanageable idea. Don't roll over and let them pick your pockets further!!!!

I am not surprised it is Taxachussetts that is trying to push this.

The whole "crisis" is simply a wake up call for everyone to live within their means, at the individual, community, state and national levels. That includes Congress!

Grrrrrrrrrrrrr.

I just read today that the new administration is adding 600,000 jobs. To the public sector. More government jobs!! Bigger government, less efficiency, less accountability, and if we don't keep tabs on our government, more $900 coffee pots....

MNB user Nancy West wrote:

After reading your piece on Mass. contemplating an internet sales tax users already pay a sales tax & service fees itemized on their monthly internet provider statements. This I feel is double taxing the consumer for the same service. In the past year, I've seen more people heading to their local library and get online for their allotted 1/2 hr. timeframe to do all of their basic business and leave. Maybe there needs to be a 'socialized' internet access vs. a monopoly from the providers? It would be interesting to see how this unfolds down the line.