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    Published on: March 12, 2009

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    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, available on iTunes and sponsored this week by Webstop, experts in the art of retail website design.

    I’m not the smartest guy in the world. In fact, a lot of people would say I don't even make it into the top 3.5 billion. But I am one of the luckier people I know, lucky enough to know some of the smartest people out there.

    Earlier this week, I quoted journalist and pundit Mike Barnicle, who commented on MSNBC’s “Morning Joe” that we needed to launch a war on pessimism if we are to get out of the economic mess that we’re in. Shortly after that piece ran, I got an email from my friend Jim Donald, the former CEO of companies like Pathmark and Starbucks, who is one of the smartest people around…and he pointed out that in recently doing some research, he identified nine companies that managed t survive the Depression and four wars, and remain in business today.

    Those businesses are Yuengling Beer, A E Schmidt (which makes billiards tables), Cornell Iron Works, Crane and Co (the printing business), Marshall Elevator, Martin Guitars, Harden Furniture, and Bixler’s Jewelry.

    Jim suggested that among the reasons these companies have managed to survive is that they have had in place two key principles – they have always made top-down cuts first, not making the front lines absorb the hits, and they have worked hard to insure that perseverance and optimism rule the day.

    Jim, who is both a student and a practitioner of the art and science of management, noted that these companies had a number of other values in common, such as a belief in the importance of building trust for both customers and employees; the critical nature of creative marketing; the importance of constant innovation, even in tough times; always have new customer “lures”; keep debt low; and always thinking long-term, viewing “downturn planning” as a strategy as opposed to a necessary evil that turns into equal measures panic and desperation.

    I may not be the smartest guy but I’m observant enough to know that what Jim Donald is describing seems to be in short supply these days … that too many businesses have substituted anxiety and tactical thinking for the kind of measured, long-term strategic thinking that they’d be engaged in if they really had confidence in themselves and their businesses.

    If we’ve learned anything in the past six months, it is that it may be as hard to survive the good times to make it through the bad times. Which is why realistic optimism and pragmatic yet enduring confidence is required in both circumstances.

    A war on pessimism? Some companies, I would submit, have already declared it. And they have a far better chance of winning long-term than those succumbing to the worst angels of their nature.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: March 12, 2009

    Mike Ambrosio, vice president of quality assurance at Wakefern Food Corporation, testified yesterday before the US House of Representatives Small Business Subcommittee on Regulations and Healthcare about food safety at retail.

    “Our stores have many prevention programs in place to protect our customers, such as consumer education programs, employee food safety training, extensive sanitation programs and food safety management systems,” he testified on behalf of his company and the Food Marketing Institute (FMI) at the hearing titled the Impact of Food Recalls on Small Businesses. “The most important goal of America’s food retailers and wholesalers is to ensure that the products we sell are safe. The supermarket industry takes this responsibility seriously and actively seeks new ways to ensure the safety of our nation’s food for all Americans.”

    In the last fiscal year, Ambrosio told the committee, Wakefern retailers had 214 recalls, including 27 Class I and 43 pharmacy recalls, which could pose a significant public health risk. Company employees dedicated 2,140 hours, the equivalent and 305 working days, to handle them. The time to implement the recalls linked to peanut butter and paste this fiscal year will be substantially higher, he said.

    KC's View:
    All of which goes to bottom line costs…which ends up costing consumers money. Yet another reason we need to be better on food safety procedures on a national level.

    Published on: March 12, 2009 has a story about how timing is everything: it concerns Groupe Danone, which has put much of its time, effort and money into the functional foods businesses, and which generated more than $5 billion in sales for the company in 2007 alone. Now, however, a recessionary environment means that some people are cutting back on expensive health-related foods and moving to simpler fare … at the same time as they are moving away from branded products and to private label items.

    All of which means, according to CNN, that “the company's business model will … be tested more than it anticipated, even if it's the right choice in the long term.”

    According to the story, “Danone has spent the last 10 years slimming down to what it calls a ‘100% healthy’ food portfolio. The company is now focused in four areas: water, baby and medical nutrition, and fresh dairy. Dairy is the largest division by revenue, with a contribution of EUR8.7 billion in 2008, representing 57% of Danone's overall revenue of EUR15.2 billion. Its biggest functional foods by revenue are Actimel, which claims to strengthen the body's natural defenses, and the probiotic yogurt Activia, which Danone says helps to regulate intestinal transit.”

    KC's View:
    While the short-term may be troubled, it is critical for companies like Danone to keep eyes on the long-term…because if they really believe that innovations such as functional foods are the way of the future, that’s where the emphasis has to remain.

    Published on: March 12, 2009

    French retailer Carrefour reportedly plans to launch a new private label line of value-oriented products that will come in “simple, white packaging.” According to the Reuters story, the move is part of Carrefour’s efforts to overcome a high-price image at a recessionary time when consumers are looking for discounts.
    KC's View:
    “Simple, white packaging” sounds suspiciously like generic products, which we haven't heard a lot about even during the recessionary plunge. While people clearly are moving to private label items that they perceived as being high quality but lower cost, there may be room for a new expansion of generic items…

    Published on: March 12, 2009

    Marketing Week has a story challenging recent research saying that in the UK, discounters Aldi and Lidl were seeing a huge influx of shoppers looking to save money on groceries.

    The Marketing Week study suggests that only eight percent of shoppers had switched to doing all their grocery purchasing a cheaper supermarket because of the recession…but that 24 percent said that they were “cherry picking” – visiting a lot of different stores – to take advantage of discounts and promotions.

    KC's View:

    Published on: March 12, 2009

    • Published reports say that Tesco’s Fresh & Easy Neighborhood Markets is getting 5,000 shoppers a week to sign up for a new email program – called “Friends of Fresh & Easy” – designed to keep customers abreast of news, deals and special offers. Since the program was launched last December, more than 45,000 customers have joined up, the company says.
    KC's View:
    I’m actually surprised that it took Fresh & Easy so long to develop an email program, and that it took more than a year operation to determine that people in the 21st century like to get information via email.

    Permit me to be even a little more cynical here…

    Southern California has something like 23 million residents. The Las Vegas metropolitan area has close to two million, and the Phoenix metro area has around four million residents. That’s a total of 29 million people…and in three months, in those three regions, Fresh & Easy has in three months gotten 45,000 people to sign up for its email service.

    That doesn’t seem like a lot to me. Then again, Fresh & Easy is in the middle of a rebranding effort and it redefines itself to consumers … so an optimist would suggest that this means that there is plenty of upside.

    Published on: March 12, 2009

    In Alabama, the Press Register reports that bankrupt Bruno’s Supermarkets has filed a motion asking for the court overseeing its financial affairs to void part of its contract with the United Food and commercial Workers (UFCW), “warning that provisions that force a buyer to keep the contracts in place could torpedo sales efforts and ultimately force the chain to liquidate.”

    The Birmingham News reports that the UFCW “has no immediate plans to void Bruno's Supermarkets contracts and that the chain is unfairly punishing workers by asking for labor concessions during bankruptcy.”

    Bruno’s is trying to sell itself before its temporary financing runs out in May.

    KC's View:

    Published on: March 12, 2009

    • The Wall Street Journal reports that Walmart plans to hire five different public relations firms to promote its various products, programs and services. In the past, Walmart mostly used one NY PR firm, but apparently has decided to be a lot more aggressive in getting its message out.
    KC's View:

    Published on: March 12, 2009

    • The San Antonio Business Journal reports that HE Butt Grocery Co. has begun carrying a line of five different salad dressings manufactured by the Brookwood Community, a home for adults with functional disabilities.

    “As a nonprofit organization, we are thrilled to be able to put our product on the shelves of H-E-B stores in Texas,” Vivian Streit Shudde, executive director of the Brookwood Community, tells the paper. “We take pride in giving the citizens jobs and tasks that they can not only accomplish but also enjoy.”

    • In Minnesota, the Star Tribune reports that Supervalu has announced that it will give its customers $20 or $30 worth of free groceries when they buy a $250 or $300 gift card in a “refund reward” program designed to help them maximize their grocery dollars. The program begins Sunday and ends on April 15, and is available at Supervalu's retail stores, including Cub Foods, Acme, Albertsons, bigg's, Farm Fresh, Hornbacher's, Jewel-Osco and Shaw's/Star Market.

    KC's View:

    Published on: March 12, 2009

    • William Morrison Supermarkets announced that its annual net profit was down 17 percent to the equivalent of $634.5 million (US), on annual revenue that was up 12 percent to $20 billion (US). Same-store sales were up 7.9 percent for the year.

    KC's View:

    Published on: March 12, 2009

    Responding to the general trend toward private label as the recession deepens, MNB user Peter Stamos wrote:

    We believe these private label gains during this economic downturn will be sustainable. With the quality gap shrinking between store branded product and CPG product along with better more appetite appealing packaging, consumers are forging new buying habits. We see this across many of our grocery clients and our recent shopper study released at NRF this past January, “Men are from Mars, Women are from Aisle 3” would seem to confirm this conclusion.

    MNB user John Quinn wrote:

    I have been in the private label business for over 20 years and have been through these recessionary cycles in the past, although not nearly as bad as this one. Each time the economy dipped, private label share increased. When the economy got back to “normal”, private label maintained there new found consumers. Sales did not retreat to previous levels, yet continued to climb and out pace the brands. Consumers realize that today’s store brands are not what they were 30 to 40 years ago and are every bit as good as the national brands and in many cases better.

    I hope the branded folks remain in denial while private label proliferates. Ultimately the consumers and retailers will be the winners with higher margins and lower costs.

    Just wait and see what happens when Wal-Mart re-launches the Great Value line. Manufacturers will be scrambling to find outlets for their items that no longer have a home in Bentonville.

    MNB user Philip Bradley had some thoughts about Michael Sansolo’s column this week:

    Your column (Is Less Really More) struck home--"too much choice" is one of my favorite diatribes (okay, remember that I'm a geezer).

    My favorite example: years ago, Crest toothpaste offered two choices: regular and mint. Shopping was easy--you made your decision in about 500 milliseconds, picked up the one you wanted, and moved on.

    Nowadays, when I go to Walgreen's or a supermarket to buy toothpaste, the choice is endless. There must be at least 20 different versions of Crest. Not only that, they change regularly, so if you like one, there is absolutely no guarantee that it will be there when you come back in 6 months (or however long it takes to use up a tube of toothpaste).

    My question is, who does this benefit? Not the customer, because it takes a lot longer to make a decision, and the choices are really mindless between countless product versions that have virtually no difference between them. Not the store, because management has to provide many shelf-feet to stock all this stuff. The only entity I can see it benefiting from this useless product expansion is P&G, who, by occupying all that space, necessarily forces out other (probably smaller) manufacturers who might have products to offer.

    And--I agree with Barry Schwartz' conclusion, and look forward to reading his book. I do become less satisfied when faced with this ridiculously large number of similar products from the same manufacturer.

    We started going overboard on providing a truly useful number of products on the shelf about 20 years ago. I'm glad that someone is questioning this crazy trend that is, in my opinion, long overdue for a reversal.

    And MNB user Kevin P. Nolan chimed in:

    Clearly most of the CPG companies side less with the Mies Van Der Rohe school of thought “Less is more” and lean more towards the Robert Venturi dictum of “Less is a bore”!

    There’s a new slogan for an MNB campaign…”Nobody else would even think of having a sentence mentioning Mies Van Der Rohe and Robert Venturi.”

    Regarding our criticism that too few retailers have been aggressive about communicating positive news about the peanut butter category, MNB user Marilyn Phillips wrote:

    A very good local independent retailer here in the Minneapolis market - Lunds & Byerly's - had signposted their peanut butter shelves recently with the right reassurance message. But you are right, few and far between.

    Lunds/Byerly’s is one of the best out there…it doesn’t surprise me that it would be on top of this.

    KC's View: