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    Published on: March 10, 2009

    by Michael Sansolo

    A funny thing happened on the way to last week’s column. I thought I had written a really nice article about intangibles and the skills we wish could be measured, but can’t. And after using an example of a professional basketball player, I offered up examples of the same in this industry.

    Then something happened. MorningNewsBeat.com is an entirely virtual adventure. Kevin does his remarkable work by high-speed connections wherever he is. And my columns arrive the same way, usually without us ever being within 200 miles of each other. It usually works.

    Last week, it didn’t. The column I sent and that I hope you read, was only two-thirds the length of what I intended. Nearly 200 of my pearls of wisdom (writers treat words like our children—we love them all) disappeared.

    Not surprisingly, I got e-mails from some readers. And almost all were favorable, praising the point of the article. Not one questioned why it was so short or seemed concerned that my point wasn’t fully made.

    Which brings s back to the headline of this week’s article: Is Less Really More?

    Is it possible the extra 200 words really didn’t make a difference and that the point was made and properly ended. (Is it also possible that my MacBook has developed artificial intelligence and edited the column for me?)

    It’s an interesting parallel for a problem we have long had in this industry - providing endless variety in product after product. It’s a point well challenged by Barry Schwartz in his book “The Paradox of Choice,” in which he argues that too many choices makes the shopper less satisfied.

    In so many ways it seems like a counterintuitive argument. But if the current economic situation shows us anything it is that the status quo must be challenged. Standing as we are in the middle of this storm, we cannot say with any certainty what formula will actually lead to success. We don’t know which format or collection of format will succeed. We don’t know which approach to customer value will succeed. We’re in uncharted waters and we have to swim like never before.

    But the lesson seems simple. Now more than ever we need to ask difficult questions and challenge the status quo. We need to find opportunity where maybe none existed before. And we need to be counterintuitive and be willing to walk toward the future in bold and new ways.

    That might well include a new look at variety and at understanding how too much choice can lead to less satisfaction and how offering the proper choice might well provide the key to even greater success.

    Perhaps we can even talk about it with shorter columns.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .
    KC's View:

    Published on: March 10, 2009

    Brian Cornell, the former Safeway chief marketing officer who has been serving as CEO at arts and crafts retailer Michaels Stores, is joining Walmart as CEO of its Sam’s Club division.

    Ironically, he will be replaced at Michaels by John Menzer, the former Walmart vice chairman and chief administrative officer who retired from the world’s largest retailer about 14 months ago. Menzer worked as an executive in arts and crafts retailing for a decade before joining Walmart.

    KC's View:
    Does Michaels’ also get a player to be named later?

    Published on: March 10, 2009

    Bloomberg reports that Senator Tom Harkin (D-Iowa) and Rep. George Miller (D-California) plan to introduce so called “card check” legislation in the US Congress today, setting in motion what inevitably will be a contentious debate about organized labor’s top priority for the year.

    As Bloomberg writes, “The measure would let workers form a union when a majority of company employees sign a card requesting one, rather than permitting their employer to require a secret-ballot election run by the National Labor Relations Board. The bill, formally called the Employee Free Choice Act, would amend the National Labor Relations Act of 1935, the Depression-era law that helped build the modern labor union movement in the U.S.”

    While the legislation is supported by President Barack Obama and many in the Democratic majority, it is opposed by the GOP minority and by wide range of companies that feel it gives organized labor an unfair advantage when it looks to organize businesses.

    KC's View:
    There would seem to be so many more important things to do right now that would allow companies to be more competitive and get the nation out of recession. Focusing on this bill now just seems like a bad idea.

    Published on: March 10, 2009

    The Wall Street Journal reports that Delhaize and Unilever have resolved their differences, ending a public disagreement that resulted from a pricing dispute that led Delhaize to remove some Unilever items from its stores, and then had Unilever urging customers to stop shopping at Delhaize and start patronizing stores that carried its products.

    Terms of the reconciliation have not been disclosed.

    Experts say that both sides probably lost in the dispute – Delhaize lost sales, and Unilever lost face…with other retailers perhaps seeing that they had previously unconsidered options in dealing with manufacturers.

    KC's View:
    I wonder if this could be a preview of what could happen here in the US if the tensions between manufacturers and retailers over prices and costs continue to escalate. Up until this point, it has just been trash talking…but it certainly is within the realm of possibility that certain retailers could just stop carrying items that they deem to be overpriced. Not likely, but possible.

    Certainly would be interesting.

    Published on: March 10, 2009

    BrandWeek has an interview with Pizza Hut CMO Brian Niccol, in which he says that the restaurant chain is looking to drive growth during the recession by emphasizing “home meal replacement solutions, whether it’s pasta, pizza or wings. Consumers are strapped for time. Some don’t have the cooking knowledge. As the economy takes its toll on consumers, the more you can give them with respect to what’s perceived as restaurant quality meals, and if it’s done in a fashion that’s affordable and ready for their households, [the better]. We’re one of the few pizza companies to actually come from a restaurant heritage. We’re updating and upgrading what a restaurant experience is like.”

    Niccol says that Pizza Hut also is in the process of upgrading its ingredients, moving to all-natural and healthier items that will improve the company’s competitive position.

    KC's View:
    For supermarket retailers, this ought to sound very familiar. It also ought to sound like a warning, as everybody goes in search of share of stomach using every tool at their disposal.

    Published on: March 10, 2009

    A new study released by the American Meat Institute (AMI) and the Food Marketing Institute (FMI) about meat buying and consumption habits during the recession reveals that:

    • “While shoppers are eating out less and cooking more, they are also trading down, substituting and eliminating, resulting in the overall spending amount remaining roughly the same, at $91 per week. While grocery expenses may be relatively unchanged, the way shoppers are spending most certainly is not. The study found that at least half are using coupons whenever possible, buying only what they need and switching from national brands to store brands. Other popular measures include resisting luxury foods and buying items on sale.”

    • More than half of respondents (51 percent) have changed their meat purchasing habits. “Popular ways to save money in the meat department include greater preparation before going to the store and a longer selection process when in the store. No less than 71 percent of shoppers say they read the grocery flyers looking for meat and poultry deals more often and more carefully than a year ago. Sixty-nine percent stock up on meat when it is on sale, and 67 percent purchase less expensive cuts either frequently or every time they shop. Others cook more casseroles or pasta dishes to make the quantity go a little further or simply buy and cook meat and poultry less often.”

    • “Supermarkets continue to have high retention rates in the meat department, with 88 percent of supermarket patrons also purchasing their meat and poultry there. Supercenters, on the other hand, continue to lose business in the meat aisles with 40 percent of their patrons purchasing meat and poultry elsewhere.”

    • Eighty seven percent of shoppers “compare the prices of different cuts and types of meat before making their final decision. The total package price is also growing more important compared with the price per pound.”

    • “Meat sales promotions greatly influence the type of meat purchased as well as the quantity. Up by seven percentage points from 2007, 58 percent of shoppers now purchase meat in large quantities to portion up, freeze and use over time. They are also less brand-sensitive, both for fresh and processed meat, in their quest to save money. Shoppers preferring national brand processed meats, for example, dropped from 37 percent in 2008 to 29 percent in 2009.”

    KC's View:

    Published on: March 10, 2009

    • The U.S. Environmental Protection Agency (EPA) has recognized Food Lion LLC with an eighth ENERGYSTAR award, the U.S. EPA’s highest honor for energy management. No other grocer has received eight ENERGYSTAR awards. The award, for sustained excellence, will be presented to Food Lion LLC on March 31, 2009 during a ceremony in Washington, DC.

    The ENERGYSTAR Sustained Excellence Award was based on Food Lion LLC’s energy conservation successes in 2008, as well as the company’s year-over-year energy reduction achievements.

    Advertising Age reports that Coca-Cola has come up with a novel approach to promoting its Vault soft drink brand, which is positioned to compete with market leader Mountain Dew. Coke is giving away a 16-ounce or 24-ounce Vault with any purchase of a 20-ounce Mountain Dew, and is encouraging consumers to try a taste test, believing that this will result in some percentage being wooed away from the Pepsi product.

    Coke isn’t saying how many coupons it is drooping for the promotion nor how much it will cost, but experts say it is likely cost millions of dollars before it is done.

    • The Wall Street Journal reports that CVS Caremark is shutting down 16 percent of its MinuteClinic in-store health facilities, saying that the remaining units will be more in line with consumer demand.

    KC's View:

    Published on: March 10, 2009

    Yesterday, in ‘Your Views,” an MNB user made the observation that since the Whole Foods-Federal Trade Commission settlement requires the retailer to sell off both more than 30 stores and the Wild Oats name and brand that it acquired more than a year ago for $565 million, there were at least a couple of possibilities of suitors:

    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.

    Well, we got several emails from various readers at Supervalu, who pointed out that the company already has an organic private label – Wild Harvest, a 300-SKU line that has long been available at Shaws and recently was re-launched nationally.

    Thanks for making that point – it was something I should have remembered, but didn’t.

    KC's View:

    Published on: March 10, 2009

    • Procter & Gamble announced that its president for global business units, Susan E. Arnold, has resigned from the company, and will officially retire as of September 1.

    Published reports say that Arnold, widely considered a possible successor to CEO AG Lafley, had always planned to step down once she turned 55…and she celebrated that birthday last Sunday.

    KC's View:

    Published on: March 10, 2009

    CNN was reporting last night that the original Margaritaville, the first restaurant/bar opened by singer Jimmy Buffett in Key West, Florida, was damaged in a fire yesterday morning and now is closed until it can be determined what caused the fire and repairs can be made.

    However, by this morning there were fresh reports saying that while Margaritavile was closed last night to deal with the effects of the fire, it had escaped relatively unscathed…and that it was only adjacent businesses that were destroyed.

    KC's View:
    Okay, I know this has nothing to do with the subjects we traditionally cover here on MorningNewsBeat. But I’ve spent some great evenings at the Key West Margaritaville and consumed more than my fair share of Hurricanes on that particular stretch of Duval Street. So I am relieved beyond measure this morning.

    Published on: March 10, 2009

    An MNB user responded yesterday to my commentary about coupons by writing:

    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.

    Which led MNB user Jerome Schindler to write:

    Now this is something the FTC should investigate, rather than squander their limited resources on matters such as the Whole Foods/Wild Oats combination. A retailer who invents these "fees" and deducts them from their invoices is competing unfairly with other retailers who do not. The Robinson-Patman Act could certainly be interpreted as applying to such conduct. I have often wondered what motivates a company to place a restriction such as "may not be doubled" on their coupons. The only logical reason is pressure from retailers who double coupons. I hope someone at the FTC reads your column.




    MNB user Craig Espelien had some thoughts about the manufacturer-retailer pricing tensions:

    I think a price war is coming – but the grocery industry executives who are shouting it loudest may want to look inside first. In my conversations with manufacturers, they are offering similar pricing to the mass channel – who has been much more open during the entire commodity run up to price advances and understanding the manufacturer’s true cost to produce product – and the fact that they (the manufacturers) need to make money as well. Most major manufacturers had a plan in place on how to raise (and lower) prices with their largest customer (you may be able to figure out who I mean) and it was executed very well by all sides. Also, this large customer has a habit of executing against the plans created with the manufacturers – which makes them an easier customer to deal with. The grocery channel has a bad habit of squeezing pricing and then not executing – or at least not growing their business.

    The grocery segment has become inefficient with a shrinking sales base. Manufacturers will invest their funds with the companies that will provide them with the largest returns – and grocery companies need to figure out how to do that. Mass operators, dollar stores and the drug channel seem to be better at this than the grocery channel – and interesting change from 10 years ago!!!





    Great line from an MNB user who had a thought about companies that might be interesting in acquiring the “Wild Oats” brand name from Whole Foods:

    Maybe a Nevada brothel will bid on the "Wild Oats" trademark - seems fitting.

    I love it. All natural, all organic.

    Besides, Nevada brothels may be the only companies with money to spend these days.




    I mentioned yesterday that MNB’s CFO (who happens to be Mrs. Content Guy) won’t let me bid for any of the three corporate jets being sold by Starbucks.

    Which led MNB user Jerry Sheldon to write:

    Had to laugh as you refer to your wife as your CFO. As we work for small companies we often humorously refer to our wives as CPO’s – Chief Procurement Officers.

    If I called her that she’d hit me.

    And MNB user Ron Pizur wrote:

    I love the humorous slant you put on your comment. Personally I think you deserve the jet - with the amount of time you spend flying around the world you should be able to fly in a little luxury. Maybe if you took your CFO on more of those trips you could get the approval (no, she did not contact me to put the pressure on you).

    I’d take her, but there are 25 third graders who would object to her absence.

    KC's View: