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    Published on: February 20, 2009

    The Japan Times reports that “despite a dramatic downturn in the economy, plans are in place to expand the number of 7-Eleven stores throughout the North American market with an eye to utilizing some successful formulas that have worked in Japan.”

    Masaaki Asakura, 7-Eleven Inc.'s executive vice president in charge of international operations, tells the Times that there is potential growth in North America that no longer exists to the same degree in Japan (which he describes as being a “dry towel” from which no more business can be wrung.) "The time has come for the U.S. market," he says. "That is why opportunity here is greater than in Japan because they are saturated in Japan — yes they can grow, but not at the speed they used to have.”

    The US tactics are expected to work like this:

    • Seven-Eleven Japan, which owns 7-Eleven in the US, currently has 7,700 stores here, but would like to add 150-200 units over the next three or four years, and believes that greater expansion is possible beyond that.

    • In addition to building new stores, the company is going to work to persuade existing independent units – convenience stores, gas stations and even small supermarkets – to convert to the 7-Eleven format.

    • The company also plans to expand its fresh food sales from 10 percent of total store sales at present to 20 percent…a number more in line with performance in the company’s Japanese outlets.

    KC's View:
    It all sounds doable, especially at a time when some of the staple items of the c-store business (tobacco, gasoline) are in decline.

    It also sounds yet more of a threat to the mainstream supermarket industry.

    BTW…see “OffBeat” for my encounter with one of the best small-store formats I’ve ever seen…

    Published on: February 20, 2009

    The Washington Consumers’ Checkbook is out with its most recent survey of the least expensive supermarkets in the Washington, DC, metropolitan area.

    The winner - Delhaize-owned Bottom Dollar, which the study says is 17 percent cheaper than market leaders Safeway or Ahold-owned Giant.

    In second place is Wegmans, followed by Shoppers Food Warehouse, Bloom, Food Lion, Giant, Harris Teeter and Safeway.

    KC's View:
    It is fascinating that the survey found Bloom to be less expensive than Food Lion – both are owned by Delhaize, but that’s not the way I would have expected it to shake out.

    Also interesting that Wegmans, which sometimes is seen as having a high price image, is number two…which demonstrates that the company has done an excellent job of doing more than talking a good game when it comes to sharp pricing.

    The results also prove that you can offer low prices as well as other differential advantages…the presence of Wegmans and Bloom on the list certainly proves that.

    Published on: February 20, 2009

    Bruno’s Supermarkets announced that it will close 10 of its 66 stores – 4 eponymous stores and six Food World units – as part of an ongoing restructuring effort that began with a Chapter 11 bankruptcy filing earlier this month. The stores are said to be underperforming, and the closures are dependent on court approval.

    According to the company, it also will be eliminating 30 corporate positions in addition to the jobs being cut through the store closures.

    "It is never an easy decision to close stores or reduce positions, but we believe this is a necessary step that will enable Bruno's to be a more focused and competitive business across the region we serve," said Jim Grady, who became the company’s Chief Restructuring Officer at the time of the bankruptcy. "We owe this to our customers and others who depend on us to operate efficiently, effectively and profitably."

    KC's View:
    The question that Bruno’s has to answer is what its differential advantage will be if and when the reorganization is completed. It’s early, but that’s the critical leap that Bruno’s has to make. Otherwise, it will just be jumping off a cliff.

    Published on: February 20, 2009

    There is a report from Reuters saying that Campbell Soup CEO Douglas Conant is interested in making strategic and appropriate acquisitions, saying, “We have a balance sheet and we’re not afraid to use it.”

    Conant says it is all a matter of timing and availability. Reuters writes that “some possible acquisition targets are tied up as private equity investors who own them look to maximize their investment, “ while others “are locked up in the portfolios of companies in ways that make it difficult to sell the assets individually.”

    Conant said the Campbell has no interest in merging with or being acquired by another company.

    KC's View:
    Nice to hear that somebody is thinking about buying something.

    Published on: February 20, 2009

    USA Today reports that there is a new study from the National Center for Health Statistics suggesting that young adults between the ages of 18 and 29 are no healthier than the same group was a decade ago – one third of this demographic is obese, one third is overweight, and about 30 percent of the group does not have health insurance.

    In addition, the study says that “among men, almost one-third smoke cigarettes and a quarter binge-drink (five or more drinks on at least 12 days in the past year).” Women apparently are smarter than men – smoking by women is down 20 percent in the past decade.

    KC's View:
    The report also suggests that while some advances have been made in adolescent health, those gains vanish once these people leave home and are responsible for themselves.

    Some of this is just natural, and there isn’t much you can do about it. The best one can do as a parent is hope that you’ve taught your kids how to be responsible enough that their autonomy actually means something. (Just responsible enough…there’s nothing wrong with a little indulgence, especially when you are young.)

    Published on: February 20, 2009

    • In Arkansas, the Morning News reports that Walmart has reached a $49 million settlement agreement with employees in South Carolina, who have been engaged in a six-year lawsuit that claimed the company had forced them to work off the books.

    According to the story, “Wal-Mart announced late Dec. 23 it was settling 63 of 73 pending wage and hour class action lawsuits nationwide. The South Carolina lawsuit is included in the 63 suits the retailer previously announced it would settle. The settlements were pending court approval, but could cost up to $640 million.”

    • Wal-Mart de Mexico said yesterday that it plans to increase its capital expanding by four percent this year, to the equivalent of $805 million (US), and open 252 new stores that will be added to its current fleet of 1,205 stores.

    KC's View:

    Published on: February 20, 2009

    Irene Rosenfeld, the CEO of Kraft Foods, appeared on the PBS Nightly Business Report earlier this week, talking about how the recession is affecting the food business. Excerpts:

    On private label’s impact: “In an economic downturn as we're experiencing now, certainly private label will do well, but I've been very pleased with the ability of our brands to hold up relative to private label. In most of our categories, we are gaining share at about the same rate as private label and it has everything to do with the fact that we have a number of iconic brands in our portfolio. We've made significant investments over the last couple of years in terms of offering a stronger value proposition in terms of our quality and our new product pipeline and so as a consequence, I think we offer a very good value to consumers in today's difficult environment.”

    On prices: “I feel very good about where we are price relative to our competition. The biggest focus on our part has been to ensure that we're adding enough value to our offerings. We have products like mac and cheese, Kraft singles, these are value-oriented products that provide good value to consumers in a difficult environment.”

    On eating at home: “The most pronounced trend that we're seeing is that consumers are eating at home more and what I feel good about is that when they eat at home, they come home to Kraft. We make so many products that are staples of their pantry and that offer good value and it's been very helpful to us as we participate in this difficult economic environment … fortunately one of the most recession-proof industries is food -- of course, people have to eat - and so we really haven't seen a significant impact on our products. What we are seeing is that more and more consumers are eating at home and that's been very helpful to our business. We offer a lot of consumer staples and a lot of products that are in their pantries and they're offering good value so that that's been a very good boon to our business.”

    KC's View:
    These comments by Rosenfeld seemed worth sharing because they illustrate marketing approaches that ought to be embraced by every retailer – an understanding that a value-added approach to staples may be the best way to connect with shoppers in a recessionary economy. The value proposition has to be strong, as does the “values” proposition.

    But here’s the thing that retailers need also to keep in mind – that saying “people gotta eat” is akin to sounding the death knell, because it suggests a level of complacency that is inappropriate and unacceptable in this environment.

    Yeah, people gotta eat. But they don't have to buy their food from you.

    Full disclosure: Kraft is a premium sponsor of MorningNewsBeat and its daily Wake Up Call.

    Published on: February 20, 2009

    • The New York Times this morning reports that “demand at food banks across the country increased by 30 percent in 2008 from the previous year, according to a survey by Feeding America, which distributes more than two billion pounds of food every year. And instead of their usual drop in customers after the holidays, many pantries in upscale suburbs this year are seeing the opposite.

    The Wall Street Journal reports that while pricing has become a contentious issue between retailers and manufacturers, CEOs ate companies such as Procter & Gamble, Clorox, Nestle and Kimberly-Clark believe that they can make the increased prices of 2008 stick even as the economy continues to tumble.

    • Another symbol of the times – Westfield Group, which operates 55 shopping malls all over the US, has decided to reduce opening hours at most of them, either opening 30 minutes later or closing 30 minutes earlier…or both, depending on the location.

    Tulsa World reports that Harps has opened its first store in the Tulsa, Oklahoma, market, with the remodeling of a 37,000 square foot former Albertsons store there.

    According to the story, “Harps has 62 stores in Arkansas, Missouri and Oklahoma, but most stores in Oklahoma are in small towns.”

    The competition is tough – there is a Walmart neighborhood Market virtually next door.

    KC's View:

    Published on: February 20, 2009

    Even Girl Scout cookies are being impacted by the recession, with declines in pre-sales of as much as 19 percent around the country. Lousy winter weather in a number of regions didn’t help, but the poor economy is blamed for most of the problems being faced by Girl Scout troops all over the country.
    KC's View:
    I don't know about you, but I think it was crossing the line when the Girl Scouts went to the government for a bailout.

    Published on: February 20, 2009

    • Loblaw reports that its fourth quarter profit was the equivalent of $149.2 million (US), up from $31.7 million (US) during the same period a year ago. Q4 revenue was up 11.2 percent to $6.2 billion (US), with same-store sales up 10.6 percent.

    The company said that it likely would not be able to repeat the profit increase in 2009 because of investments it has to make in upgrading an “archaic” computer system.

    • CVS Caremark reports that its fourth quarter earnings rose to $949.3 million, from $811.2 million during the same period a year earlier. Q4 sales rose 10 percent to $24.1 billion at CVS, on same-store sales that were up 3.6 percent.

    • Chiquita Brands international said that its fourth quarter revenue was down less than one percent to $839.3 million, from $840.4 million. The company’s Q4 loss was $411.9 million, compared with a loss of $26 million a year earlier.

    KC's View:

    Published on: February 20, 2009

    …will return next week.
    KC's View:

    Published on: February 20, 2009

    About 10 days ago I found myself in Dublin, Ireland, for a few hours…which is never a hardship.

    This time, I was walking along Merrion Row and happened upon a small food store that was as nice as any such store that I’ve ever visited. It is a SPAR store, and is fresh-food driven, offering fresh sandwiches, a smoothie and coffee bar, ready-to-heat-and-eat foods, and even a smattering of frozen and packaged foods.

    It struck me that the strength of this particular store is that it has unusual focus…its message and content are completely consistent, and seem in synch with an urban environment.

    It is nice to walk into a store and be delighted. Kudos to Spar for its Irish innovation (which, to be fair, has been there for several years…it’s just that I hadn’t been in it until now).

    At a time when the focus of many people in the retailing business seems to be on efficiency, it’s nice to see interesting marketing schemes pop up from time to time. It tends to give one hope that we’re not so locked into cost cutting that there is no room for innovation…because new ideas and new products always are going to be the best ways to achieve transcendent excellence and prosperity.

    I thought about this just last week when announced that it is coming out with a new version of its popular Kindle, the electronic book reader that has sold more than a half-million units at more than three hundred bucks apiece since first being introduced by the retailer. Now, I’ve gone on record here as saying that I love my Kindle – I have the old one, and I bring it everywhere, and have read a dozen or so books on it since getting it as a birthday present last year. I can’t recommend it highly enough, especially to people who travel and like having easy access to book, newspapers and magazines without having to lug actual books, newspapers and magazines around.

    What really caught my attention about the new Kindle announcement was the note that Stephen King has a new novella that only is available via the Kindle. In almost every retailing venue, it makes sense to have differentiated content of some kind…it creates excitement and loyalty that cannot be precisely duplicated. In other words, it should be an advantage.

    So anyway, as soon as it became available, I bought and downloaded the novella to my Kindle. It’s entitled “UR,” and as I read it I found myself captivated not just by the story, but by the synergy of it all. You see, “UR” is a story about a mediocre college professor who orders a Kindle…but ends up with a very special Kindle that gives him a view of other dimensions and realities where things are not the same as where he lives…and also gives him a view of the future, which can be dangerous for all sorts of reasons. It is a terrific story, sort of like a really cool “Twilight Zone” episode, and I recommend you read it…if you have a Kindle.

    Think about this for a second. You need to have a Kindle to read a story about a Kindle…which you actually have to pay a few bucks to read the story after you’ve dropped more than just a few bucks on the technology that allows you to read it. This has a great kind of circular logic about it…and the best thing is that it reinforces the brand at every turn with differentiated product, differentiated content. It is the marketing equivalent of “connect the dots.”

    The question I would ask other retailers is whether they are doing the same thing – providing differentiated product in a differentiated context, in a way that reinforces their brand at every turn of the aisle, at every checkout, on every one of the retailer’s web pages?

    We all know the ones that do. But I think it is fair to suggest that there are plenty of retailers that do not.

    It is a mark of how the world is changing that the Times Square Virgin Megastore in New York City is closing down.

    It should not, however, be a surprise.

    When the store opened 13 years ago, the iPod had not yet been invented. Music downloads were not popular. And, which made the act of shopping at a brick-and-mortar store unnecessary, was just in its infancy.

    Thirteen years ago, it may have seemed that the Virgin Megastore would be in Times Square forever, that it always would be a fixture there.

    But there is no “always” in retailing. There is no “forever.”

    Today’s differential advantage is tomorrow’s commodity. There is no such thing as an unassailable market position.

    Get used to it.

    If you’re in my business, you learn to appreciate a really good “lede,” which is the first sentence of a new story or column. The idea is to do one of two things – a “hard lede” that gives all of the essential information, which is then elaborated upon in the rest of the story, or a “soft lede” that is anecdotal or provocative, turning the piece into what’s called a “reader” that you can't stop reading.

    Then again, sometimes the writer is able to do both. Such was the case this week, when had the following story…in which the lede did both:

    The founder of an Islamic television station in upstate New York aimed at countering Muslim stereotypes has confessed to beheading his wife, authorities said.

    I wish I’d written it. Tragic story, but a great sentence, worthy of Raymond Chandler.

    Speaking of good writing, Peggy Noonan has a good column in this morning’s Wall Street Journal, entitled “Remembering the Dawn of the Age of Abundance.” She brings to the current economic debacle an innate sense of optimism and possibility…which, quite frankly, we all could use.

    I cannot, however, see any possibility of the complete truth being told to us by A-Rod, who seems to believe that the facts about his steroid are best doled out in tiny, elliptical pieces…not realizing that this story is never going to go away, and that the press is never going to be satisfied. Nor should it be.

    On the great “Morning Joe” the other day, Chuck Todd was talking about the problem with “rolling disclosures,” and how they never allow people to get ahead of the story. Now, he was talking about “rolling disclosures” in the context of Illinois Sen. Roland Burris, who seems to have an elusive relationship with the facts when it comes to how he got his Senate seat. Which made me think that Burris and A-Rod have a lot in common.

    I wish they’d both go away.

    Last week I found myself near Orlando for a few days, where my 14-year-old daughter and I spent an inordinate amount of time at Universal Studios and Disney’s Epcot. We went on “The Mummy” ride at Universal six times in six hours without once having to wait on any sort of line, which was good for us but cannot be very good news for Universal, which seemed unusually empty. Another sign of the recession, I guess. The even better news for me was the fact that I have a teenager who still wants to go to a theme park with her dad, and tolerates the fact that I don't go on anything resembling a ferris wheel or on any rides that go upside down.

    Also in Florida last week was Jimmy Buffett, who made a surprise appearance at the Margaritaville in Key West, where he debuted a typically cheerful and funny song about the recession: “We’ve Got A Lot To Drink About.”

    You can find it on YouTube in advance of it coming out on CD, and while the camerawork is shaky, the song is great, with one lyric going:

    Here’s your bucket for the big bailout
    Iraq, Iran
    We’ve got a lot to drink about…

    Great stuff. Check out the performance here:

    I think I’m gonna head down to the River Cat tonight, have a beer or a boat drink, and think about it some more.

    Have a good weekend. I’ll see you Monday.


    KC's View: