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    Published on: February 11, 2009

    GS1 US, a not-for-profit organization, today announced that its annual U Connect Conference for supply-chain professionals will be held June 2-5, 2009, in Orlando, Fla., and will feature Bruce Richardson, renowned chief research officer of AMR Research, delivering the Conference Keynote.

    The conference program will support its theme, “Transforming Your Supply Chain for Extraordinary Times,” providing attendees with information and tools for improving their ability to respond to today’s economic crisis and associated challenges. More than a thousand supply-chain professionals will converge at U Connect for a user-driven program focused on business-oriented tracks: Efficient Distribution of Goods; Efficient Order to Cash; Supply Chain Visibility and Traceability; Sustainability; and Item Identification and Setup. Another track will address GS1 Standards. Conferees can take advantage of hands-on workshops, ask-the-expert sessions and other offerings, in addition to three plenary sessions and 60 breakout sessions.

    Richardson will address the theme head on, drawing heavily on the 2009 version of the annual AMR Research Supply Chain Top 25 list, which will have been unveiled just the prior week.

    The conference also will feature Kevin Coupe, the “Content Guy” of, moderating a Retailer Panel comprising executives from large and influential retail chains.

    For more information:
    KC's View:

    Published on: February 11, 2009

    Walmart announced yesterday that it will eliminate 700-800 jobs at its Walmart and Sam’s Club offices, cuts that represent roughly five percent of its workforce there.

    "We will continue to take appropriate steps to further align our support structure with our business plans," Walmart CEO Mike Duke said in an internal memo. Duke has been in the CEO job for less than two weeks. The cuts reportedly are coming in the company’s marketing, merchandising and real estate departments, and are said to be appropriate to its plans to cut back on new store openings in the recessionary environment.

    Walmart said in the announcement that has 2.2 million employees worldwide, and that still expects to hire thousands of workers for in-store positions during the coming year.

    KC's View:
    Remember the line from “Young Frankenstein” that Michael Sansolo quoted yesterday?

    ”Things could be worse.”

    “How could they be worse?”

    “It could be raining…”

    Well, it’s raining.

    In the national scheme of things, 700-800 jobs isn’t that many. But when Walmart – a company believed to be better positioned than almost any other to thrive in a tough economic climate – starts cutting jobs, you know it is going to be a long, tough year.

    An umbrella, hip boots and a good waterproof coat would seem to be in order. And maybe an ark.

    Published on: February 11, 2009

    The Wall Street Journal this morning reports that in Belgium, Delhaize has pulled 300 Unilever products off its shelves, saying that they are priced too high.

    According to the Journal story, “The banished products include everything from Dove soap and Axe deodorant to a jam brand called Effi. Delhaize normally stocks as many as 500 Unilever products in its 775 stores in Belgium … Delhaize says its conflict with Unilever is rooted in the supplier's effort to push a broad range of goods into its stores, including some that the grocer says it would prefer not to stock because they are unpopular. If the supermarket doesn't buy the whole range of products, Delhaize says, Unilever has threatened to raise prices by an average of 30% for the remaining items.”

    The dispute highlights the ongoing battle that seems to be evolving between food retailers and suppliers, as retailers look for lower prices that are in synch with a recessionary economy and customers with less disposable income, and suppliers look to hold the line or even increase prices to compensate for higher cost structures that go back several years.

    KC's View:
    The Journal story quotes a Unilever spokesperson as saying that Delhaize is the only large retailer in Belgium that hasn't agreed to a price rise this year.” That’s what I call an advertising slogan…and Delhaize ought to use it early and often to reinforce its pricing credentials with consumers.

    Expect this scenario to play out over a lot of retailer-supplier relationships. In the end, I think, prices are going to have to come down…because the shopper has to come first. And if they don't, private label will take on an increasingly important role in consumers’ lives.

    Published on: February 11, 2009

    The Hartford Courant reports that in a visit to Yale University yesterday, Whole Foods CEO John Mackey said that he hoped to have “an announcement in the next couple of weeks” of a settlement of the ongoing effort by federal regulators to undo the company’s $565 million acquisition of Wild Oats.

    The Federal Trade Commission (FTC), stymied in its initial efforts to block the deal, has been trying to unravel the merger both through administrative hearings and court filings. The FTC’s case is based on its antitrust argument that the deal created a dominant entity in the natural/organic segment that would result in higher prices and less choice for consumers. Whole Foods, on the other hand, has argued that there is plenty of competition in the segment, and that prices actually have gone down since the merger.

    In the last few weeks, however, the FTC has called a halt to its various initiatives as it engaged in settlement talks that were requested by Whole Foods. The details of what a settlement might entail, however, have not been divulged.

    According to the story, “. Mackey came to Yale to deliver two separate lectures, one called ‘Conscious Capitalism,’ in which he described the principles of Whole Foods' business philosophy, and another called ‘A Vision of Sustainable Agriculture and Healthy Eating in the 21st Century.’ He portrayed Whole Foods as an organization that seeks profits as a byproduct of pursuing other ideals, including service to others, devotion to discovery, the pursuit of excellence and improvement of the world at large.”

    KC's View:
    Hard to imagine that the government would persecute an entity with such lofty goals and motivations.

    But hopefully it will be all over soon, and the FTC bureaucrats can start figuring out what to do with their lives once their government services has ended, and Mackey can focus more on how to make a company nicknamed “Whole Paycheck” relevant and viable in a recessionary economy.

    Published on: February 11, 2009

    The Boston Health Commission has voted to ban the sale of tobacco products by the city’s pharmacies, according to a report from CBS News.

    This will make Boston the second US city to enforce such a ban; San Francisco imposed a similar ban a year ago.

    According to the story, tobacco products generate between one and three percent of total pharmacy sales, and so the impact is expected to be minimal…and both Walgreen and CVS, which operate the most pharmacies in the city, tell CBS that they will comply with the new rules.

    KC's View:
    It does seem to make a certain amount of sense that a place that supposedly specializes in helping people more healthy ought not be in the business of selling a product designed specifically to addict and kill consumers. On the other hand…and this represents an evolution in my thinking…people ought to be smart enough to be able to make this judgment on their own. And at some point, we’ve got to stop creating an environment in which people have no responsibility for themselves and their own decisions. Smart regulations make sense. But this one seems to cross the line.

    Published on: February 11, 2009

    The Nielsen Company has released a new report that gauges the impact of the peanut butter-related salmonella contamination has caused hundreds of sicknesses and eight deaths.

    The facts, according to Nielsen:

    • “Nearly $32 million worth of prepackaged peanuts, including bags, cans, jars and unshelled, were sold in the four-week period ending January 24, 2009. This is down 25.9 percent versus the previous four-week period, and down 1 percent from the same period a year ago. This reflects the typical seasonal pattern seen for each of the past four years.”

    • “Nearly 12.5 million pounds of prepackaged peanuts were sold in the four-week period, down 25.9 percent versus the previous four-week period and down 9.5 percent compared to the same period a year ago. Again, this pattern is typical.”

    • “Unshelled peanuts showed a small increase in dollar and equivalized unit volume during the four weeks versus the previous four weeks: 0.6 percent in dollar sales and 1.7 percent in pounds sold.”

    • “$72.5 million of jarred peanut butter was sold during the four-weeks, down 11.5 percent during the previous four-week period and down 3.8 percent compared to the same period a year ago. While the year-over-year decline may seem minimal, it comes after eight consecutive periods of double digit growth in this category.”

    • “33.8 million pounds of jarred peanut butter was sold during the four weeks, down 11 percent from the previous four weeks and down 22.1 percent from the same period a year ago. Again, this pattern is different than noted for the prior periods.”

    “The peanut butter outbreak shows little ill-effect on prepackaged peanuts, but the peanut butter category is definitely showing the impact,” said Todd Hale, Senior Vice President, Consumer & Shopper Insights at Nielsen. “It would appear that manufacturers and retailers are quickly removing potentially tainted products off of store shelves. For those who are not affiliated with the particular supplier of tainted product, now is the time to take extra measures to educate consumers and minimize any negative impact.”

    In other news about the salmonella scandal, the Wall Street Journal reports this morning that a Texas plant owned and operated by Peanut Corp. of America has been closed in the wake of a new inspection showing samples possibly contaminated with salmonella.

    The Journal writes that “the move follows a raid by Federal Bureau of Investigation agents on Monday at Peanut Corp.'s Blakely, Ga., plant, identified by federal investigators as the source of the continuing outbreak. Neither the Food and Drug Administration nor the FBI, which recently announced a criminal investigation of Peanut Corp., would comment.

    “The House Energy and Commerce Committee voted Tuesday to subpoena Peanut Corp. President Stewart Parnell to appear at a hearing Wednesday.”

    KC's View:
    A couple of suggestions for Parnell.

    First, don't take a private jet to Washington.

    Second, bring a lawyer.

    Third, bring a toothbrush. Because of there is any justice, you’ll be going directly from Congress to a federally maintained institution where…again, if there is any justice…you’ll be served a steady diet of products made with peanut butter and peanut paste. You’ll have to live with the uncertainty of not knowing where the products are from…and that’ll be part of the punishment. You’ll just have to eat and wait. Eat and wait. Eat and wait.

    Published on: February 11, 2009

    • In another story about Walmart’s plans to make a push into Chicago, this one in the Wall Street Journal, it is reported that “the company now sees the Windy City as a potential proving ground for urban development strategies it could later bring to other resistant markets, including New York and Los Angeles.”

    "I think people are starting to understand we can be relevant in the urban area and improve the quality of life," John Bisio, Walmart’s Chicago director of public affairs and government relations. "The economy being what it is, the city and various aldermen have reached out to us to inquire about our desire to expand what we have."

    The Journal writes that “among the locations Wal-Mart is eyeing is a site in the largely African-American South Side district of Alderman Howard B. Brookins Jr. And from Brookins comes the quote that must warm Walmart’s heart: "When we said 'no' to Wal-Mart, we could afford to thumb our nose at people because the city was flush with cash. Now, that bubble has burst."

    KC's View:

    Published on: February 11, 2009

    Numerous published reports say that marijuana legalization advocates are calling for a boycott of Kellogg’s products in the wake of the company’s decision not to renew Olympic champion Michael Phelps’ endorsement contract after he was photographed using a bong.

    Rob Kampia, executive director of the Marijuana Policy Project, said that the move was “hypocritical and disgusting,” especially since so many pot users eat Kellogg’s products when they get the munchies.

    "Kellogg's had no problem signing up Phelps when he had a conviction for drunk driving, an illegal act that could actually have killed someone," said Kampia. "To drop him for choosing to relax with a substance that's safer than beer is an outrage, and it sends a dangerous message to young people."

    KC's View:
    I’m not sure that this was the best argument that Kampia and his cohorts could have used.

    And while I have already argued here that maybe a little too much was being made of the Phelps case, perhaps we could use it as the impetus for an intelligent and mature discussion of marijuana laws in the US, rather than just knee-jerk reactions from both sides.

    Published on: February 11, 2009

    • The Washington Business Journal reports that Wegmans, which currently operates 72 stores in New York, Pennsylvania, New Jersey, Virginia and Maryland, is focusing its future growth plans on the mid-Atlantic region…with plans for six new stores in the Washington, DC, area…though opening dates have not been announced or scheduled. The company currently has four stores in the area.

    Newsday reports that in New York, Westchester County has levied fines totaling almost $60,000 against 21 supermarkets accused of selling food past its expiration date. More than $12,000 in fines were against a single Whole Foods store in White Plains, New York, which had 156 outdated items – a number that the company said was “simply unacceptable,” and that it would investigate.

    • The Minneapolis / St. Paul Business Journal reports that General Mills has decided to stop using milk in its Yoplait Yogurt that is from cows treated with bovine growth hormone (rBGH). At the present time, 0 percent of the milk it uses in the yogurt is from cows not treated with rBGH, but it says the complete transition will be completed by August.

    The use of rBGH has been approved by the US Food and Drug Administration (FDA), but General Mills said it was making the decision in response to consumer preferences.

    • The Chicago Tribune reports that Kraft CEO Irene Rosenfeld said yesterday that she and 18 other company execs will have their salaries frozen as a response to the recessionary economy. The freeze does not affect potential performance-based bonuses.

    KC's View:

    Published on: February 11, 2009

    • Dollar General says that its fourth quarter sales were $2.85 billion, up 11.2 percent from a year earlier, on same-store sales that were up 9.4 percent.

    • Molson Coors Brewing said that its fourth quarter profit fell 44 percent to $96.8 million, from $173.2 million a year earlier. Q4 revenue fell 49 percent to $1.10 billion.

    For the full year, the company’s net income dropped 22 percent to $388 million, from $497.2 million a year ago. Revenue fell 4 percent.

    KC's View:

    Published on: February 11, 2009

    • The Sacramento Business Journal reports that Raley’s has hired Don Ball, the former vice president/CFO of IKEA North America, to be its new CFO. Ball succeeds Bill Anderson, who recently retired after 19 years.
    KC's View:

    Published on: February 11, 2009

    On Tuesday, I took note of a story saying that the recession is hitting the nation’s magazine business, with newsstand sales down 11 percent in the second half of 2008 compared to the same period a year earlier. The declines seem to be pretty much across the board, with two bright spots - People and Entertainment Weekly.

    My comment, in part:

    Retailers should think about just getting rid of their magazine sections and using the space for something more 21st century. (You can keep a few at checkout if you like.)

    My logic is this. Sales are down, but not just because of the recession. More people than ever are getting their news via the Internet, and at some point the bulk of the customer base won’t be reading paper magazines and newspapers. (Just as they won’t be listing to music on CDs or watching movies on DVDs.)

    We can see it already as newspapers and magazines go out of business, or try to restructure themselves in a way that makes sense for a 21st century readership. So maybe food retailers need to do the same thing. Restructure for a 21st century customer base.

    Maybe all those magazines are just so much wasted space. Get rid of them. Get ahead of the curve, and figure out what tomorrow’s customer wants. And if you are in the magazine business, my advice is the same.

    Got a bunch of emails from folks who thought I was misguided, mistaken or just delusional.

    MNB user John Corbett wrote:

    Rumours about the demise of magazines are greatly exaggerated. Sure there are undoubtedly too many and some should and will go, but some are likely to stay around for quite some time yet, especially high end glossies. You just can't get what they do via a screen, especially their tactile effect.

    MNB user Rob Johnson wrote:

    Regarding your comment on reducing magazines, I buy one magazine each year, Fantasy Football Index. Yes, I am one of those Fantasy geeks, it may be my biggest vice and my wife considers herself a football widow. But honestly, if I don't find my magazine in the local grocery market, there will be hell to pay. I may be old fashioned, but it is most difficult working on a lap top when there are 11 other fantasy "coaches", beer and pizza involved.

    MNB user John Harrington wrote:

    I'm disappointed with you. Even with the recent dreary figures, magazines are still one of the most general merchandise categories for supermarkets. Maybe I'm missing something, but I haven't heard that anything is selling very well.

    Internet's biggest hit for publishing is in advertising, and that impacts newspapers more than magazines, although they have suffered too. To a surprising degree, consumers prefer print, especially when reading something beyond headlines and sports scores.

    On top of that, you have always struck me as a guy who reads a lot of magazines, although you probably get them through subscriptions.

    MNB user Jane M. Williams wrote:

    Maybe the reason retailers aren’t selling as many magazines is they’re not selling the right ones. I can’t imagine doing without my reading material and, since I’m about ready to retire, I am building the costs into my budget! After all, you can’t take the computer into the “home reading room.” (Actually, I guess you could take a laptop, but how bulky….a magazine is much easier.) When I get my Smithsonian, Yankee, and Alaska magazines, I almost immediately read them cover to cover and then pass them along to friends. I cannot imagine doing without the printed (on paper) word and hope this never changes.

    MNB user Jerry Lynch wrote:

    Adversity can help a category to surface with renewed vigor and purpose, why not this category and why not in supermarkets? Taking a 4 billion dollar category and jumping ship sure sounds like a radical idea but that doesn’t make it right. Customers, while buying less right now, like magazines and still buy a lot at retail. Why?... because it is great product and a great value. If that isn’t enough reason to support magazines then note that the category delivers superior bottom line results overall and per foot. Generally it is the number one or two category in GM. Magazines are more than just news, they deliver great content with health and wellness information, recipes and cooking techniques, home trends and many more topics that are high on retailers lists and drive sales in store . Rather than running away from adversity why not, as Mr. Sansolo says…take a currently Sad Song and Make it Better. PS, I liked the article on Every Day with Rachael Ray magazine launching a new section in April called “Supermarket 101,” …..that’s better!

    And MNB user Chris Daugert wrote:

    You don't know anyone in a Nursing Home, do you?

    Not everyone disagreed with me, however.

    One MNB user wrote:

    I used to enjoy People magazine as a subscriber and read it religiously cover to cover. Then the price went way up (obscene amounts per issue), the real content went down, and it became pages and pages of advertising as is true with most magazines these days. You have to play detective to find the articles. There are other ways to get the info (internet, TV) and better ways to get more bang for your buck.

    Another MNB user wrote:

    Your readers should check out, where they can select a FREE 1-year subscription to one of several digital magazines (choices include Parenting, Popular Science, Saveur, Elle, Men’s Journal, US News and World Report, and many more). This is the new world of magazines.

    And still another MNB user chimed in:

    Your thoughts on magazines, on a day where the new Kindle (your toy) is announced, is timely.

    However, one place still exists where you need something printed - the plane. On take offs and landings, you have to turn off your approved portable electronic devices.

    I have a couple of other places too, but they are more personal...

    So, the real question is - what is that balance and what will it look like in a few years?

    Look, I’m not really arguing that stores should dump their magazine sections tomorrow. What I am saying is that the world is changing, and that the ways in which people get their information is changing. If you have children, you know that it is true. If you don't, borrow one for a few hours and you’ll see what I mean. (You can have one of mine. No charge.)

    I like magazines. Wrote for them for years. Still do columns from time to time. I treasure my New Yorker subscription, and probably get a dozen titles each month.

    But that’s not the point, because I am not the customer of the future!

    And neither are most of the people arguing that the magazine business remains vital and credible.

    One thing that stores can do immediately is to look a lot more carefully at the titles they carry, and align them better with the interests of their core customers. But they have to consider that in the not too distant future, the magazine business – along with the CD and DVD business – may be irrelevant to most of their customers.

    You’re right. I don't have anyone in a nursing home right now that I am visiting and to whom I am bringing magazines.

    But at the risk of being roundly criticized, I’m going to be brutally cold about this.

    Something like eight percent of all the US citizens over age 75 are in nursing homes…and while they might like reading magazines, they are going to die. The people who replace them in those nursing homes, at least eventually, will know how to use computers and Kindles and other pieces of technology that allow them to access information and journalism electronically rather than on paper. (BTW…paper may be tactile, but online access can offer text, pictures, video and audio…which strikes me as far superior.)

    Again, this isn’t all going to happen tomorrow. But it is going to happen. All I am suggesting is that we all have to open our minds to the likelihood that the world is not going to look like we’re used to it looking, and we have to open our minds to the possibilities and opportunities that exist.

    To do otherwise would not just be delusional, but would shortchange our businesses and stakeholders.

    MNB took note yesterday of a story in US News & World Report pointing out 15 companies likely to be out of business, or radically altered, by the end of the year – including Rite Aid, Sbarro, Krispy Kreme and Blockbuster.

    I commented:

    The question that I ask when I see these companies identified this way is how, if at all, they are relevant for a 21st century consumer in a 21st century economy. We live at a time when people are buying what they need, not what they want; and they are looking for retail options that make a compelling case for why a person should go there and not someone else.

    I can make the argument that three of them are close to irrelevant … at least from my perspective as a consumer. Can’t imagine buying anything at Sbarro or Krispy Kreme anymore, and I haven't walked into a Blockbuster store to buy or rent anything in at least five years, maybe longer.

    Rite Aid is the one exception, but it may simply be in so much trouble, facing too much competition, to be able to become a vibrant competitor.

    Relevance is the key. Without it, you can’t open the door to the consumer’s heart and mind and stomach.

    MNB user Bob Shaw responded:

    Slightly different reaction as a former retailer turned marketer. Retail actually allows companies that are extremely weak to survive much longer than almost ANY other industry – and it takes a major event like the economic issues of late to create shakeout. Look at Kmart the past 20 years, look at the final 15 years of Montgomery Wards. Look, to your point, at how many stores Blockbuster still has OPEN. Look at how many years Circuit City lingered in the shadow of Best Buy – definitely not state of the art in a state of the art industry. Personally though I like Sbarro pizza and an occasional Krispy Kreme !

    And MNB user Bernie Ellis chimed in:

    I just finished reading your comments on Rite Aid, Sbarro and Krispy Kreme and I'm struck by the negativism in your comments. While you cannot imagine buying anything from Sbarro and KK, a great many people do. Bakery and pizza businesses are strong retail segments across the country . The issue is not just one or relevance, it is one of decisions made that fit a time and place that has changed in short time frame. Sbarro strategically placed their stores in malls, once the center of retailing, a great decision. Unfortunately, a recession has sent those retailing meccas into a downward spiral that no one could have imagined a year ago... not even you.

    Krispy Kreme and Rite Aid made growth decisions that were unsustainable if cash availability was limited. Did you foresee the credit crisis three years ago?? A viable business must foresee these ups and downs and plan for them as the original article states. You on the other hand blame them for not seeing the recession coming. Great Monday morning quarterbacking but not very realistic if you manage a business. With the breath and depth this recession is having on retailers, and with your view point, almost all CEO's should be fired for not being clairvoyant.

    Bad decisions were made by at least two of these companies but you are doing too much pontificating and not enough analysis to understand the real issues they faced yesterday and tomorrow. Today we need CEO's that have vision and who are pragmatic in their thought process. CEO'S who are willing to sponsor ideas, not own them.

    You’re right. I was and am pretty negative.

    I’m not sure I agree that Krispy Kreme can be absolved of its missteps because there was no way to foresee the credit crisis. That company has a lot more systemic problems, and has experienced some bad luck as well. It just seems to me that Krispy Kreme’s value equation doesn’t add up.

    Rite Aid and Sbarro are different stories. But I’ve been arguing for years that Blockbuster has been dependent on a soon-to-be obsolete business model…so I am not new to this party. I’ve also been saying for a couple of years that the economy is undergoing fundamental changes…not because I am an economist or a fortune teller or an analyst or a pontificator, but because I was looking at the world around me, paying attention to what was happening to people I know all over the country.

    Another MNB user has my back on this one:

    It doesn't take a crystal ball to see that the companies you mentioned today are probably DBA (Dead Before Arrival), the poor economy may just be the thing that finally puts them out of their misery. Of the companies you mentioned, there does not seem to be a slice of excellence anywhere to be found. Rite Aid is not only over leveraged, its stores a typically poorly laid out, poorly stocked and poorly staffed. There is not a reason for anyone to go in there, unless the location is so good that there is no other choice (in this case they should sell that property to someone like Walgreens. Sbarro....... I have never had anyone say to me (nor have I heard any testimonials), that I have to try this wonderful (or at least very good) slice of pizza at this place in the mall that I do would have to go out of my way to visit...... In a downturn you better be cheap or very good. not just convenient (unless again you have the only gig in town - which does not last). Blockbuster, Krispy Kreme, who cares? Yes I love a hot doughnut and Blockbuster had its day, but I also have an old BetaMax next to my 8 track player in my garage that are irrelevant too (I hid them from my wife, she sees clutter, I see nostalgia).

    Here are a couple others to lump in:

    • Kmart
    • 50% of the newspaper industry (maybe more)
    • Applebees (if they were gone, would someone really mourn?)
    • Circuit City (oops, already gone)

    Look, the real issue for me is the notion of a sustainable business model that is focused on relevance and excellence, not on mediocrity and survival. All four of those companies may make it to the end of the year and beyond as they currently are constituted. Or, they may be bought or sold or diluted.

    But I would argue that none of these four companies make a convincing case that they have sustainable business plans that will carry them into the next decade as vibrant, relevant business entities. And I think that’s what we all need to be reaching for in our businesses.

    KC's View: