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 13, 2009

    The New York Times reports today that Texas regulators have ordered the immediate closure of a peanut plant there operated by the Peanut Corporation of America, the company that has been implicated in the salmonella outbreak caused by contaminated peanut butter and peanut paste.

    According to the story, Texas officials have ordered the company “to recall all products after inspectors found dead rodents, feces and feathers above a production area … The volume of products that would need to be pulled back was not immediately known. Many of the plant's customers – mostly manufacturers -- had already begun holding products back or running their own tests.”

    The story says that officials found “a filth-infested crawl space” and an air handling system that “was pulling debris from the crawl space into areas where dry roasted peanuts, peanut meal and granulated peanuts were processed.”

    It reportedly is up to the company to inform its customers of the recall, but the Times says that “it wasn't immediately clear if the company was complying.” Nobody from the company is talking at this point.

    In related new, there is a report out of South Carolina that the state legislature is considering the passage of a bill that would require retailers to use their customer databases to inform people if they have purchased products recalled for safety reasons.

    KC's View:
    This story just gets worse and worse. One MNB user suggested yesterday in an email that the company’s officials ought to be immediately shipped off to Guantanamo, where they could be subjected to frequent hot peanut oil waterboarding.

    I think he was kidding.

    Published on: February 13, 2009

    The Washington Post reports this morning in a page one story that Walmart, “once vilified for its stingy health benefits … has become an unlikely leader in the effort to provide affordable care without bankrupting employers, their workers or taxpayers in the process. From its headquarters in Bentonville, Ark., the retailer is doing in the real world what many in Washington are only beginning to talk about.

    “At a time when other firms are scaling back or eliminating health coverage, Wal-Mart has made a serious dent in the problem of the uninsured. New figures being released today show that 5.5 percent of its employees now lack health insurance, compared with a nationwide rate of 18 percent. The company has also put into practice many of the innovations that experts say will lead to higher-quality, more efficient care. Using its high-tech marketing savvy, Wal-Mart has introduced digital records, partnered with prestigious organizations such as the Mayo Clinic, and begun targeting costly health problems such as obesity and premature births.”

    According to the story, while Walmart’s approach isn’t as extensive as some of the solutions being considered by the Obama administration, the company has been emphasizing both prevention and employee choice in developing a new health care model. There’s no question that many of its innovations were driven by bottom line considerations – its poor image in the health care area as hurting sales and driving down its stock price.

    KC's View:
    I keep thinking that retired Walmart CEO Lee Scott eventually is going to get a job in the Obama administration. (Maybe as Secretary of Commerce? That seems to be a job that Obama is having trouble filling…)

    On so many levels, bringing Scott into the administration would irritate so many people who are in the Democratic base. But that may be the best reason to draft him…because on so many levels, that’s a voice that ought to be at the table.

    Published on: February 13, 2009

    The Houston Chronicle reports that the recession is having an impact on people’s meat eating habits, with a lot of customers switching from pricier cuts to ground beef that they can use for basic dishes such as hamburgers or tacos.

    However, this cuts two ways.

    “Sales of the cheapest ground beef are up, but so are sales of H-E-B’s highest-quality prime beef, said Scott McClelland, president, H-E-B Houston, adding that he is hearing that prime beef buyers are cooking more at home rather than dining out.

    “The change is evident even in higher-income areas, where hot dog sales at the company’s stores were up 33 percent between November to January, compared with the same period a year earlier, he said.”

    And the same sort of shift is being seen at Kroger stores, the Chronicle writes.

    KC's View:
    Even while offering less expensive options to people who are being more price-conscious than they used to be, it is critical for stores to be able to establish the value/values equation for the occasional indulgence that still remains more affordable than, say, going out to dinner.

    Even in tough economic times, it is important to remember that the aspirational customers of just a year ago haven't lost their aspirations. They’re just looking for new and creative ways to fulfill them.

    The smart store offers them these options and ideas.

    Published on: February 13, 2009

    The Washington Post reports that lawmakers for Washington, DC, are considering legislation that would levy a five cent tax on each paper or plastic handed out by stores to shoppers. According to the story, the bill, which would be one of the toughest in the country, would split the five cents “between businesses and the city, which would use its share to help clean the Anacostia River and offer free reusable bags to elderly and low-income residents.”

    However, the story notes, “The District's proposal could have some consumers trying to balance their environmental instincts against their pocketbooks” as consumers there already have been affected by a recession that has made it harder for them to buy groceries.

    KC's View:
    As I have said here many times, I wish that these kinds of advances could be made without government legislation and taxation. But I continue to believe that from an environmental perspective, anything we can do to get people to shift from disposable bags to non-disposable bags is a positive thing.

    There’s also a point at which one has to hope that people will do the right thing for the right reasons.

    Interestingly, the Times Union reports that Hannaford Bros. is about to end a policy that has been in place since the early nineties, “giving shoppers who carry their groceries home in reusable totes a 5-cent credit for each bag … The decision stems from recognizing that the few pennies customers gained for their effort made for a modest reward at best.” In addition, the company said, the policy didn’t seem to be inducing new customers to use non-disposable bags.

    However, Hannaford also says that between 12 and 15 percent of the items being sold at Hannaford are being carried home in non-disposable bags (of which Hannaford has some of the cleverest designed bags out there, by the way).

    This seems like a good time for a contest.

    I’d be interested in proposals for how supermarkets and/or governments ideally should work – together or apart – to get people to use non-disposable bags when they go shopping. Send me your ideas…make them innovative…and I’ll send the winners limited edition MorningNewsBeat canvas bags, designed by EcoBags. (I’ll use this promotional moment to tell you that pretty much everyone who has seen and used our MNB bags love them – they are strong and big and versatile…and you ought to sell them at your store with your own logo on them.)

    Try to keep your entries to 100 words or fewer, just so this thing doesn’t become unmanageable. Okay?

    Published on: February 13, 2009

    Brand Week reports on a new study from the Pew Research Center that asked the following question of American consumers:

    Would you prefer to live in a place with more McDonald's or more Starbucks?

    In the overall tally, 43 percent of respondents said McDonald’s, compared to 35 percent who said Starbucks. (The rest didn’t choose or had no preference.)

    But the demographic differences are startling. According to the story, “Among the poll's 18-29-year-olds, Starbucks beat McDonald's by 49 percent to 36 percent. McDonald's had the edge over Starbucks among the 30-49-year-olds (45 percent vs. 37 percent), the 50-64s (43 percent vs. 33 percent) and those 65-plus (48 percent vs. 18 percent). Gender was also a factor. While McDonald's easily outpolled Starbucks among men (46 percent to 30 percent), it eked out just a one-point win among women (41 percent to 40 percent).

    “In a breakdown of the data by race and ethnicity, McDonald's outpointed Starbucks among white respondents (43 percent vs. 35 percent) and, by a much wider margin, among their black counterparts (56 percent vs. 27 percent). Among Hispanic respondents, though, it was nearly a tie, with Starbucks getting 39 percent and McDonald's 38 percent.

    “The only one of the survey sample's income brackets in which Starbucks beat McDonald's was the $75,000-plus cohort (48 percent vs. 34 percent) … Regionally, Starbucks had its best showing in the West, where it won by 47 percent to 28 percent. McDonald's won everywhere else.”

    KC's View:
    It probably is redundant to say that I am in the minority on this one…I’d bet that I make at least 50 visits to Starbucks for every single visit to a McDonald’s. Then again, that’s because I travel so much…and when I’m on the road, that’s usually where I find myself picking up a reliably good cup of coffee and the New York Times.

    But that’s okay. I’m a lot more comfortable having a minority opinion…

    Published on: February 13, 2009

    There were numerous press reports yesterday saying that Starbucks, still seeking the magic formula that will help it rise from a sales and profit slump that in one year has turned it from being a golden business model to a poster child for misreading the marketplace, is about to introduce a new product – instant coffee.

    Now, suffice it to say that while the company is not handing out details just yet, this isn’t be described as just any old instant coffee. Starbucks reportedly has been working on the concept for two decades, it supposedly replicates the Starbucks taste, and is being described in some places not as “instant coffee” but rather as “soluble coffee.”

    Called “Via,” the product reportedly will start being sold in stores next week. CEO Howard Schultz is said to be making the formal announcement of the product on Tuesday.
    KC's View:
    A rose by any other name would smell as sweet, but will instant coffee called by another name taste any different?

    I guess we’ll find out next week.

    Timing is everything, and the problem with this announcement is that, no matter how long Starbucks has been working on the product and how good it tastes, the company continues to look desperate. Make this announcement two years ago, and maybe it looks revolutionary. Make it today, and it becomes fodder for jokes.

    Published on: February 13, 2009

    • The Wall Street Journal reports this morning that Tesco is expanding from 350 to 550 a line of discount grocery products that is part of its recession-era effort to blunt the impact of Aldi and Lidl on the British marketplace.

    According to the story, “Tesco said 25% of its customers had tried the discount products that Tesco sells, in addition to its low-priced Tesco Value line and price promotions on 9,000 other goods in its stores.”

    KC's View:

    Published on: February 13, 2009

    • The Dallas Business Journal reports that HE Butt “has purchased more than 160 acres in the Central Texas city of Temple to build a 400,000-square-foot distribution center.”

    • Pro’s Ranch Market, which just last week won the first annual Thomas K. Zaucha Entrepreneurial Excellence Award at the National Grocers Association (NGA) convention, is reported to be opening a new Hispanic-themed store in Mesa, Arizona. The company already has four stores in Phoenix and one in Glendale, Arizona, as well as units in California, Texas and New Mexico.

    • Spartan Stores reportedly is embarked on a $2.5 million remodeling of a Felpausch store in Pennifield, Michigan, converting the unit into a Family Fare unit in a process similar to those that already have taken place at Felpausch stores in Paw Paw, Marshall, Eaton Rapids, Dowagiac, Albion, Williamston.

    Spartan acquired the Felpausch chain in March 2007.

    • In the UK, there are reports that as Tesco and Asda continue to fight an ongoing price war, William Morrison Supermarkets has joined the fray, cutting prices on 4,000 SKUs.

    KC's View:

    Published on: February 13, 2009

    • Unified Grocers reported first quarter sales of $1.045 billion, down slightly compared to the $1.052 billion generated during the same period a year ago. Q1 net earnings were $3.9 million, down from $6.2 million a year ago.

    According to the company, the chief reason for the earnings decline was that “in the 2009 period, earnings attributable to the former Associated Grocers (Seattle) customers are now reflected in patronage dividends, as the vast majority of these customers are now members. In the 2008 period, earnings attributed to these customers were reflected in net earnings.”

    • Coca-Cola reported that its Q4 profit was off 18 percent to $995 million, from $1.21 billion during the same period a year ago. Revenue fell 3 percent to $7.13 billion from $7.33 billion a year ago.

    • PepsiCo said that its fourth quarter profit was $719 million, down from $1.26 billion during the same period a year ago. Q4 sales climbed three percent to $12.73 billion from $12.35 billion.

    KC's View:

    Published on: February 13, 2009

    Microsoft has hired David Porter, who worked for Walmart for a quarter century, to help it develop a chain of stores along the lines of the Apple Stores that have turned into a retailing phenomenon.

    MarketWatch reports that Porter’s job responsibility will be to define the time frame, locations and specifics for planned Microsoft-branded retail stores .”
    KC's View:
    It seems a little derivative in view of Apple’s success, but it probably makes sense for Microsoft to take more charge of its retail presence. Porter also has worked for DreamWorks, so he has a sense of the theatrical…so it’ll be interesting to see what they come up with.

    One clue to whether or not the Microsoft stores will be successful – let’s see if they come up with a version of the Genius Bars that have helped to define the Apple Stores. That kind of customer support is an enormous advantage…though Microsoft may be worried about all the people who could come in complaining about Vista.

    Published on: February 13, 2009

    …will return.
    KC's View:

    Published on: February 13, 2009

    There are days that I wish I could get through an MNB without mentioning “recession”…but that seems pretty much impossible. No matter where I go or what I read, there seem to be implications for how we should think about the current economy.

    The other day, for example, I was watching on iTunes a lecture given by writer Pete Hamill – one of my favorites – at the University of California at Santa Barbara on the subject of immigration. (By the way, this is one of the great things about the Internet in general and iTunes in particular – they make these sorts of things available to everybody, which can't help but us better informed than if we only read, say, magazines. But that’s another story…) Hamill made the point in the lecture that the only positive thing to come out of the Depression was the fact that it brought people together – it affected pretty much everyone.

    In hearing this, though, I couldn’t help but think that I’m not sure that the same thing is happening now. I don't get the sense that we’re all in this together. In fact, just the opposite – I get the feeling that in some ways we’re being driven further apart. An that’s worrisome…because getting through tough economic times is difficult at best…but if there also is a kind of class/political/societal warfare taking place, getting through it may be next to impossible.

    At least, that’s one of the things that I worry about.

    Know what else I worry about? Spring training is about to start, and I’m not nearly as jazzed as I used to be.

    I hope not, but I think maybe baseball – at least, all the crap about baseball – has finally worn me down.

    Maybe it’ll be different when the games start.

    On the other hand, there is a cheery essay on this morning by Richard Rodriguez, who writes, in part, that “the fallacy of American capitalism is the equation of our economic status and our mental well-being. In a country where we routinely define ourselves by our job, an economic downturn must lead to a psychological downturn. Right?”

    Nope. At least, not according to Rodriguez: “Politicians, Democrats and Republicans alike, have learned in these last weeks that Americans are not a people listless with dejection. Quite the reverse. Americans are angry at corporate incompetence that is rewarded. Americans are angry at having to bail out the institutions that so efficiently foreclosed on their mortgages. Americans are angry that rich people -- rich, smart, educated people who know all there is to know -- seem not to know how to pay their taxes.”

    But depressed? Not so much.

    And not even during the Depression, Rodriguez suggests: “As grandparents and great-grandparents who lived through the Depression will tell you, families were often strengthened in adversity, not splintered. And there was, in the constriction of family budgets, a sense of the essential. Today's economic downturn is the result of an unbridled credit economy – the expectation of ever-increasing earning power. In the past year, Americans have learned caution; we are saving money, not spending. Economists tell us we will extend the recession if we keep saving. But the question is whether Americans are going to find a sense of well-being by living modestly rather than by shopping.

    “Finally, I would speak of the bravery of Americans. All over the country, people are uneasy, worried, yes. But they are getting out of bed to join job lines and job fairs. In Washington, there is much debate about the appropriate girth of a ‘stimulus bill.’ But responsibility is the stimulus that gets people out of bed and dressed and out of the house … We are more than the sum of our dollars. In adversity, this is what America is learning. The national mood is more complicated than an economist has the ability to graph.”

    Great piece. I feel better already.

    Advertising Age reported this week that the folks at Cessna are revving up advertising and public relations campaigns designed to “make a bold case” for why private jets actually are “productivity tools” not ego-driven executive toys.

    One ad says: "One thing is certain: True visionaries will continue to fly. Because in tempestuous times, leaders recognize it's not about ego. Or artifice. It's simply about availing yourself of the full range of tools to do your job."

    I can understand why Cessna needs to get into this fight – the current backlash against private aircraft is a direct attack on its business.

    But the ads miss what I think is the real point. Most people, including me, even if they think that maybe executive compensation (especially the practice of giving huge packages to CEOs who fail at their jobs) has gotten a little nuts, don't want the government regulating how much people make or even whether or not they have access to a private jet.

    What we have a problem with is companies enjoying such luxuries when they are simultaneously going before Congress to ask for money from the public trough so they can remain alive. In other words, paying big bonuses and flying private jets on our dime.

    That doesn’t seem quite so fair at a time when so many people are struggling economically.

    Besides, there are productivity tools and there are productivity tools.

    When retired Citicorp CEO Sandy Weil took his family to Mexico recently, he had access to the company jet. (He reportedly paid for part of the trip out of personal funds, and now has decided to give up his access to the jet.) The jet was described in one press report this way: “Seating up to 18 passengers, the interior features a full bar and fine-wine selection, along with "$13,000 carpets, pillows that were made from Hermes scarves, Baccarat Crystal glassware and Cristofle sterling silver flatware…”

    I don't know about you, but when I start sipping fine wine from Baccarat Crystal glassware, it doesn’t do a whole lot for my productivity.

    And, from the files of our “Tone Deaf” Department…

    Politico reports that “support is growing for a Senate pay freeze as the chamber seeks to keep its own pay in check while the nation’s budget deficit skyrockets and the economic recession deepens.”

    I’m sorry. Did they say “support is growing…?”

    Any bozo in public office that opposes an immediate pay freeze on all government officials ought to be impeached…yesterday.

    Not to malign public servants, but you have to set an example.


    I just finished reading a wonderful book entitled “The Invention of Air,” by Steven Johnson, which is nominally a portrait of a kind of lost Founding Father, Joseph Priestly, who was a contemporary and friend to the likes of Benjamin Franklin and Thomas Jefferson. Priestly was a remarkable 18th century scientific mind, but he also was a progressive thinker in the areas of religion and politics, and integrated these disciplines in a uniquely American way.

    “The Invention of Air” is a fascinating book in how it shows a different side of the minds that shaped a number of revolutions, and makes scientific thought accessible to the non-scientific mind. I never was much of a science student while growing up, but in reading this book I realized that it may have been because science generally was taught in a vacuum. “The Invention of Air” puts science in historical, cultural and human context…and suggests that the anti-intellectualism that sometimes pervades modern thinking is, essentially, at odds with the kind of thinking that created America.

    Fascinating stuff.

    There is a story this morning in the Wall Street Journal that gives me hope that if this whole MNB thing goes south, there may be career options for me.

    The story profiles how fiftysomething journalist Michael Precker, married and with a couple of kids, began to get tired of the daily grind and the career worries of the newspaper game.

    So he got a job running a Dallas business that might best be described as a “gentleman’s club.”

    (I think that there may be a couple of MNB readers who might argue that running such a club isn’t, from a morality/ethical POV, all that different from working for a daily newspaper. No doubt I will receive diatribes and manifestos from them any time now.)

    Being a writer, one of the things that Precker (and yes, I spelled his name right) did was change the joint’s slogan, which used to be, “Where a man can be a man."

    The new slogan: "For the finer things in life."

    Hell, since Precker used to cover the Middle East, I’m surprised he didn’t change the name of the club to the Gaza Strip.

    His wife apparently approves.

    I’m thinking that Mrs. Content Guy might not be so amenable.
    KC's View:

    Published on: February 13, 2009

    Next Monday, February 16, is a federal holiday here in the US – Presidents Day, which is sort of a combination of George Washington’s birthday, Abraham Lincoln’s birthday, and a time when a lot of mattresses seem to be on sale. (Though these days, pretty much everything seems to be on sale and has been since the holidays.)

    Still, it is a federal holiday and a school holiday … which means that I’m going to take advantage of the calendar and take the day off to spend time with the family.

    See you Tuesday…have a great weekend.


    KC's View: