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    Published on: January 8, 2009

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

    It’s only two weeks since Christmas, and I don't know about you, but I’m already tired of getting email and snail mail announcing this sale and that discount. Now, I understand that retailers of all kinds, having suffered through a generally awful end-of-year-holiday season, feel the need to generate some shopper traffic, some sales, and even, in moments of supreme optimism, maybe even a little profit.

    But as one of millions of Americans who has made a conscious decision to be very careful about expenditures as we navigate a recession unlike any we’ve known before, I’m frankly a little annoyed that so many people are trying to separate me from my money. At some level, it is just like the credit card offers that used to flood the mailbox before I subscribed to a service that put a stop to them – irritating in the extreme because they seem to be so completely random and even tone-deaf.

    Now, I understand that MorningNewsBeat is a business-to-business website, and that retailers have a right to make a living, and to do everything they can to survive the hard times. But I guess what I’m arguing is that they also need to appear not to be tone-deaf to the needs and concerns of their shoppers.

    I think this is where the retailers that employ a targeted marketing program are going to come up big. Because they track shopper behavior, and know what their customers – especially their best customers – are buying, they should be able to demonstrate a greater sensitivity to what lines should not be crossed.

    And know this. There are lines that should not be crossed. Some will argue that it is the retailer’s job to sell, and the consumer’s job to decide whether to buy or not, and that’s true. But I think sensitivity is called for here, especially if retailers want to maintain long-term and positive relationships with the shoppers who will determine whether or not they will be successful, short-term and long-term. If you are selling something, I think it is important to be able to demonstrate the differential advantages of the product and the relevance it has to the shopper’s lifestyle. Of course, that’s a good idea all the time…but never more so than these days.

    Indiscriminate flooding of ads and coupons, I think, eventually are going to wear thin on many shoppers who aren’t, for the time being, doing a lot of shopping.

    This may seem counterintuitive if you actually are in the business of selling things, but there are a lot of things about the world these days that don't fit the old paradigms. This is the new normal…and we’d better all get used to it.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: January 8, 2009

    Supervalu CEO Jeff Noddle said yesterday that the company would cut back on capital expenditures and close 50 underperforming stores as a response to a quarterly loss and heightened competition. According to a Dow Jones story, Noddle also pledged that “the supermarket chain would gain more traction with consumers through merchandising plans and negotiating lower prices with its food suppliers to improve the company's food prices compared to the competition.”

    In a conference call with analysts, Noddle said, "We know that price has become a key criteria for consumers when choosing where to shop. We know improving our price perception ultimately leads to increased trips and basket size."

    Dow Jones reported that “the supermarket operator has been boosting its promotional activity and making bigger investments in its own corporate food brand to lure cash-starved consumers.

    “As the U.S. economy has weakened and undercut consumer spending, Supervalu has struggled to keep pace with rivals Kroger and Safeway, whose identical-store sales growth has fared better as consumers have become picky about food prices.”

    CNN reports that “Noddle said during an earnings conference call with analysts he expected food manufacturers to continue their reticence to lower prices through the first half of the year … but the vendors may not be able to hold firm for long, especially as they lose market share to retailers' private-label brands and the consumer spending slump continues.

    "I don't think they're going to be able to hold that very long," Noddle said. "I think they're going to be forced initially into more trade spending and then ultimately bringing prices down."

    Supervalu’s Q3 sales were $10.17 billion, down from $10.31 billion during the same period a year ago, on same-store sales that were off 0.5 percent. The company recorded a quarterly loss of $2.94 billion, including a $3.1 billion non-cash impairment charge, compared to a $141 million profit a year ago.

    KC's View:
    It will not escape Supervalu’s notice that the numbers are up at places like Walmart and Family Dollar, which means that in the current environment the company has to either redefine value or highlight its current definition with a lot stronger bulb.

    I agree with Noddle (not that he needs me to agree with him) on the subject of prices. I have not understood the people who have maintained that manufacturers will not be lowering their prices anytime soon. I believe the pressure to do so will be too much to resist…especially when private label is making serious inroads.

    Published on: January 8, 2009

    Walmart announced yesterday that Doug McMillon, president/CEO of its Sam’s Club division, has been named to succeed Mike Duke as head of the company’s international division.

    Duke was named in November to replace Lee Scott, who is retiring, as president/CEO of the whole company.

    International is Walmart’s second largest division, and is seen as its biggest growth engine.

    The shift in responsibilities is effective February 1.

    KC's View:

    Published on: January 8, 2009

    The Jacksonville Business Journal reports that Winn-Dixie has repriced virtually every one of the SKUs stocked by its Save Rite grocery store there, positioning the store as having prices equivalent to those at Walmart.

    “After a year’s worth of research that included purchase history data and customer surveys, and a two-and-a-half month $700,000 remodeling project, the store’s product choices were reduced from about 40,000,” Senior Vice President Dan Portnoy tells the Journal. “But the products that remain are those most often purchased in that neighborhood, he said.

    “The new pricing is divided into three different categories – warehouse prices for everyday staple items, locked-in prices for manufacturer deals that will last about four weeks and price drops for one-week sales that will most often be on meats and produce.”

    “This is the right store for the neighborhood with the right products at the right price,” says Winn-Dixie CEO Peter Lynch. “We made it simpler to make it fresher and provide the consumer with what they want.”

    And, the Journal writes, “The pilot store, located just blocks away from Winn Dixie headquarters, is one of the Jacksonville-based company’s three Save Rites in Jacksonville. Based on the results of the pilot program, Winn-Dixie executives could restructure prices at other Save Rites in certain neighborhoods and possibly some Winn-Dixie locations.”

    KC's View:

    Published on: January 8, 2009

    Newsday reports that Wegmans Food Markets is offering “free generic oral antibiotics to customers with prescriptions from their doctors,” a program similar to one announced last week by Ahold USA for its Stop & Shop and Giant chains.

    The program, which runs until the end of March, “covers up to a 14-day supply of nine different generic oral antibiotics, including amoxicillin, penicillin and tetracycline. There are no limits on the number of prescriptions that can be filled, and it includes both new prescriptions and refills. The only catch is that customers must use a Wegmans shoppers club card, which is also free.”

    KC's View:

    Published on: January 8, 2009

    Albertson’s LLC announced yesterday an expansion of the “Rx-tra Savings” prescription discount program it launched last October, introducing a new offering of $10.99 for a 90-day supply of over 500 generic drugs. In addition, Albertsons said it has added new generic medications to its list of over 500 drugs already covered by the discount program.

    The original program offered up to a 30-day supply of select generic drugs for only $4.99.

    KC's View:

    Published on: January 8, 2009

    Business Week reports that “Wal-Mart Stores Inc. has agreed to a $637,000 fine to settle allegations that it violated drug record keeping regulations at its pharmacies in south Texas … Wal-Mart spokeswoman Daphne Moore said the settlement was limited to discrepancies between records and inventory involving a small number of pharmacies in Texas. The company has more than 4,000 pharmacies in its U.S. stores.”
    KC's View:

    Published on: January 8, 2009

    • Seattle-based PCC Natural Markets said yesterday that it has sent letters to vendors and manufacturers of personal care products saying that from now on, the company will require that they be in compliance with ingredient criteria as defined by the Natural Products Association (NPA) Natural Standard.

    According to the company, “The NPA Natural Standard defines the term ‘natural’ as it applies to ingredients in personal care products, including natural skin and hair care products. Although the natural personal care industry has grown significantly over recent years, use of the term ‘natural’ never has been subject to regulation or certification by any government or industry entity. Manufacturers have been able to claim that products containing potentially harmful synthetic or petroleum-derived ingredients are natural.”

    • The Atlanta Journal-Constitution reports that “Coca-Cola Co. and United Resource Recovery Corp. will celebrate next week in Spartanburg, S.C., the opening of the world’s largest plastic bottle-to-bottle recycling plant,” which is jointly owned by the two companies.

    According to the story, “The plant will be able to produce annually about 100 million pounds of food-grade recycled PET plastic — the equivalent of almost 2 billion 20-ounce Coca-Cola bottles.

    “Coca-Cola and other beverage makers have been criticized by environmental groups for their use of plastic bottles, which contribute to swelling landfills.”

    • The New York Times reports that PepsiCo-owned Tropicana is unveiling a new marketing campaign that is designed to emphasize the quality factor connected to its premium not-from-concentrate orange juice, while hoping that the recession can work in its favor – after all, a glass of orange juice is seen as an affordable indulgence with tangible health benefits.

    According to the story, “One noticeable change is the disappearance of the longtime Tropicana symbol, a straw stuck in an orange that stood for the juice’s fresh taste. The device is being replaced by a tall glass filled with Tropicana and an orange-colored twist cap atop large cartons that is shaped like a halved orange.”

    KC's View:

    Published on: January 8, 2009

    • Costco reports that its December sales were down two percent to $7.4 billion, on same-store sales that were off four percent.

    • Family Dollar Stores reports that its first quarter profit rose to $59.3 million, from $51.9 million a year earlier. Q1 sales rose more than four percent to $1.75 billion, on same-store sales that were up 2.1 percent.

    • Wal-Mart de Mexico, commonly known as Walmex, said yesterday that its 2008 sales were up 11 percent to the equivalent of $17.7 billion, on same-store sales that were up 4.6 percent.

    KC's View:

    Published on: January 8, 2009

    Just weeks after Starbucks announced that it may not match employee contributions to their 401 (k) programs this year, and following a corporate decision to close 600 US stores as a way of reducing costs, the coffee icon apparently has found enough money to buy a corporate jet, a Gulfstream 550, worth $45 million.

    The Seattle Times reports that the order for the jet was placed three years ago, and that a Starbucks spokesman said that the company determined that it would be too expensive to cancel delivery.

    However, the Times also reports that the jet spent the first two weeks that it was owned by Starbucks – coincidentally, the end-of-year holidays - in Hawaii.

    The Starbucks spokesman, according to the paper, “declined to say who took the jet to Hawaii over the holidays, but said it was a combined personal and business trip. She pointed out that Starbucks policy requires employees to reimburse the company for personal use of the jet. That policy was instituted in fiscal 2007, when Chairman Howard Schultz reimbursed the company $400,919 for flights.”

    KC's View:
    Starbucks already is having labor troubles, as baristas in some markets are fighting for the right to unionize…an argument that is a lot easier to make when the corporate honchos are going to Hawaii on the corporate jet for the holidays.

    Okay, Starbucks isn’t looking for a bailout. And I understand that corporate jets can be a necessity.

    This is just a mistake. It is just tone-deaf.

    Fly commercial. Fly first class if you must. Or better yet, fly coach…and spend some time chatting with past, present and maybe future customers.

    Published on: January 8, 2009

    Got the following email from MNB user Amy Buttery:

    I was a little surprised to read the reactions by your readers to the idea that Massachusetts is considering joining the other states that are trying to bring the nation closer to a workable system for charging sales tax on Internet sales. Most of the reactions were knee-jerk “taxes=bad” or just ill informed, as the person who was thinking it applied to a tax on internet SERVICE. The question isn’t whether to apply a *new* sales tax to a new category of items, it’s whether to find a way to *collect* sales tax on items that would be taxed if bought through a different means (B&M).

    A little background: At present, 22 states are members of the streamlined sales tax project and 22 others are “in active discussions,” according to Scott Peterson, executive director of the Streamlined Sales Tax Governing Board. Massachusetts is just one of these in active discussions. (Michigan, where I’m at, passed the legislation needed to streamline sales tax in 2006.)

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

    First, lack of sales tax has helped fuel some e-commerce, but now that most shoppers like or love online shopping, we aren’t going to reverse that trend just by tacking on state sales tax. And “free shipping” has been a cost borne by the retailers—just a playful way to make shoppers think they’re getting a deal, when really it means lower margins for online sellers. And before the economy went south, “free shipping” was beginning to become rarer or limited only to larger tickets. (Online sellers do better by having really low prices, so that price search engines turn them up as big bargains, and when shipping isn’t free, people still do the math and decide to pay it. I think “free shipping”--which of course isn’t really free—will become a permanent fixture of e-commerce if a sales tax is collected.)

    Also, online sellers have MANY other ways in which their overhead is lower than B&M, which is why online prices are often so low. Changing the dynamics of tax collection isn’t going to put any good online retailer out of business, nor should it. It SHOULD (to be fair to all participants in the marketplace) put out of business any online seller for whom no-sales-tax is their primary advantage. If there are a lot of them, so be it better for the skilled B&M AND e-commerce merchants that deserve that business.

    Major supporters of Internet sales tax include the National Retailers Federation. Major opponents: Amazon and eBay (although it’s highly unlikely that the average eBay seller will have to collect sales tax. The national orgs working on this plan to exempt small sellers, once they adequately define a small seller).





    Got a lot of email yesterday responding to my rant against the CVS loyalty card program, which was described in terms that I found to be almost indecipherable in a press release trumpeting how much people had saved using the program in 2008. (I’m also a regular CVS customer, and still don't get it.)

    I wrote, in part:

    I have to admit that I’m totally confused about how all this works.

    Maybe I’m just a dolt. Maybe, like Denny Crane, I’m suffering from mad cow. Or maybe the program isn’t nearly as transparent and user friendly as it needs to be.

    All I know about the ExtraCare program is that you don't need a card to get the points – you just need to give the cashier your phone number (which is a very nice feature, by the way). Then, the cashier gives me a receipt that, no matter how many items I have bought, seems to be about three feet long, and I generally throw it out because I’m just annoyed by it.

    Never gotten an email from CVS. Never had anyone in the store point out how to get savings. And I had no idea that there was a deadline involved.

    My point is this. (And I am not picking on CVS here. There probably are a lot of companies making the same mistakes.) These programs have to be easier to use, easier to understand, and less dependent on three foot receipts.

    On the other hand, maybe I am a dolt.


    MNB user Richard Lowe wrote:

    I feel the same way. It is too complicated to meet all the requirements posted on their tapes. CVS brand items only on so many dollars purchased by such and such deadline.

    MNB user Carolyn Flathers wrote:

    I really don't think you are a dolt.

    While I am quite sure that CVS gave out $1.8 billion worth of extra bucks, how many were actually redeemed by the customers who received them? I willing to bet it is a small percentage.

    I share your annoyance with the 3 foot register tape. Further annoying is while sure, many of the coupons are for items I use, the problem is I get a coupon for things I have JUST bought on that very trip and the coupons are very short duration. For example, if I buy toothpaste on my current trip, my 3 foot long receipt for that includes – guess what? A coupon for dollars off toothpaste, expiring in about two weeks, long before I'd ever need more toothpaste. What good is that?


    MNB user Kevin McCaffery wrote:

    I agree 100%; giving me the incentive on the way out the door is ridiculous. (Not to mention most of the coupons on the receipt are for items have never purchased) wouldn’t it make more sense to have me swipe my card on the way in and get the incentive then?

    Another MNB user chimed in:

    Agree wholeheartedly with the lack of understanding the CVS Extra Bucks concept. They could take a lesson from Price Chopper. We have several PC's in our area. When the PC cashier hands the receipt to a customer, they of explain the extra coupons and the gas discount program, including expiration dates for the gas program.

    And MNB user Sandra Mayhew wrote:

    I have a card, I don’t understand how to redeem the points either. I thought it was just me- maybe I had tossed the explanation on the three foot receipt for the single greeting card I purchased.. Thanks for letting me know I’m not alone here.

    MNB user Geoff Harper wrote:

    As I'm sure other readers will attest, you're no dolt. Good critique of a poorly communicated program. And I hate any large register receipts, and NEVER take the time to read them.

    Could be the mad cow, though…

    MNB user Jerry Sheldon wrote:

    Ok, maybe I’m being a cynic, but maybe, just maybe, if the program is not easy to use then CVS makes more money, yet they still get to promote the fact that they have a loyalty program that is “saving” so much money. I like Wal-Mart’s Pharmacy program. They offer the same low price to everyone, and because of that, we’ll shop in their stores because of all of the money we save and keep coming back. Humm, how effective is that as a loyalty program!

    However, one MNB user disagreed with the criticism:

    Maybe you’re not a dolt…maybe you’re just going to the wrong CVS store. I love my neighborhood CVS store. I drive right past Rite Aid and Walgreens to get to it just so I can use my CVS card. Just last week I got $6.00 Extra Bucks for buying two bottles of kids mouth was where I normally would have paid $6.00 for each bottle! I used the $6.00 coupon instantly on another product. I looked perplexed as I read the Extra Bucks info and an assistant manager came over to explain to me and walked me down the aisle to show me all of the products where I could get Extra Bucks. She even showed me where the baskets were so that I could put my purchases in. I also get my photos developed at CVS and the clerks always inform me of the current sales / specials on photo processing. When I get that long receipt, I always get an explanation of the future coupon savings and yes Kevin, I do get mailed coupons as well. Try another store or maybe another neighborhood.

    Wow.

    Maybe I do need to try a different store. (Though I actually like the people behind the pharmacists’ counter at my store.)

    But doesn’t this sort of miss the point?

    Another MNB user wrote:

    The savings numbers reported no doubt include the weekly sale prices that you need to present a card to get. Mark it up, then mark it down, and then brag about how much they saved you.

    Perhaps you have not registered to receive CVS e-mails. Several times a year I receive an e-mail with, for example, a $5 coupon good on a purchase of $25 (prescriptions and alcohol/tobacco excluded). Combine that with (1) sale prices and (2) something you actually need and it can be worthwhile. Perhaps they do not do that in your market.

    The CVS "extra buck coupon" program can be a pain as these bear relatively short expiration dates for redemption. Sometimes I split my store visit purchase into two - the first to get the extra buck coupons, and the second to use the extra buck coupons I got with the first purchase. I am sure customers don't have a good feeling about CVS when they buy something that was a good deal because of the extra buck coupon and then later discover that they let that coupon expire unused.





    I still think that targeted marketing is the most sensible approach, especially these days.

    MNB user Dobbin Prezzano agreed:

    I could not agree with you more on this subject. In the economic environment that all marketers are spending in at this time, it is surprising to see the “broad strokes” of media spend that is not focused on who their key demographic really is. As a company that focuses a marketing dollar at a very granular level, for both retailers and manufacturers, it is interesting to hear these decision makers agree with the targeting concept, shake their head yes regarding its effectiveness, but because “we have always used these tactics”, still make untargeted decisions. We have very similar stories regarding very gaudy numbers for clients when there is a targeted strategy.

    Your article was forwarded to me from a current client that knew I would appreciate your thoughts. Keep up the good work and I look forward to now following MNB.


    Music to my ears.




    On the subject of former Nash Finch CEO Ron Marshall going to Borders to try to rescue that troubled company, one MNB user wrote:

    Just a comment about the story of Border’s naming former Nash-Fincher Ron Marshall as CEO. I’m probably being cynical but I have to wonder if Ron Burkle had wind of this, which might have prompted him to buy stock in the competition, Barnes & Noble? If Marshall does as well at Border’s as he did at Nash, B&N stock will double!

    And another MNB user recalled that when Marshall left Nash Finch – followed by the company’s general counsel, and at the same time the company was dealing with an SEC probe – a lot of people said “good riddance”:

    You can’t help but wonder how stuff like this happens…. Doesn’t anyone check into references or at least read the news … People don’t change and especially not Ron Marshall. Borders is going to have to recover from the lack of leadership from George Jones and Rob Gruen…. The Publishing industry all ready has issues accepting “outsiders” and these two didn’t help the cause, never mind the company…. Ron will probably put the nails in the coffin for sure.

    KC's View: