retail news in context, analysis with attitude

Published on: March 4, 2009

The US Senate will consider new legislation that would provide the Food and Drug Administration (FDA) with new power to order product recalls and compel companies to disclose their internal records, while taking what experts call a risk-driven approach to inspections. The FDA Food Safety Modernization Act was introduced by Sen. Richard Durbin (D-Illinois) and Sen. Judd Gregg (R-New Hampshire), and already has garnered support from the Food Marketing Institute (FMI), Grocery Manufacturers Association (GMA), and United Fresh Produce Association.

“Over the last year, we’ve seen major recalls of peanut butter spiked with salmonella, spinach laced with e-coli and chili loaded with botulism,” Durbin said while introducing the bill. “These are not isolated incidents and are the result of an outdated, underfunded and overwhelmed food-safety system.”

The Senate bill, however, differs from one under consideration in the House of Representatives, which would create a separate food safety agency and mandate a regular schedule of inspections regardless of risk assessments.

Published on: March 4, 2009

In Oregon, the Register Guard reports that Supervalu-owned Save-A-Lot is giving away 4,000 bags of free groceries at each of its nine Pacific Northwest stores, with each bag containing spaghetti, pasta sauce, two canned veggies and garlic bread worth about five bucks.

Save-A-Lot also reportedly is giving 1,000 of the grocery bags to local food banks.

The company said that the giveaway is a good way of helping customers who are being negatively affected by the economic downturn.

Published on: March 4, 2009

The Seattle Times reports that Starbucks CEO Howard Schultz says that the pace of change at the troubled coffee icon is likely to slow at coming months, after a period of time when the company seemed to be “feverishly” announcing initiatives to drive up sales and profits. Schultz also said that he doesn’t expect there to be any more layoffs at Starbucks after the closing of 975 stores and the cutting of 18,400 jobs in the US.

Schultz also plans to introduce decaffeinated and other varieties of its new Via instant/soluble coffee, according to a Reuters story.

Published on: March 4, 2009

Bloomberg reports that in the most recent quarter, UK grocery market leader Tesco saw its percentage of food dollars drop to 30.3 percent, down from 30.8 percent during the same period a year ago – a small drop but one that continues a trend that has persisted in recent quarters.

Walmart-owned Asda’s market share increased to 17.3 percent from 17 percent a year earlier, while Sainsbury’s market share stayed stagnant at 16.3 percent,

Discounters Aldi and Lidl also grew during the quarter, with Aldi up to 2.9 percent from 2.6 percent, and Lidl up to 2.3 percent from 2.2 percent.

Published on: March 4, 2009

USA Today reports on a new Ohio State University study saying that when children consume fruits and vegetables, they tend to be in the form of French fries, which account for 25 percent of kids’ vegetable intake, and fruit juice, which represents 40 percent of kids’ fruit consumption.

Intake of green leafy vegetables and fresh fruit tends to be higher in more affluent families, according to the study…at least in part because fresh fruits and vegetables tend to be less available in poorer neighborhoods.

Published on: March 4, 2009

Whole Foods announced that, in partnership with Teens Turning Green, the national coalition of teens educating peers and community members about safe, healthy, and eco-lifestyle choices, it is launching Project Green Prom, an effort “to encourage teens around the country to make thoughtful, earth-friendly decisions and purchases around prom season.”

Published on: March 4, 2009

• The Wall Street Journal reports that a new study from the Carnegie Mellon Green Design Institute says that “e-commerce reduces the environmental impact of shopping by using about a third less energy than traditional retail — but only if you skip the express airmail.” According to the Journal story, “E-commerce not only uses less energy, but its carbon footprint is also a third smaller than bricks-and-mortar retail, the scientists found.”

The Journal notes that the biggest environmental impact of brick-and-mortar shopping, not surprisingly, is the use of cars to get to the store…and that the only way for consumers to lower their ecological impact below the use of the Internet is to walk to and from the store.

Published on: March 4, 2009

Interesting column in the Los Angeles Times by Dan Neil, in which he questions the decision by PepsiCo to change the logo of its flagship brand.

The redesign, he writes, “is a flattened derivative of the previous one with a right-slanting organic swell, a curiously pregnant white diagonal line traversing the logo.” Ironically, the change was engineered by the same company that resigned the logo for PepsiCo’s Tropicana brand…which has been abandoned just weeks after it hit shelves because of consumer discontent.

Published on: March 4, 2009

• Costco Wholesale said this morning that its Q2 profit was $239.7 million, down 27 percent from $327.9 million during the same period a year ago. Q2 sales were off one percent to $16.49 billion, , excluding membership fees, which increased four percent to $355.6 million. Same-store sales were down three percent.

• Walgreen Co. said that its February sales were up 3.4 percent to $5.09 billion, from $4.92 billion during the same month a year ago, on same-store sales that were up 1.9 percent if adjusted for the extra day during February 2008...but down 1.9 percent if that extra day is not factored in. It is Tesco’s lowest market share number in three years.

Published on: March 4, 2009

Interesting email from MNB fave Glen Terbeek, who always has provocative thoughts about the food industry:

I was in our local Starbucks recently which is directly across the street from a very successful local coffee cafe, which I would guess is doing much better than the Starbucks store based on traffic. While at the Starbucks I had the chance to speak with the district manager during her normal visit. I asked her what she thought of the local competitor across the street. Can you believe, she had never visited the local competitor? Apparently, she is there to ensure that the corporate ( i e central) Starbucks policies/procedures are being executed; and wasn't interested in or measured on local market performance. I would guess she had no authority to think locally.

It is a nice gesture that Schultz met with "invited" customers in Florida. My guess is that they were pro Starbucks customers, in other words, they like the Starbucks offering. However, there is much more to learn from visiting with competitor customers. Unfortunately, Schultz can't do that on his own, since there are so many local Starbucks markets.

The quality of the Starbucks branded coffee is for sure a centralization issue, it needs to be the same everywhere. However the coffee house experience is very much a local issue. I would guess their organizations, measurements, and authority need to be changed accordingly.




On the subject of Tesco’s Fresh & Easy division in the US, which is endeavoring to make adjustments to its operations that will reflect the way in which the recession is affecting shopping behavior, one MNB user wrote:

I visited one Fresh & Easy at Riverside, CA. To be honest, I cannot see how the store would be able to attract American suburban shoppers who are used to shopping at supermarkets that offer 30,000 more SKUs.

If Fresh & Easy is trying to duplicate Aldi’s and Lidl’s success in America, they may need to consider putting the stores in more densely populated areas, where shoppers would trade convenience for EDLP.

And MNB user Doug Madenburg had a thought about the new “Buxted” value-driven private label brand created by Fresh & Easy:

When I read yesterday’s WSJ story about F&E, the Buxted brand name stuck out at me. Usually you think “I guess they did their research on it…” but given Tesco’s recent admission of faulty and/or deficient market research around the F&E concept, one has to wonder. “Buxted” might be one of the last names I would choose for a fresh food brand. Doesn’t sound the least bit appetizing (at least to this sample of one, who also wonders how Tofurkey ever made it onto the shelf).

I agree. “Buxted” actually sounds like “Buxton,” the company that makes leather wallets. (In fact, in my commentary, I actually wrote “Buxton” instead of ‘Buxted”…and had to fix it later when someone pointed it out.)




And regarding the decision by Prince to release his new three CD set exclusively through Target, several MNB users made the following point:

He’s a Minnesota man helping a Minnesota company. Good for him!!

Hadn’t thought of that. Good point.