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: January 22, 2009

    Now available on iTunes...

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las


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


    Regular readers of MorningNewsBeat know that one of my biases is in favor of good food…I have long thought that too many supermarkets focus on efficiency rather than effectiveness. They sell bottles and bags and boxes and cater to the lowest common denominator rather than focusing on really good food that challenges and enlarges the consumer palate. That’s a shame, because it misses some of the innate advantages of being in the food business.

    I love it when food retailers trumpet a favorite food. When Norman Mayne of Dorothy Lane Market talks about a favorite rub used on steak. When Neil Golub of Price Chopper brags about the corned beef sandwiches made by his Ben & Bill deli. When the folks at Wegmans insist that you eat in one of their Tastings restaurants, because they’re just so proud of the food that is made and served there. It speaks volumes, I think, about how they have their priorities right…it doesn’t mean that the operational details aren’t important, but that they understand the unique role that food can play in our lives.

    It was interesting to me to read that Jamie Oliver, the British celebrity chef who has brought his expertise and spotlight not just to restaurants and cookbooks but also to an effort to improve school nutrition in the UK, plans to open a chain of meal preparation stores where people will be able to come in and make dishes from Oliver’s own recipes. In addition, the stores will sell prepared meals that Oliver says will be designed to provide both value and high quality. The name of the new chain, the first of which will open this winter, will be Recipease.

    Here’s what he has to say on the subject: “I think we can really get people excited about food - young mums wanting ideas for the family, blokes wanting to impress the girlfriend, professionals planning a dinner-party, everyone. Whether you've got time or not, we can add a little bit of something extra and teach people in a friendly way, like I was taught. I really believe that if the produce and product is exceptional and good value, then people will find this service dead handy."

    With Jamie Oliver’s name attached to it, there won’t be much question that quality will be a high priority for the new chain, and if it lives up to the promise, Recipease could be an interesting and formidable competitor. But you just know that the company isn’t going to cut corners or indulge in lowest common denominator food. It doesn’t make sense, and it would erode the power of the brand.

    There’s been a fair amount of debate – here on MorningNewsBeat and elsewhere – about whether or not the meal preparation business is a viable one. At least here in the US, I’m not sure we know one way or the other.

    But maybe the problem is that we’ve been looking at it wrong. We’ve been looking at it as a stand-alone industry rather than seeing it within the context of a broader food business. Now, at a time of economic uncertainty, customers may be more willing than ever before to try new things that they perceive as having value attached to it. They’ll be interested in saving money, but if you can offer them a new experience, a little bit of education that isn’t too heavy handed, a fresh perspective on mealtime, and maybe even fill some of the holes that have been left as people adjust their spending patterns…well, maybe that has the potential to be a winner.

    It is all about consistent innovation, constant strategic thinking, and an ability to maintain momentum in a way that delights and surprises the customer. And if that includes making a great corned beef sandwich, or selling a steak rub that’ll knock your socks off…well, so much the better.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: January 22, 2009

    Delhaize Group opened a new concept store this morning in Gembloux, Belgium, that it says features an emphasis on low prices, a significantly edited grocery selection, and a high service component, and has incorporated some innovations originally developed in the US.

    Among the features of the new 21,000 square foot store, according to the company:

    • “Red Market offers a range of quality products that meet the customers’ everyday needs (+/- 5,400 products). The focus is on food, along with personal care and household products, as well as a number of ‘emergency items’, such as kitchen utensils and stationery products.

    “In addition to the products that meet everyday needs, Red Market offers local products (e.g. beer, snails) and ‘discovery’ products (new or special products). By limiting the number of brands in each product category, Red Market simplifies the selection process for its customers, so that they can complete their shopping in less time.”

    • “The general use of self-scanning, a new (single line) queuing system at the check-outs and extended opening hours are 3 additional features of the concept. The role of the (25) store staff primarily consists in offering customers a friendly and efficient service.”

    • Except for bakery, there is no in-store food production, reducing the need for high-cost labor and centralizing production in an offsite location.

    • Another innovation in the fresh food, according to the company, “is the way all fresh fish, meat and poultry products are packaged. The new type of packaging guarantees optimal quality and keeps the product fresh for longer after the customer brings it home. Another innovation is the refrigerated units with closed doors in which most of the fresh products are kept. These innovations guarantee the improved freshness and protection of the products and above all result in reduced energy consumption, which benefits the environment.”

    The company says that “the launch of Red Market is perfectly in line with (its) strategy of continuous innovation and concept differentiation. To this end, the test project in Gembloux incorporates elements of various store concepts that Delhaize Group has recently developed and implemented across the world. Examples are the Bottom Dollar prototype that Food Lion recently opened in the US, the Hannaford concept store (US) that opened at the end of 2007, and the Lion Food discount stores launched by Alfa Beta in Greece in 2008.”

    The Red Store is being operated by a new Delhaize division called Smart Food Shopping, which is set up to be independent of the main corporate structure.

    KC's View:
    There was an interesting story in the Wall Street Journal the other day that reported on how retailers in western Europe seem to have the ability “to cater to local preferences in a cost-effective way,” which “may help position these companies to weather the economic downturn better than their competitors. Western Europe's top-performing grocers grew at twice the industry's compound annual growth rate between 2000 and 2006. One practice that set them apart: The winners are more adept at localizing their offerings.”

    The message seems clear. While standardization may be the best way to grow a company, the best way to serve customers, it becomes increasingly clear, is through varying kinds of customization.

    Haven’t seen the store in person…I couldn’t figure out how to get myself to Gembloux this morning…but it sounds impressive. Delhaize continues to impress with its innovation and differentiation efforts, both here and in Europe. And spinning off entities that can thrive in a more creative atmosphere is a smart was of nurturing creativity.

    Published on: January 22, 2009

    Iowa-based Hy-Vee is rolling out the NuVal nutritional rating system throughout its stores, ranking virtually every product on a scale of 1-100.

    Hy-Vee CEO Ric Jurgens has been an enthusiastic proponent of the NuVal system, dating back to when it was called ONQI. The system is being trumpeted on Hy-Vee’s website.

    The NuVal system “summarizes the overall nutritional value of food,” according to the organization’s website. “It uses the Institute of Medicine’s Dietary Reference Intakes (quantitative reference values for recommended intakes of nutrients) and the Dietary Guidelines For Americans (advice from the Department of Health and Human Services, HHS, and the Department of Agriculture, USDA, about how good dietary habits can promote health and reduce risk for major chronic diseases) to quantify the presence of more than 30 nutrients – including vitamins, minerals, fiber, and antioxidants; sugar, salt, trans fat, saturated fat, and cholesterol. The system also incorporates measures for the quality of protein, fat, and carbohydrates, as well as calories and omega-3 fats. The NuVal System also takes into account how these nutrients influence health based on broadly accepted, published scientific literature.”

    Upstate New York-based Price Chopper also announced its adoption of the program this week.

    KC's View:

    Published on: January 22, 2009

    Fortune is out with its annual list of the nation’s best places to work, and among the top 100 are the following food and retailing companies:

    5. Wegmans
    10. Nugget Market
    22. Whole Foods
    24. Starbucks
    32. The Container Store
    53. Stew Leonard’s
    72. Nordstrom
    81. SC Johnson & Co.
    88. Publix Super Markets
    99. General Mills

    Number one is NetApp, an Internet company.

    The premise of the list each year is that these companies treat their employees as their primary constituency, feeling that if staffers are treated well they will take better care of customers.

    In the case of NetApp, the company’s greatness is described thus:

    “Employee enthusiasm for the legendary egalitarian culture helped catapult NetApp to No. 1 after six years on our list.

    “Typical of its down-to-earth management ethos, NetApp early on ditched a travel policy a dozen ­pages long in favor of this maxim: ‘We are a frugal company. But don't show up dog-tired to save a few bucks. Use your common sense.’ Rather than business plans, many units write ‘future histories,’ imagining where their business will be a year or two out.

    “And the benefits are tops: five paid days for volunteer work, $11,390 adoption aid, and autism coverage -- used by 43 employees since 2006 at a cost of $242,452. The company has gained market share during the slump, hasn't had layoffs, and has more than $2 billion in cash on hand to help it ride out the global financial crisis.”

    KC's View:
    Interesting note: Of the 100 companies on the list, 73 are hiring, even in the current climate.

    Coincidence? I think not.

    Published on: January 22, 2009

    Fascinating piece this morning in the New York Times about how PepsiCo decided to try to figure out the environmental impact of orange juice. According to the story, “PepsiCo hired experts to do the math, measuring the emissions from such energy-intensive tasks as running a factory and transporting heavy juice cartons. But it turned out that the biggest single source of emissions was simply growing oranges. Citrus groves use a lot of nitrogen fertilizer, which requires natural gas to make and can turn into a potent greenhouse gas when it is spread on fields.

    “PepsiCo finally came up with a number: the equivalent of 3.75 pounds of carbon dioxide are emitted to the atmosphere for each half-gallon carton of orange juice.”

    But now that the research has been done and the conclusions reached, PepsiCo is said to be facing another problem: deciding how to use that information, and even figuring out whether anybody knows whether 3.75 pounds of carbon dioxide is a lot or a little. These are important considerations, because manufacturers are facing pressure to use things like “carbon footprint” on packaging…but there is a general acknowledgement that there may be a lack of context for the numbers.

    KC's View:
    There’s a pretty good argument that “carbon footprint” is one of those phrases tossed around by people with very little understanding…a classic case of a little knowledge being a dangerous thing. It probably would be a lot more effective for industry and government to come to sort of agreement about how to measure and communicate such information in a transparent and user-friendly manner…because the alternative may be a plethora of ratings systems that will only confuse the shopper. Which won’t help anyone in the long run.

    Published on: January 22, 2009

    The Stamford Advocate reports that Fresh Market, the upscale grocery chain that operates 86 stores in 18 states, mostly in the Southeast and Midwest, plans to open a new store in Westport, Connecticut later this year. The unit will represent the company’s second entry into New England; there also is a Massachusetts store in development.

    The store will be on the site of a closed Shaw’s store.

    KC's View:
    Unless there is a real economic turnaround in the next ten months, it won’t be an easy time to open an upscale grocery store…and it will be competing with Stew Leonard’s, Whole Foods, and Stop & Shop. Won’t be easy, especially because Fresh Market doesn’t have much of a profile in the area.

    Published on: January 22, 2009

    In Minnesota the Star Tribune reports that an independent grocery retailer in Iowa, D&G Foods, has filed a lawsuit charging that Supervalu and C&S Wholesale Grocers colluded to limit competition.

    According to the story, D&G operated a store called Gary’s Foods and “severed a 40-year relationship with Supervalu three years ago after it closed a Des Moines warehouse and began taking on some $1,500 in extra weekly fees to ship groceries from Minneapolis. The suit alleges that Supervalu could close warehouses without fearing competition from C & S thanks to a deal the two companies struck in August 2003. The deal led to the closing of six warehouses -- three for each company -- in the Midwest and New England.

    “Dietrich said he now buys groceries from Edina-based Nash Finch Co., which has a Cedar Rapids warehouse just 17 miles from his store.”

    The suit is seeking class action status for “thousands” of independent retailer affected by the alleged collusion.

    KC's View:

    Published on: January 22, 2009

    Irish retailer Superquinn announced that it is closing its Dundalk store and will lay off 400 people as one way of shoring up its financial situation.

    “This programme is necessary to secure the future of our business and to protect almost 90% of the jobs in Superquinn,” said Simon Burke, chairman of the company, in a prepare statement. “We are hoping to reach agreement with regard to the wide ranging measures with colleagues representatives over the coming weeks. These measures will provide Superquinn with a competitive trading base and avoid putting all of the jobs in Superquinn at risk. It breaks any retailer’s heart to close a store, but recent developments in cross-border shopping have left us with no alternative. It is our hope to avoid any other closures as part of the programme.”

    KC's View:
    The irony of this is that Dundalk is where Feargal Quinn opened his first store in 1960, though he closed that unit in 1982 and opened a much larger store there in 1999. (The new unit was a very nice one…I’ve been there.)

    The real problem, as noted by Burke in his statement, is that food is much cheaper in Northern Ireland at the moment, and Dundalk is not far from the border…which put the store in an almost untenable position. Combine that with Ireland’s current financial woes, and Superquinn is doing what it needs to do to position itself correctly.

    Published on: January 22, 2009

    BrandWeek delivers a paean to the benefits of in-store marketing, noting that while 21 million people watch an average episode of “Dancing With The Stars” and 35 million people watched the most recent finale of “American Idol” – enormous numbers in a fragmenting television universe – “those audiences pale when compared to the crowds that pack the aisles of the big-box retailers. Costco, Walgreens, Safeway and Kroger boast weekly shopper counts of 20 million, 30 million, 44 million and 68 million, respectively. Passing through the revolving doors of Wal-Mart locations across America each week are 150 million people.”

    The conclusion: it is no wonder that “ shopper marketing (the in-store appeals that take the form of shelf talkers, end-aisle displays and the newest: in-store video networks) is getting more attention than ever from retailers, manufacturers and ad agencies alike. According to a study by the Grocery Manufacturers Assn. and Deloitte Consulting, the number of manufacturers and retailers that have significant shopper marketing organizations of more than 20 people has jumped from 29 percent in 2007 to 60 percent in 2008. The study also found that over the next three years, in-store marketing activity will grow at a higher rate than any other marketing tactic. A Booz & Co. survey of consumer packaged goods marketing executives found that 95 percent plan to either maintain or increase investments in retail store media.”

    KC's View:
    One would think that especially in a time of economic strife, high-return targeting tactics and strategies make a lot more sense than less specific efforts.

    Published on: January 22, 2009

    • In upstate New York, the Democrat and Chronicle reports that Wegmans has expanded its test of self-checkout lanes to its Penfield unit … though the company still hasn’t decided whether the technology will become a permanent fixture in its stores.

    • Consumers Union has called on President Barack Obama “to appoint a new FDA Commissioner as soon as possible to address peanut butter contamination and a growing list of other food safety problems.”

    The letter says, in part, “With only an Acting Commissioner in charge, the FDA is now adrift. Given the seriousness of the problem - people’s lives are at stake – President Obama must appoint a new FDA Commissioner as soon as possible who can begin to assert strong leadership on food safety. We need quick action not just on peanut butter, but melamine in infant formula, BPA in baby bottles and canned food linings, and other critical food safety issues.”

    KC's View:

    Published on: January 22, 2009

    • Andrew Mann, Tesco’s marketing director for planning and innovation, reportedly is leaving the company to join Sainsbury as director of customer insight and loyalty.

    KC's View:

    Published on: January 22, 2009

    Responding to yesterday’s story about Publix opening its 1,000th store, one MNB user wrote:

    I was working for Publix in 1990 when they came out with their "Vision 2000". They set an aggressive goal of having 1,000 stores by the year 2000. Am I disappointed that they did not meet their goal? Absolutely not. Myself and the other stockholders couldn't be happier. Publix is OPENING stores this year ~ not CLOSING them. Maybe there was something to that story of the tortoise and the hare...




    Regarding Fresh & Easy’s use of Twitter to converse with its shoppers, and the importance of such technologies, MNB user Aleta Fullenwider wrote:

    I’ve observed that consumers are talking about all brands and it’s useful for companies to monitor these conversations. It provides an opportunity to turn a negative experience for a consumer into a learning experience for a brand. The point is do you know what people are saying about your company? No matter how big or small, people are talking. Are you listening?

    Fresh & Easy is just one of the many retailers who are embracing not only Twitter but other forms of social media. Whole Foods uses this marketing strategy to inform people of new store opening, promote different products, drive traffic to their site, take surveys, and basically communicate with customers. Other companies like PCC and New Seasons are also two smaller retailers who are developing a loyal following of customers using social media to enhance their brands.





    MNB user Sherri Field had some thoughts about Michael Sansolo’s column yesterday about the environment’s bottom line:

    Whenever I read a green article about energy footprint, compact fluorescent bulbs, and waste modification, I find memories reemerging of my favorite childhood fairy tale. Just like the emperor’s new clothes, there’s nothing to it, and the world is being dragged along by peer pressure. It is fine for companies to use “green” marketing and let consumers decide which message is meaningful to them, but don’t expect me to believe swindlers telling the emperor their fine fabric is invisible.

    I respectfully disagree.

    To believe that man is having no impact on the environment around him, and to think that we cannot reverse our negative impact though a careful and nurturing stewardship of the planet, is, I think, tantamount to believing in a fairy tale.

    And to equate environmentalists with swindlers?

    There are none so blind as those who will not see.

    KC's View:

    Published on: January 22, 2009

    The 81st annual Academy Award Nominations were announced this morning…and the major categories broke out as follows:

    Best Picture
    “The Curious Case of Benjamin Button”
    “Frost/Nixon”
    “Milk”
    “The Reader”
    “Slumdog Millionaire”


    Best Actor
    Richard Jenkins, “The Visitor”
    Frank Langella, “Frost/Nixon”
    Sean Penn, “Milk”
    Brad Pitt, “The Curious Case of Benjamin Button”
    Mickey Roarke, ‘The Wrestler”


    Best Actress
    Anne Hathaway, “Rachel Getting Married”
    Angelina Jolie, “Changeling”
    Melissa Leo, “Frozen River”
    Meryl Strepp, “Doubt”
    Kate Winslet, “The Reader”


    Best Supporting Actor
    John Brolin, “Milk”
    Robert Downey, Jr., “Tropic Thunder”
    Philip Seymour Hoffman, “Doubt”
    Heath Ledger, ‘The Dark Knight”
    Michael Shannon, “Revolutionary Road”


    Best Supporting Actress
    Amy Adams, "Doubt"
    Penelope Cruz, "Vicky Cristina Barcelona"
    Viola Davis, "Doubt"
    Taraji P. Henson, “The Curious Case of Benjamin Button”
    Marisa Tomei, "The Wrestler"


    Best Director
    Danny Boyle, "Slumdog Millionaire"
    Stephen Daldry, "The Reader"
    Clint Eastwood, "Changeling"
    David Fincher, "The Curious Case of Benjamin Button"
    Ron Howard, "Frost/Nixon"

    KC's View: