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    Published on: January 15, 2009

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

    We talk a lot about transparency here on MorningNewsBeat, so I wasn’t hugely surprised the other day when one of our readers sent me some information about a recently decided court case that, I think, flies in the face of what should be a core industry value.

    The case concerned a lawsuit brought against PepsiCo, charging that the company had engaged in unfair and deceptive trade practices in violation of New York State’s consumer protection laws when it marketed its Aquafina product. Essentially, the lawsuit said that the company was deceiving consumers when it put Aquafina in a bottle designed to suggest that it was from a mountain spring, when it in fact is just purified tap water. To be sure, the label says “purified drinking water,” but the plaintiffs argued that a false impression clearly was the motivation behind the packaging design.

    Now, I’m not a lawyer, but I do get that the judge in the case ruled in favor of Pepsi, saying that the federal Food, Drug and Cosmetic Act says that the company can't be sued because it would preempt its federal exemption, which I believe says that states cannot establish standards different from those held by the federal government. (I say “I believe” because all the legalese is sort of difficult to read and even harder to understand.)

    I’m certainly in no position to debate the merits of the law – there probably are good arguments on both sides. I’m not even going to argue Pepsi’s motivation.

    I just want to suggest that everybody’s time would be better spent if we could all just be a little more transparent and accurate in how we talk about our products. Because regardless of the law, when it came out that bottled water that a lot of people believed was spring water was actually purified tap water, the industry took a hit. Maybe not a big hit. Maybe just a little one. But a hit just the same. And all those hits eventually take a toll on an industry’s reputation.

    It was interesting that in a separate case, on the opposite coast, it was ruled by the California Supreme Court that consumers can sue grocery stores for being deceptive when they did not disclose that farm-raised salmon had been given a dye to make them look more like wild salmon.

    Now, I’m not in favor of litigation. Far from it. But I understand the consumer impulse to fight back when he or she thinks deception has taken place.

    Manufacturers and retailers sell a lot of things. Included on the shopping list, I think, is an item called trust. We all have to take the extra step to make sure that we’re ahead of the consumer on this issue, taking no chances, because as Ralph Waldo Emerson once said, “distrust is very expensive.”

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: January 15, 2009

    The Chicago Tribune reports that Supervalu has begun the closure of the 50 stores that it said that it would shutter as an economy move. The company also said that it would cut back on new store openings and remodeling efforts.

    According to the story, the closures include five Cub Foods stores in Wisconsin and Illinois; seven Albertsons stores in Utah, Nevada and California; four Lucky stores in Nevada; four Shaw’s/Star Market stores in New England; and two Farm Fresh stores in Virginia.
    KC's View:
    Amazingly, this is just the tip of the iceberg.

    There was a story in the Rocky Mountain News the other day in which Burt Flickinger of Strategic Resource Group suggested that a total of 200,000 retail stores – ranging from big box stores to the smallest mom-and-pop shop – are likely to close in 2009 because of the recession.

    That’s an almost unimaginable number, and a reflection of the tough times in which we all find ourselves.

    Published on: January 15, 2009

    The Chicago Sun-Times reports that Walgreen Co. is adjusting its marketing strategy, looking to become a more pervasive health care provider and resource for both consumers and employers.

    According to the story, Walgreen “is expanding its clinics that operate at company workplaces. The company staffs 360 such clinics, including at Disney World in Orlando, Fla., and at a Harrah's casino in Las Vegas. The company wants to grow to a combined 800 in-store and workplace clinics by the end of August. Walgreens announced Wednesday a ‘Complete Care and Well-Being’ program that offers business and government employers a cost-saving network for their employees that incorporates Walgreens pharmacies, clinics and private-label goods.”

    Also has part of this approach, Walgreen is expanding its specialty pharmacy business, “which lets it provide costly medical care, including injections and intravenous therapies, at people's homes.”

    The company pointed to the success of its loyalty program, according to the story. “The retailer has signed 1.5 million members to its prescription savings club program, which for a yearly fee ($20 for singles, $35 for families) offers a three-month supply of certain generic drugs for $12.99. About 30 percent of the club members are new Walgreens customers,” the Sun-Times writes. And Kim Feil, the company’s chief marketing officer, says that more loyalty programs will be introduced shortly.

    The Sun-Times writes, “Walgreens executives say the company's strategy to expand access to basic health care will play well with the Obama administration.”

    KC's View:
    It’ll also play well in a recession when people have less access to health care and less access to health insurance.

    It is the difference between being a source of product and a resource for consumers. The latter, I believe, is a far better position for retailers to be in if they want to survive the tough times and thrive in the good times.

    Published on: January 15, 2009

    Dow Jones reports that Ramesh Chakrapani, an executive with the Blackstone Group, “has been arrested and charged with fraud in an insider trading scheme involving shares of Albertson's Inc. that allegedly netted more than $3.5 million in illicit profits, according to court documents made public Wednesday.”

    Chakrapani also is being sued by the US Securities and Exchange Commission (SEC).

    According to the story, “Prosecutors have alleged Chakrapani tipped a co-conspirator with material nonpublic information concerning the acquisition of Albertson's Inc. prior to the public announcement of the deal in January 2006.

    “Chakrapani was privy to nonpublic information about the deal because he worked as a member of the team assigned to advise Albertson's on the transaction, the government said. Prosecutors said the co-conspirator then traded shares in his personal account and caused trades of Albertson's shares in his firm's proprietary trading accounts and an account held by the co-conspirator's parents.

    “In its lawsuit, the SEC has alleged Chakrapani tipped a friend, who works as a financial analyst.”

    KC's View:

    Published on: January 15, 2009

    The People for the Ethical Treatment of Animals (PETA) is proposing that fish be renamed “sea kittens,” suggesting that such a change will increase awareness of fish feelings and cause people to stop catching and eating fish.

    According to PETA’s website, “People don't seem to like fish. They're slithery and slimy, and they have eyes on either side of their pointy little heads—which is weird, to say the least. Plus, the small ones nibble at your feet when you're swimming, and the big ones well, the big ones will bite your face off if Jaws is anything to go by.

    “Of course, if you look at it another way, what all this really means is that fish need to fire their PR guy—stat. Whoever was in charge of creating a positive image for fish needs to go right back to working on the Britney Spears account and leave our scaly little friends alone. You've done enough damage, buddy. We've got it from here. And we're going to start by retiring the old name for good. When your name can also be used as a verb that means driving a hook through your head, it's time for a serious image makeover. And who could possibly want to put a hook through a sea kitten?

    “Ask the U.S. Fish and Wildlife Service to stop promoting sea kitten hunting.”

    In an interview with National Public Radio, PETA’s campaign coordinator, Amanda Byrnes, says, “Fish not only have the same ability to feel pain as a dog or a cat, but they also communicate with one another. They have complex social interactions; they form bonds; they express affection by gently rubbing against one another … Most parents would never dream of spending a weekend torturing kittens for fun with their families, but hooking a sea kitten through the mouth and dragging her through the water is the same as hooking a kitten through the mouth and dragging her behind your car.”

    In addition to pushing for the name change, PETA also is selling t-shirts using this theme for as much $25 and sweatshirts for $36.

    KC's View:
    PETA would love my kids, because I can’t get them to eat fish. Though I beg them to.

    I think it is fair to say that PETA has completely taken leave of its senses.

    This is, just to keep things in perspective, the same group that urged Ben & Jerry’s to start making its ice cream with human breast milk instead of cow’s milk because milking cows is inherently cruel. (Of course, I can't imagine that an un-milked cow would feel all that comfortable, but that’s apparently not important.)

    To be clear here, I am not in favor of wanton cruelty to animals. Ever. I believe that fishing has to be done both responsibly and sustainably. (And I know a little bit about this, having just completed a video project about seafood that will be shown at next month’s CIES Food Safety Conference in Barcelona.)

    But fish are food, preferably, in my view, blackened and very spicy. Kittens are not. (Historically, that’s probably because it is tough to get the fur out of your teeth. Though if the recession turns into a depression, kitten stew could become a real delicacy…)

    There are some animal welfare issues out there that PETA could grapple with that would not reduce its credibility and image as a radical fringe organization. This isn’t one of them.

    Published on: January 15, 2009

    The Arizona Republic reports on a new campaign by the Johns Hopkins Bloomberg School of Public Health, suggesting that Americans observe what they are calling “Meatless Monday,” or just eating like a vegetarian one day a week.

    According to the Republic, the campaign “maintains that eating like a vegetarian just one day a week reduces consumption of saturated fat by 15 percent, enough to ward off the ‘lifestyle diseases’ such as heart attacks, strokes and cancer. A weekly commitment also adds the disease-fighting benefits of fresh fruits, vegetables, grains and legumes … According to health and culinary experts, there has never been a better time for part-time vegetarians. Today's vegetarian cuisine - once known for bland bowls of brown rice and endless raw vegetables - has traded its image as a deprivation cuisine for one of haute cuisine.”

    KC's View:
    Gee, an intelligent, thoughtful campaign that addresses the notion of vegetarian eating without the use of images like “sea kittens.” I’m shocked.

    This is actually a pretty good idea. It is one that Catholics had for decades before Vatican II – albeit for different reasons on a different day – but a good idea.

    Good for the body, good for the soul…

    Published on: January 15, 2009

    Bloomberg reports that CVSA is investing more in the development of private label brands, believing that this will give it a differential advantage in a recessionary economy.

    According to the piece, an example of the strategy is how CVS “is wooing cash- strapped shoppers with house-brand anti-wrinkle cream that’s as much as 30 percent cheaper than L’Oreal SA’s Advanced Revitalift.”

    Private label sales generated 14.5 percent of company sales during 1997, the story says, and CVS hopes to get that up to 20 percent during the next three to five years.

    KC's View:
    Interesting to watch the Walgreen-CVS battle. Stay tuned.

    Published on: January 15, 2009

    • The Coca-Cola Co. is unveiling a new global ad campaign around the theme “Open Happiness,” replacing ‘The Coke Side of Life.” It is hoped, according to the Wall Street Journal, that it will “appeal to consumers' longing for comfort and optimism at a time when the weakening economy is sapping soft-drink sales.”

    • Starbucks said this week that it is urging customers to donate five hours of their time to community service, for which it will reward them with a free coffee. The promotion is timed to coincide with next week’s inauguration of Barack Obama as president of the United States.

    • Detroit-based Hiller’s Markets, a seven-store upscale independent, said this week that it will stop selling tobacco products. CEO Jim Hiller said that his personal beliefs about the dangers of smoking – including second-hand smoke - prompted him to make the decision.

    KC's View:

    Published on: January 15, 2009

    • Patrick McGoohan, who evolved from playing “Secret Agent” John Drake to starring in, writing, directing and producing “The Prisoner,” one of the most innovative television series ever created, died this week. He was 80.

    McGoohan at one point in the sixties was the highest paid actor in England as a result of his starring role as Drake in both “Danger Man” and “Secret Agent.” He famously had turned down the role of James Bond before Sean Connery was cast, saying he did not approve of the violence and sex ; he also had turned down the role of Simon Templar in “The Saint” before Roger Moore was cast. But he will best be remembered for “The Prisoner,” which portrayed a retired British spy who was kidnapped and imprisoned in a futuristic place called “The Village” where people have been stripped of their names and given numbers, and where it is impossible to tell the prisoners from the wardens. McGoohan’s character was christened ‘Number Six,” and we never learned his real name, though his constant refrain was “I am not a number, I am a free man!”

    In the late sixties, when “the establishment” was at war with some notions of personal freedoms, the series was seen as profound and ground-breaking. It had real resonance when Number Six said, “I will not be pushed, filed, stamped, indexed, briefed, debriefed or numbered. My life is my own.”

    After the 17 episodes of “The Prisoner,” McGoohan did a number of “Columbo” television movies, and was compelling in movies ranging from “Ice Station Zebra” to “Braveheart” to “Escape from Alcatraz.” And he did a lovely little series about a retired Army doctor that almost nobody remembers called “Rafferty.” But it as Number Six, looking for answers and freedom, that McGoohan left a permanent and compelling mark.

    • Richard Montalban, who perhaps will be best remembered for playing the villainous Khan Noonien Singh on an episode of “Star Trek” called “Space Seed,” which later spawned the plot of “Star Trek II: The Wrath Of Khan,” died at age 88.

    Also well known for his role as Mr. Roarke on TV’s “Fantasy Island,” Montalban was one of the first Mexican actors to gain broad and mainstream appeal in Hollywood.

    But it was as the genetically engineered Khan – with an amazingly muscular chest that Montalban pointed out was his own – with which he will be forever remembered, saying of his nemesis Captain James T. Kirk, “He tasks me. He tasks me and I shall have him! I'll chase him 'round the moons of Nibia and 'round the Antares Maelstrom and 'round Perdition's flames before I give him up!”

    And, in the closing moments of the film, quotes Herman Melville’s “Moby Dick”: “From hell's heart, I stab at thee. For hate's sake, I spit my last breath at thee.”

    Doesn’t get any better than that.

    KC's View:

    Published on: January 15, 2009

    MNB reported yesterday that a new Fareway Economical Food Store is scheduled to open in Minnesota – a 30,000 square foot store that will be a welcome sight for local residents who have been without a supermarket since the last one there closed in 2006.

    It will be an unusual store in some ways, according to the local coverage: “Expect clerks to take groceries to customer's cars. The store will be closed on Sundays like retailers of the past. Special cuts of meat and bountiful fresh produce will be available for the asking.”

    I took note of the “closed Sundays” policy, and wrote:

    Don't get me wrong. I respect a company with unique values and the integrity to put them into practice no matter what the impact on its competitive stance. But it is hard for me to rationalize the “closed Sunday” policy – it is like getting into the ring for a 15 round fight, but refusing to fight during the seventh and fourteenth rounds.

    It was no great surprise to me that I got deluged with email on this one. In fact, “deluged” may be an understatement.

    Let me give you a taste, and then I’ll respond.

    MNB user Shawn McKimens wrote:

    You are correct in that Fareway may be out of the ring for some of the rounds – but the fact that the founders based their business values on faith and family means they may measure success differently than their competitors. And while it is can be a good thing to win the fight, it is more important to stay in the fight for the long term – and remain strong. If a boxer really could sit out a round or two while the competition just swings around and gets tired, he'd have time to become refreshed and refocused. Of course the key is you have to be a good fighter when you're in the ring. It sounds like Fareway has their values in line with the customers they serve – and my guess is their stores are busier than most on the days they are open.

    Chick-Fil-a is good example of a company that has solid core values – and even though they are closed on Sundays will frequently do more business in six days than their competition does in seven. Ukrop's is also closed on Sunday's and they are considered very competitive.

    When you close on Sunday, it's what happens the rest of the week that makes the difference.

    It is interesting however that a company that follows biblical principles would be considered unique in today's marketplace.


    MNB user Steven Ritchey wrote:

    Having grown up in the Dallas, TX area, I remember when department stores were closed on Sunday and even though the grocery, drug and discount stores were open Sundays, due to the Sunday Blue Laws, there were certain things that couldn’t be sold. I also remember when the first Brookshire Foods store came to town from East Texas, it was closed Sundays, and didn’t sell beer, wine or tobacco products, within a few months, all of those policies were gone.

    That being said, I like the idea of a store saying, we are going to close one day per week, and we will close on the major holidays. Having worked retail, I can attest to the pleasure of knowing you have the same day off each week. The so called geniuses of the industry may not like the idea, but I’ll bet the rank and file employees love it. Think of it as a way of making retail a little more humane. Let’s face it, the grocery business has long had the reputation of being one of the hardest businesses to work in as the hours can be brutal, and you never know from one week to the next what your schedule will be.


    MNB user David Carlson wrote:

    I found it ironic that today's edition included both a questioning of Fareway's Closed on Sunday policy and Wegman's refusal to sell tobacco products, which you have lauded in the past. Obviously you'll find plenty of people on both sides of both situations. Both chains risk lost sales and customers from their decisions but both are principled decisions that will appeal to a certain customer base and, potentially, make loyal customers out of them. They're both points of differentiation and both companies should be lauded for standing for something. If every retailer tried to be all things to all people then all retailers would be Walmart.

    Who wants that?


    Another MNB user wrote:

    I grew up in a very small Iowa town where Fareway was the closest store (15 miles away). They had and still have incredible meats, bakery and low price. It wasn't very long ago that they started to sell beer in-store. It's interesting that they prospered before Hy Vee and Wal Mart entered their markets and continue to do well, even being closed on Sunday.

    Another MNB user wrote:

    I certainly don’t “value” your opinion regarding Fareway Food Stores, but judging by their loyal customers it appears they do “value” the “closed Sunday” policy.

    Still another MNB user wrote:

    I’ve never entered a Fareway store, but I’ve worked for the competition in Iowa. I can tell you that the Fareway customers stick to them like glue – no fair weather customers in their stores!

    Even in the ranks of the competitors, there is an admiration for their approach (and I might even say envy). They appear to be quite comfortable with the market share that finds their “valued approach” attractive. While this may not play well in all parts of the country, it does seem to meet a need in the upper Midwest.


    I know I said I’ll respond at the end, but can I just pose a quick question here? How do you compete with a company without every entering their stores? You don't have to spend money there, but don't you have to at least see what they’re doing right and wrong in order to compete?

    Just curious…

    MNB user Jeff Davis wrote:

    Why is it so hard to rationalize the "closed Sunday" policy? Financially, how is Fareway doing? How about Ukrop's and Chick-fil-A? They also close on Sundays. For these companies, adhering to Biblical principles is part of their brand and a key ingredient of their success. These are strong, vibrant companies. If they changed direction and started to open their doors on Sundays, they would damage their brand and disappoint many of their loyal customers.

    To follow up on your boxing analogy, it would be a low blow. And an unwise business decision.


    Another MNB user chimed in:

    There are many other successful retailers that are closed on Sunday, and are thriving successful. Just look at Ukrop's or Chic Fil A to name a few. They are observing and honoring the Sabbath day by keeping it holy (meaning no work). The fight analogy that you used is appropriate, but instead of "refusing to fight in the 7th and 14th rounds" they are actually resting up so they can have more fight in them during all the other rounds, and WIN.

    Fareway is as successful as they are and able to expand in a downturn economy in part due to them honoring this principle.


    I mistakenly identified the store as being in Rochester, Minnesota…and one MNB user corrected me:

    You mentioned the new Fareway store this morning. The store is actually in Stewartville, MN, about ten miles south of Rochester. Locals are very excited, they have heard about Fareway's excellent meat departments and personal customer service. I spoke yesterday with three farmers, all from near Rochester, and we talked about the demise of the local grocery stores and local hardware stores. I got to give my sermonette on how "if you don't like your local hardware store stop shopping there, it will go away." They all nodded in agreement, having seen many local establishments on main street go away, leaving empty storefronts in their formerly vital down towns. The subtext of that is, you can't bitch about cans of peas being 13 cents cheaper at Wal Mart, and in the same breath complain about the Wal Mart store being too big or impersonal or whatever. I think small town consumers have realized that they have to actually shop at their main street stores if they want to keep main street, their town, even their culture, vital. How that plays out this dark, penny pinching winter, remains to be seen.

    Still another MNB user wrote:

    I just can't rationalize your thoughts on a retail food store closing on a Sunday. To me it doesn't matter, if I lived in Stewartville, which is where the store is located, I would jump at the chance after a year of no food store in my town (as I'm sure they are), not having to drive the 11 or 12 miles to Rochester to shop. To think I have an entire six days to shop right here in my own hometown, man that's great.

    Sunday closings aren't popular I am sure. It decreases ones ability to "just run down to the store and pick-up that necessity", or drop by to pick up a basket of wings and bag of chips before the big game. Why not do that on Saturday or Friday, or stop by the local KFC and grab a bucket to go. I must admit I go the store on Sundays, but wouldn't have a problem if they closed.

    It seems to me it might be easier on work schedules, everyone has Sunday off, lower store/chain Operating costs, perhaps more importantly reduce electricity usage and the Carbon footprint of the store. I don't see the problem. I suppose as an employee it might reduce my opportunity for overtime, or if I were a student looking for weekend work it might not be the best option. I think the positives outweigh the negatives.

    I have worked with a small chain through the years, in Virginia, that closes on Sundays, called Ukrop's. Let me see, # 1 in the market, very forward thinking in their business, technically savvy and what many call leaders in the industry. Gee I'd back them in the ring anytime, I don't think they are throwing rounds by closing on Sunday. They seem to be holding their own and perhaps even beating the competition in the ring in which they box.

    Cheers to Fareway for closing on Sundays.


    Another MNB user wrote:

    Not a churchgoer, but I was just pondering this very fact the other day: While growing up, ALL businesses in my town closed on Sundays - it was the norm. People also tended to work 40--45 hours a week.

    Fast forward to now - I make calls from my car as I drive, and plan this into my work day/week. When necessary I work weekends, often, or at least part of each day, to keep up with the perpetual never ending "stuff" that "must get done".

    CA is talking about banning all cell phone use. My business mind laments the loss of valuable 'talk time' but the rest of my is excited about having a break from the relentless perpetual drive towards 'accomplishment'.

    From a sociological standpoint - staying open Sundays, what did we lose? Gain? in the process? Divorce, single households, single parents are the majority now over the "nuclear family". Could this be a result? I think so.


    MNB user David Livingston wrote:

    I doubt Fareway cares what you, me or anyone else thinks about their closed on Sundays policy. They are privately held and not too worried about the bottom line as long as they can continue to stay in business running stores as they see fit. Sales per square foot at these stores is well above average and they are managed in a very unconventional manner. The result is they are highly successful and I'm not going to question their methods.

    And one MNB user critiqued my commentary this way:

    This is written by someone that does not understand God’s law, we are to rest in Him on Sunday. God created the universe and all within it in six days and He even rested on the seventh day. Clearly this should teach us that we can do more in six days with Him than in seven days without Him. Regarding your comment of getting into the ring, if we want to win the fight, we cannot win if we step in the ring of our life alone.

    Okay, that gives you a sense of the range of criticisms. This represents, by the way, about a third of the emails I got on just this subject

    My response:

    Okay. I’m a heathen. A pagan. Been called worse.

    But to be fair here, I don't think I was criticizing Fareway for its “closed Sunday” policy. I was observing – and I continue to believe that this is true – that being closed one day a week can put a store at a competitive disadvantage. Now, if you have a lot of other differential advantages – and both Ukrop’s and Fareway do – then being closed on Sunday is a worthy trade-off.

    To stretch the boxing metaphor a little, it doesn’t matter if you don't fight the seventh round if you score a knockout during the sixth round.

    But I’ll stick to my guns on this. To suggest that being closed on Sunday, a day when a lot of people do their shopping because it might be the only day on which they can do it, has no competitive impact…well, that strikes me as naïve.

    I also don’t believe that being open on Sunday is a sin, or a market of being a heathen.

    So let me be clear about what I think is most interesting part of this discussion. What makes Fareway unique and competitive is not that it is closed on Sunday, but what it offers and does the other six days of the week.

    And that’s what we really ought to be focusing on.

    Amen.

    KC's View: