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: February 5, 2009

    Now available on iTunes…

    Hi, I’m Kevin Coupe, reporting today from Barcelona, Spain. MorningNewsBeat Radio is brought to you by Webstop, experts in the art of retail website design.

    I’m in Barcelona this week attending the annual CIES Food Safety Conference, and in doing so, I have decided who the most important consumers in the United States are…and why both retailers and manufacturers need to pay attention.

    I would submit that Sasha and Malia Obama, President Barack Obama’s seven and ten year old daughters, are the most important consumers in the United States.

    This became clear earlier this week when President Obama spoke to NBC’s Matt Lauer and talked about food safety and the current peanut butter-related salmonella outbreak that has sickened more than 500 people and may have killed as many as eight.

    When Obama spoke, he spoke like a concerned parent, like the kind of guy who said that one of the big advantages of being President is that he gets to have breakfast and dinner with his wife and daughters most days. This is someone who takes parenting seriously.

    "I think the FDA has not been able to catch some of these things as quickly as I expect them to catch them, so we're going to be doing a complete review of FDA operations," Obama told Lauer. "At a bare minimum, we should be able to count on our government keeping our kids safe when they eat peanut butter.”

    And, he said, peanut butter is what Sasha eats for lunch. Probably three times a week. I don't want to worry about whether she's going to get sick as a consequence of eating her lunch."

    We make the argument a lot here on MorningNewsBeat that it makes a lot more sense for the food industry to get ahead of government regulations when it comes to food safety, that a reactive position practically invites new regulation that many in business will find to be oppressive.

    The Obama remarks reinforce this position, I believe. Because their father is in a position of some influence, Sasha and Malia Obama have the potential to be the food industry’s worst nightmare, if it doesn’t get more aggressive, pro-active and transparent about self-regulation that goes beyond what the government demands. They have this potential because their dad is unlikely to view the FDA as a method of protecting and serving industry; rather, he’s going to see it as a way of serving and protecting the consumer. In other words, he’s going to want to protect his kids.

    I wouldn’t mess with this if I were you. In fact, you may want to start wearing rubber bracelets with the following initials:


    What’s best for Sasha and Malia?

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: February 5, 2009

    by Phil Lempert

    Content Guy’s Note: Since I am in Barcelona at the CIES International Food Safety Conference, that meant I couldn’t be in Las Vegas for the annual National Grocers Association (NGA) convention. And so, “Supermarket Guru” Phil Lempert was kind enough to contribute a guest column this morning that details the top-line results of the conduct the third annual N.G.A. SupermarketGuru Consumer Panel Survey.

    The findings, based on 72 attributes and questions, define consumers’ current supermarket expectations, purchase influencers, eating habits and nutritional focus. ConAgra Foods facilitated the survey with Lempert and NGA to gain insights into leading food industry trends.

    We’ll have links at the end of this column to help you access the full survey results…

    Consumers have changed their relationships with food and beverage, and the stores and restaurants that provide them, after the economy’s slash and burn of 2008. Visits and spending shrank, as people began to save in many ways that seem likely to stick. They tightened their shopping plans, retail outlays, and eating and nutrition strategies to grow fitter and weather these tough times.

    As a result, shoppers seek retail improvements in the areas of price/cost savings, service, and assortments, especially healthful, locally grown foods, according to survey results. People are eating out less—and demanding more of supermarkets.

    Price is currently their #1 issue—even with the potential economic lift from the new U.S. presidency and a stimulus package moving through Congress. How absolutely important is price today? The survey shows store features that have classically driven store selection are less important now. Among them: availability of high-quality meats, seafood, fruits and vegetables; nutritional and health information; organic foods; and consistent product freshness in perishables and center-store categories.

    Key Findings of the 2009 Survey:

    The Value of Convenience

    Consumers want low prices, but convenience still comes first.

    • Ninety-four percent of respondents patronize the food store closest to home regardless of its attributes.

    • Though the economy has changed, shopping habits have not. Most people (84%) still buy food primarily from supermarkets instead of discount havens like mass-merchandisers (7%) and club stores (3%).

    • Fast checkout (94%) and store layout (91%) are the most “important” convenience factors.

    Cost is Boss, but Quality is Key

    To come out on top in 2009, retailers must offer low prices and frequent shopper programs without losing sight of customer relationships.

    • The rapid climb of the importance of price, sales, and specials (each up seven percentage points from last year) reflect consumers’ economic concerns.

    • Immediately behind price? The desire to feel welcome and be treated well (49%).

    Internet More Trusted than Doctors

    To truly satisfy consumers’ needs, retailers have to understand how to best communicate with them. Social networking and a strong online presence is a good place to start.

    • Shoppers trust information from the Internet (26%) more than that of physicians (17%) or nutritionists/dietitians (12%).

    • Consumers obtain information from the Internet alone (70%) at the same frequency of newspapers (38%) and books (32%) combined.

    A Healthy Appetite

    Consumers motivated to eat healthier demand easy access to nutritional information.

    • Health-conscious consumers closely monitor labels for: Fat content/low fat (14%); chemical additives (11%); salt/sodium content (9%); sugar content (7%) and calories (7%).

    • In the pursuit of healthiness, consumers: Eat more fruits and vegetables (83%), less junk foods/snack foods (64%) and more whole grains and fresh foods (both 54%).

    Fresh Thinking

    On the quest to save money, shoppers’ taste buds still crave excitement. To stay competitive, popular brands consistently pioneer new technologies and varieties.

    Independent retailers traditionally feature these innovations long before chains can respond.

    • When purchasing a new product, nearly all shoppers opt for a brand name (92%).

    • Due to rise of home cooking - up two percentage points from last year - shoppers welcome innovative products that add flavor or convenience to their recipes.

    • A good selection of ethnic or cultural foods is important to 62 percent of shoppers.

    As we said earlier, consumer relationships with food and beverage, and the stores that provide them, have changed suddenly. With insights from this report, NGA and ConAgra Foods have as their goal to help retailers and suppliers be better able to adjust strategies and execution to better serve the shell-shocked consumer.

    Full survey results can be found starting today at:

    KC's View:

    Published on: February 5, 2009

    More news in the case surrounding a peanut butter-related salmonella outbreak that has sickened more than 500 people and killed as many as eight:

    • The New York Times this morning reports that Peanut Corp. of America has released a statement saying that it was visited by federal and state regulators as well as by private inspectors on a regular basis last year, and that they all declared it “to be in tip-top shape.”

    According to the story, “Peanut Corporation of America’s statement was released as food manufacturers and public health officials tried to determine how so many inspectors missed what some have said were obvious problems at the plant, including improper sanitation procedures, live roaches, mold and slimy residue on floors and equipment.”

    Meanwhile, USA Today reports that Kellogg’s “says it's reviewing how it qualifies suppliers after a food-safety auditor it hired gave superior ratings to the Georgia peanut plant now at the center of one of the nation's largest food recalls.”

    • The outbreak has been traced to a Georgia plant owned and operated by the Peanut Corp. of America, and which has been reported to have been badly maintained without essential food safety and hygiene practices being enforced. Now, however, the Associated Press reports that the same company owned and operated an unlicensed peanut plant in Texas.

    “Once inspectors learned about the Texas plant, they found no sign of salmonella there,” the AP writes. “But new details about that plant — including how it could have operated unlicensed for nearly four years — raised questions about the adequacy of government efforts to keep the nation's food supply safe. Texas is among states where the FDA relies on state inspectors to oversee food safety.”

    • The Washington Post has a story suggesting that any public panic over the peanut butter scare will be short-term at best.

    “A 2007 Gallup poll reported that 62 percent of Americans said they avoided buying certain brands or types of food due to a food safety warning or recall in the previous 12 months,” the Post writes. “But only 28 percent of Americans reported paying "a lot" of attention to food safety and nutritional issues, about the same number as in 1989.”

    The Post continues, “There seems to be little connection between rising concerns and consumer eating habits. Regular E. coli scares boosted the percentage of adults who were very worried about the germ from 21 percent in 2002 to 32 percent in 2007. Meanwhile, the percentage planning to eat fewer hamburgers has hovered steadily around 30 percent. The same is true with regard to fears about mercury in seafood. The number of adults aware of and concerned about the problem jumped from 58 percent in 2003 to 69 percent in 2008, while the percentage who say they plan to eat less fish or avoid seafood entirely has remained between 20 percent and 22 percent.”

    KC's View:
    We’ve described this before as a systemic breakdown, and these stories do very little to alleviate that feeling. In fact, it begins to sound like Peanut Corp. was cooking the books…showing people only what it wanted to show them, which makes you think that management and ownership was far more cavalier about this than is almost imaginable.

    We were chatting about this last night at a dinner in Barcelona at the CIES Food Safety Conference, and the general feeling was that it was impossible to understand the moral and ethical disconnect that could have allowed these things to take place. The odds are that at least some of the people at the plant are parents, and that their children consume some of the affected products. How could they care so little about their own children, much less the public at large?

    As for the Post story, I think the food industry should take little comfort in those numbers. Keep piling up outbreaks like these, and eventually you’ll reach the tipping point, and trust in the food system will collapse. And then where will you be?

    Published on: February 5, 2009

    Excellent piece in the Los Angeles Times about how the Center for Science in the Public Interest (CSPI) has asked that supermarket chains use their frequent shopper program databases to contact consumers who have purchased products that might be affected by recalls related to the peanut butter-related salmonella outbreak that has sickened more than 500 people and killed eight.

    Among the companies that already have done so, according to the Times, are Costco (which has made issued than one million letters and automated phone calls) and Ralphs.

    There is a downside to the CSPI request, however. While there are obvious public health benefits to making such phone calls, privacy advocates worry about the data being collected and how it is being used by retailers and manufacturers.

    KC's View:
    Call me silly, but if a company wants to prevent me and my kids from getting sick by tracking my purchases, an effort that also would allow them to better target me with relevant promotions and products, I’m okay with that.

    There is a simple solution for privacy advocates who don't want their purchases tracked. Don't use a loyalty card. Better yet, use cash.

    I more worry about the retailers out there that are not effectively using databases that, by all rights, should be one of their most valuable assets.

    Published on: February 5, 2009

    The Phoenix Business Journal reports that Arizona-based Bashas’ Supermarkets is laying off 350 people, a result of what the company described as the impact of the recession and heightened competition.

    According to the Journal, “The layoffs represent less than 3 percent of the firm’s total work force and were spread throughout the grocer’s operations, including administrative offices, distribution centers and its network of retail stores.”

    The Arizona Republic, reporting on the same story, notes that Kristy Nied, a spokeswoman for Bashas', said that "it’s no secret that we're battling on several fronts for the future viability and profitability of the company, and we're facing fierce competition and the economic recession.” She also blamed the United Food and Commercial Workers (UFCW), which she said has been trying to stop people from shopping at Bashas’ various banners because of labor issues.

    Jim McLaughlin, president of the Local 99 chapter of the union, tells the Republicthat the company is obligated to negotiate with the union if any of the layoffs involved union workers: “We're certainly interested in hearing the company's real reason for laying off these workers. It's an often convenient excuse to blame it on the workers when it's the management that holds the responsibility."

    According to the Republic, the employees who were dismissed were not given any severance pay, but full-timers were placed on a preferential hiring list in case new jobs become available within the company.

    KC's View:
    It doesn’t sound as if Bashas’ labor issues are going to end anytime soon. Which makes it even more difficult to be competitive in a tough environment.

    Without passing any judgment on the decisions made by Bashas’ – because in tough economic times, you often have to do what you have to do – I would like to point out that while laying off store personnel during tough economic times may seem like the right thing to do, it is in an area in which I think stores need to step very carefully. After all, one’s ability to be competitive often is as much tied up in who works in the store as in what products and services are offered. At least, that’s the way it should be…and often, when a retailer has trouble being competitive, it is because one of those three elements is missing.

    You’re only as good – and as competitive - as the people on the front lines.

    Published on: February 5, 2009

    Tesco’s Fresh & Easy division in California, Arizona and Nevada said yesterday that it had increased its produce sales by more than 11 percent since January by introducing 98-cent Produce Packs that “are delivered fresh daily to stores and currently include grape tomatoes, yellow onions, green bell peppers, pears, lemons and oranges. Customers can always choose from six different fruits and vegetables that will rotate depending on seasonality and availability.”

    “Our customers told us finding high-quality produce at affordable prices was challenging,” said Simon Uwins, Fresh & Easy chief marketing officer. “We are making changes so our customers have even more options on their weekly shopping trips. The 98-cent Produce Packs offer customers a great way to save money without compromising on quality or freshness.”

    KC's View:
    The argument here has always been that Fresh & Easy is a work in progress. It may be that with innovations like this one, the company may find the current recession to be far from depressing.

    Published on: February 5, 2009

    Time has a piece questioning how long direct-to-consumer (DTC) advertising by pharmaceutical companies will be allowed in the US under the new Obama administration, which has vowed to lower drug costs, plus a new Congress that has a number of advocates for severe limits on such advertising. While the White House has not identified DTC advertising as a high priority, there are expectations that some sort of limitation, or perhaps a moratorium, will be debated once other, more pressing issues are dealt with.

    The case against such advertising, which is allowed in only one other country (New Zealand): “Critics claim that these advertisements encourage consumers to seek out overly expensive brand-name drugs from doctors. Their symptoms might not require such medications, and when they do, cheaper generic drugs may be available. Such marketing probably drives up overall health-care costs. More important, new drugs that are aggressively marketed can pose a safety risk.”

    KC's View:
    Can we add to this argument that these ads are really, really annoying? Not to mention often embarrassing when watching television with one’s children?

    The ads, of course, always go into great detail about possible side effects. But I actually think that it is the commercials themselves that may cause your hair to turn green, your nose to fall off, fevers and chills to occur, and possible impotence.

    Published on: February 5, 2009

    There is yet more evidence that the talks between the Federal Trade Commission (FTC) and Whole Foods, designed to resolve the battle over the retailer’s acquisition of Wild Oats, could be coming to a successful conclusion. Yesterday, the FTC announced a 30-day delay in its antitrust challenge to the $565 million acquisition, which actually closed more than a year ago and that, if successful, would require an unraveling of the two now-enmeshed operations.

    Last week, the FTC had delayed the challenge by five days, which it is now extending. At the same time, the court hearings into the case, schedule for mid-February, had been postponed because of the ongoing talks.

    Jim Sud, Executive Vice President, Growth and Development for Whole Foods, issued the following statement: “We look forward to continuing constructive dialogue with the FTC to find a mutually agreeable resolution to this matter."

    KC's View:

    Published on: February 5, 2009

    • The Atlanta Business Chronicle reports that Publix is preparing to open a new store in Atlanta that is designed for Latino shoppers.

    According to the story, “the 47,000 square-feet store will feature dual-language signs, an enhanced selection of traditional Latino grocery items and a weekly sales paper in Spanish. The produce department will feature fresh and dried chilies, dried beans and plantains. The bakery will offer fresh conchas, flan and breads baked through out the day. The meat department will custom slice thin cuts of meats for traditional Latino recipes. The deli will provide a salsa bar including mango, corn chipotle, black bean, guacamole, fire roasted peppers and traditional tomato based salsas. Meats include carne deshabrado, pork carnitas and chorizo sausages.’

    Opening day is scheduled for February 19.

    • The Seattle Post Intelligencer reports that the US Postal Service is investigating for possible non-compliance with postal rules, though the specifics have not been identified by either party.

    • Published reports say that Beech-Nut Nutrition Corp. is building a state-of-the-art production facility in Florida, New York, and also will move its corporate headquarters there from St. Louis.

    Retail Week reports that Carrefour has opened its first Carrefour City store, a c-store format that “is split into two areas, everyday convenience items and essentials.” A six month test is anticipated before any roll-out decisions are made.

    The Seattle Post Intelligencer reports that Costco has instituted a hiring freeze at its headquarters and division offices, but has no plans to lay anyone off. The freeze is not absolute, according to the story; if a need can be established, it will be lifted when and where appropriate.

    KC's View:

    Published on: February 5, 2009

    Things are running a little late this morning, so I have just a few emails to share…

    There was some discussion here yesterday about the efficacy of the military commissary system, and I wondered if it made more sense to simply outsource the whole thing to a company like Walmart. MNB user Bob Anderson wanted to disabuse me of that notion:

    The Military Commissary system operates Retail Stores to serve its military community. To think that the Commissary system only serves the Military Installations in the 50 states is short sighted. The commissary operates nearly ever where the US Military operates. There are a lot of overseas locations that are small and quite frankly unprofitable to operate. Many overseas locations do not have access to a dependable, quality food supply. So the Military does all it can to provide for the Military community. There have been contracting out reviews in the past and every time contracting out was a more costly option.

    The Commissary is a military benefit that is highly prized by members of military and is very often cited by personnel for continued service (reenlistments or service extensions).

    The commissary has been continued as a benefit because the Congress is unwilling to raise military pay to levels that will attract and keep competent and qualified personnel. The American [people say they want National Defense and an all-volunteer force to provide that defense. However, the Congress has discovered that the cost is high, so a variety of non-cash benefits are provided, access to a commissary is one.

    Commissary shoppers are assessed a surcharge to pay for store construction, store fixtures and other costs associated with the retail stores. Retail stores receive minimum of tax fund support.

    The commissary is more than a retail store. The commissary is the food distribution point for the military dining facilities. The commissary will remain even if the retail stores were eliminated.

    FINAL point, Congress knows it is not paying the military enough. (They are paid a lot better than use to be but still not enough for what is expected of them.) As to “Huge subsidies”, I believe the reader is dead wrong.

    Thanks. I believe you answered my question.

    Michael Sansolo wrote a column yesterday about Dan Rooney, owner of the Super Bowl Champion Pittsburgh Steelers, and why many of his management techniques are worth emulating. This column generated some differing responses.

    One MNB user wrote:

    Great editorial. And, as Confucius said, “If you are leading and no one is following, it’s just a walk.”

    MNB user Jeff Davis wrote:

    The apple certainly didn't fall far from the tree in this case. Like his father, Art Rooney, Dan knows that building relationships is what inspires loyalty and leads to success. The current Steelers, like all other Steeler teams before them, love their owner.

    Nice guys finish first!

    However, another MNB user disagreed:

    True leadership in these tough economic times would be Mr. Rooney paying back the taxpayers he extorted money from for his teams stadium before he pays his family off. It would also be a first class example of giving back to the community that has given him and his family millions.

    Not a Steeler fan, I’m guessing.

    There was another email…and to be honest, I debated long and hard with myself before running it.

    In his column, Michael wrote:

    There is a rule in the National Football League that requires teams to interview minority candidates for head coaching positions. It is called the Rooney Rule because Dan Rooney made it happen. It seems hard to believe that a few decades ago African-Americans were frequently called incapable of playing quarterback in football. This year, the traditional phone call between the President and United States and the Super Bowl winning coach involved two African-Americans. Times change because of people like Dan Rooney.

    To which one MNB user – and I’m making the decision here not to identify him – wrote:

    That was a touching article about a great man. One thing about your article that really isn't appropriate is your Presidential reference. We know (us Pittsburghers) that the right decision was made by hiring coach Tomlin as he has proved it this past Sunday. We (us Americans) do not know how well our new President will do. What we can probably extrapolate from his (Coach Tomlin) interviewing, hiring and performance is that he did not tell Mr. Rooney that he would run a defensive scheme with 11 down lineman on 3rd and long. Or that he would use defensive lineman in the secondary on 3rd and long in a 1 point game when the opposing team is using a 5 wide receiver set. Those decisions would be catastrophic and anyone that understands football would know that. Just the same, the prescription for our economy that has been written by our new President is equally as catastrophic for our country. And anyone who knows anything about economics would know that. Our new President does not deserve the be mentioned in the same sentence as Coach Tomlin. Other great African Americans do like Thomas Sowell, J.C.Watts, Clarence Thomas, or Walter Williams. They have done more than give speeches and write books. Besides I hear President OBama (sic) has a little white in him.

    Michael’s responds to this email as follows:

    “You missed my point by a huge margin. The point was that Rooney worked to change the culture of the league and he's lived up to that credo. The point is, thanks to his work it is no big deal that an African-American is coaching the Super Bowl winner. It wasn't a political statement, it was a leadership statement.”

    As for me, I would merely point out to two things. One, Dan Rooney happens to be a lifelong Republican activist who endorsed Barack Obama in the 2008 election, and at no point did he say in his endorsement that he was supporting Obama because he was black or because “he had a little white in him.” And two, Rooney, Tomlin and Obama know something that apparently the writer does not – that you don’t know the final score until the game is actually over. Best I can tell, the first quarter has barely started.

    Finally, “a little white in him”? Shame on you.

    KC's View: