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    Published on: March 9, 2009

    (Which do you want first? The bad news? Okay, here goes…)

    Business Week reports that as the nation lost 651,000 jobs during February 2009, approximately 39,500 of those jobs were in retailing…the 13th straight month that the retail sector has lost jobs. That’s the bad news.

    The good news: the magazine noted that “the pace of cuts appears to be moderating, another sign that the worst may be behind the industry.” The suggestion is that retailing is likely to bottom out first in the current recession, and could lead the way to any sort of recovery. According to the story, “February's losses were slightly lower than the revised 40,000 cuts in January and well below the 88,000 cuts in December and 91,000 in November, when retail job slashing hit a crescendo.”

    KC's View:
    One can only hope.

    I think Mike Barnicle got it right last week on “Morning Joe” when he said that the nation needs to declare a “war on pessimism.”

    We see those jobs numbers, and we can choose to be optimistic or pessimistic in our views.

    Choose optimism. Pragmatic optimism, but optimism. (And I write these words as someone who said all last year that the nation was facing financial troubles and that we were in a recessionary environment even if the economists were in denial…and got roundly criticized for being too negative.)

    Published on: March 9, 2009

    The Wall Street Journal reports that the peanut industry is hitting the streets and the stores to try to convince consumers that peanuts are safe to eat – hardly the easiest task after months of headlines related to the salmonella outbreak connected to peanut products traced to Peanut Corp. of America (PCA). That outbreak has thus far sickened close to 700 people and caused the deaths of nine, and forced the recall of more than 3,000 products.

    The new marketing effort is taking place in store aisles and in places like Grand Central Station in New York City, where both samples and reassurances are being handed out. And companies like JM Smucker and ConAgra, which make Jif and Peter Pan peanut butter respectively, are reassuring customers about the safety of their products in advertising.

    USA Today, by the way, reports that the recent bankruptcy filing by PCA included nearly $11.4 million in assets and debts of $4.8 million…but no insurance to compensate consumer claims against the company related to the salmonella outbreak and charges of negligence.

    There is insurance money to pay to businesses that bought products from PCA and had to recall them, the story notes, but not the victims of the outbreak.

    PCA does have personal injury insurance that could be used to cover consumer claims, the paper notes…but the insurer, Hartford Casualty, reportedly is arguing that it ought not have to pay out on the policy since the claims emanate from PCA’s deliberate negligence.

    KC's View:
    This is unbelievable. Or completely believable, considering the apparent lack of a moral and ethical compass at PCA headquarters.

    Published on: March 9, 2009

    The Chicago Tribune has a piece this morning suggesting that a price war will be the result of the current battle between retailers and manufacturers over costs and prices. Here’s the logic:

    “Consumers are trading down to private-label brands. They're shopping for discounts at Wal-Mart and hunting for promotional bargains at their supermarkets. That spells trouble for foodmakers, who jacked up prices last year after commodities spiked. They desperately want to hold the line, even as sticker shock in the grocery aisles threatens sales and profits—and raises the odds of an eventual price war. ”

    KC's View:
    There’s a lot of kvetching and debating about prices and costs, but ultimately I don't believe it is going to matter who is right and what their motives happen to be. The consumer is going to drive prices lower if current price levels cause a significant and quantifiable shift in shopping behavior.

    At this point, with so much consumer concern about the economy, the best course for manufacturers and retailers to establish themselves as being advocates for shoppers, who don’t care about commodity prices or contracts. They just care that they are having trouble feeding their families, and they are looking for help.

    If a price war commences, and the collateral damage is industry credibility among consumers, then so be it.

    Published on: March 9, 2009

    In Canada, The Star reports that Canadian Tire – a retailer best known for nonfood items ranging from apparel to fishing gear and lawn mowers – is getting into the grocery business, experimenting with putting food in several of its stores to see if it can generate more sales and profits.

    Analysts say that the experiment is limited and that companies like Loblaw and Sobeys don't have anything to worry about. However, it is also pointed out that Canadian Tire is using food to draw in customers and at the discount prices it is charging, probably isn’t make much money on groceries; the goal is to draw customers in so that the company can sell them more profitable merchandise … something increasingly hard to do in a recessionary economy.

    KC's View:
    Not to make too much out of too little, but this move probably reflects a strategy that more and more nonfood retailers are likely to embrace – and a strategy that certainly, if it gains enough momentum, could have an impact on mainstream retailers that are complacent about the competition.

    Sure, people have to buy food. But they don't have to buy it from you.

    Published on: March 9, 2009

    The Seattle Times reports that Starbucks has put a third corporate jet on the market, amid criticisms that it was living too high on the hog during a time when stores were being closed and jobs were being cut.

    According to the story, the first jet to be put up for sale was a seven-year-old jet that hit the market last December. The second was the new $45 million jet it bought in December 2008, the purchase of which prompted all the controversy. The third jet is a small, five-year old jet that has just been put up for sale.

    One interesting note from the Times: it used to be that flights by Starbucks’ jet were tracked on a site called FlightAware.com…but no longer, at the request of Starbucks ownership. It was CEO Howard Schultz who used the new jet to take his family to Hawaii for the holidays last December, a trip used to paint him as being tone deaf to the chain’s economic troubles.

    KC's View:
    I checked with my CFO (Mrs. Content Guy), and she says that I can’t buy any of the jets, not even the smaller one. She says that it doesn’t matter that MNB hasn’t laid anyone off, and that we haven't closed any offices … MNB can’t afford to be tone-deaf, she says.

    Damn.

    Published on: March 9, 2009

    • Published reports say that a federal appeals court in Michigan has ruled that a Costco store manager there created a racially hostile workplace, insulting black workers and using racial slurs. However, while the court agreed that the two employees who filed suit were entitled to lost wages – they left Costco’s employ in 2007 – it also said they were not entitled to $25,000 apiece for “emotional distress,” and it referred the case to a lower court so that the damages could be adjusted downward.

    • The Greenville News reports that Bi-Lo says that “its pharmacies now offer commonly prescribed drugs at $4 for a 30-day supply and $10 for a 90-day supply … The company said in a statement that it is introducing the new program to remedy the fact that many people do not buy the prescriptions they need.” A Bi-Lo Bonuscard is required to participate in the program, and the News notes that Bi-Lo “joins the likes of Wal-Mart, Kmart, Target, CVS, and Walgreens in offering customers savings on generic drugs. Publix offers free antibiotics.”

    KC's View:

    Published on: March 9, 2009

    • PriceSmart, which operates membership warehouse clubs in Central America and the Caribbean, said that its February sales were up 9.4 percent to $90 million, from $82.3 million during the same period a year earlier. Same-store sales were up 12.4 percent.

    For the six months ending 2/28/09, sales increased 17.5 percent to $626.8 million from $533.4 million a year ago, on same-store sales that were up 14.4 percent.

    KC's View:

    Published on: March 9, 2009

    • The Dannon Co. announced that Gustavo Valle, the CEO of Danone Brazil, is moving to the United States to become Dannon’s president/CEO. His predecessor, Juan Carlos Dalto, reportedly is returning to his home country of Argentina to become an “international strategic consultant.”
    KC's View:

    Published on: March 9, 2009

    Anthony J. Rouse, who founded the Louisiana supermarket chain that bears his name, died last week at age 79. His chain of stores, which began in 1960 in Houma and recently moved into the New Orleans market, continues to be known for a commitment to locally grown food.
    KC's View:

    Published on: March 9, 2009

    MNB broke the news with a special email “Wake Up Call” on Friday about the Whole Foods settlement deal with the Federal Trade Commission, which led MNB user David Diamond to write:

    I totally agree with your overall assessment of the Whole Foods/Wild Oats mess – this is just a face-saver for the FTC – which clearly needs to focus on other things.

    But I do think there is value in the Wild Oats name – If I were Supervalu I would look at buying the name to put on private label organics and to brand the natural foods department of their stores – It is a quick way for Kroger, SV or Ahold to “catch up” with Safeway/O Organics.


    Another MNB user wrote:

    If Whole Foods can’t sell the real estate, maybe they can ask for some bail out money like everyone else. I wonder how many of those types of responses you’ve gotten already.

    Also, your comment about there being too little money to spare… I disagree. Apparently, there are billions and billions, if not trillions and trillions, of dollars out in the economy. That money just hasn’t trickled down to people like you and me. I do agree that there is sufficient competition in the organic foods industry for Whole Foods to have kept the Wild Oats brand and gone about their business. But since they’re the largest organic foods grocer in the industry, I can see how their acquisition caused a stir.





    I wrote last week that while coupon redemption may be up, I remain appalled that so many coupons are not targeted.

    One MNB user responded:

    Your views are from the retailer end ... which I understand and appreciate. But how would you suggest national distribution manufacturers target consumers?

    Retailers don't provide loyalty card information to us (at least in my industry) and there is no way for us to directly gain this type of information.

    I assume your answer will be something along the lines of manufacturers and retailers being partners. As you'll see in my next point, it is hard to partner with some retailers.

    While we've been running more and more coupons ... we are considering using other vehicles for our ad dollar. The reason: fees and fines by retailers on coupons. A $.50 coupon can cost us over $6 each after some retailers place all their fees on it. When we deny the charges ... the fees end up deducted on the next invoice. Good thing redemption isn't higher ... we'd go broke with the fees. There are some areas of the country we no longer drop coupons in due to this practice.





    There was a story last week about how Minnesota’s food safety apparatus seems to be more efficient and effective that those elsewhere in the US…and I joked, “there are only two things that I can think of that are negative about Minnesota. It has a winter that lasts about nine months, and it only has one Senator.”

    MNB user Doug Campbell wrote:

    It could be that Minnesota is so good at dealing with food safety issues from the regulatory perspective because it has just about the best educational system in the nation.

    MNB user Tom Redd wrote:

    The other point on this is that Minnesota is known for as the world leader "hot dish" or bring a "casserole" meals. Thus, food is safe there unless cream of mushroom soup is tainted.

    I grew up in a family of nine, and because our father was a teacher, tuna fish casserole was a staple – it was cheap and fed a lot of people. I must admit, however, that I haven't eaten casserole of any kind since I left home. Just can't do it.

    MNB user Bob Vereen said there is a third negative about Minnesota:

    You forgot to mention our Paul Bunyan-sized mosquitoes.

    And MNB user Tom Schaefer chimed in:

    I suppose it’s how you define winter, but come and visit in April when the ice is going out and things are greening up it’s quite nice and refreshing and the September and October are really beautiful. Of course, summer is great with all the trees, rivers, lakes, etc. It’s not that unlike Vermont, with which you are more familiar -- we just have more lakes and no mountains. I won’t get into the political similarities or anything about our Senatorial demise.




    Finally, in “OffBeat” last week I wrote about my trip to Burlington, Vermont:

    So there I was in a French bistro, eating scallops and drinking good wine, a listening to a couple of musicians play standards from the forties while I read chapters in Ernest Hemingway’s “A Farewell to Arms” that actually take place in Paris. It was sort of a surreal evening that could have been happening in another place and at another time…except that I was reading the book on my iPhone.

    It’s a good life.


    To which one MNB user responded:

    So, were there no other patrons in this establishment? You would rather cocoon yourself with your iPhone than interact with the people around you? Sounds narcissistic to me, or far more anti-social than I would have expected from you.

    Anti-social, maybe. Narcissistic, I’m not so sure.

    For one thing, I may have been the only single person in the place...everyone else was paired off. I chatted with the bartender and a couple of waiters...but to be honest, I’d been “on” all day because of the video project that I was working on. And I knew I was going back to my room to spend 3-4 hours working on MorningNewsBeat. Sometimes, I need to spend a little bit of time collecting my thoughts, having a glass or two of wine, and reading Hemingway or Parker or somebody else.

    This may sound defensive...it probably is defensive...but the criticism stung.
    KC's View: