retail news in context, analysis with attitude

Published on: March 16, 2009

There was an interesting story in the New York Times yesterday about the priority placed by “competitors in entertainment, venture capital and medical research” to continue hiring smart people and funding innovative ideas, despite the economic downturn that has led so many companies to cut back on expansion and lay off employees. “In pockets of the American economy, however, the hunt for game-changing stars remains surprisingly intense, the Times writes, noting that “finding the next big hit can save the day, but running out of talent is a recipe for extinction.”

“A downturn can be a very good time to build a company,” Michael Moritz, the Silicon Valley venture capitalist, tells the Times. “The parvenus and the pretenders are gone. The only people who want to start a company in a time like this are the ones with the greatest conviction.”

The Times continues, “In fields where picking hits is crucial, executives say it’s vital to keep wooing candidates no matter how jittery the economy. In extended interviews, seven of these talent scouts argue that enduring success can come only from adding more of the best people to their teams.

“These executives’ specialties are as diverse as architecture, biotechnology and country music. Asked to share their recruiting principles, they touched on a handful of simple, recurring themes. Among them: take chances on passionate people early in their work lives, focus on what can go right, offer rewards no one else can match and harness the lessons of your own career.”

Published on: March 16, 2009

The New York Times reports that last week saw a milestone in the in-store advertising business, as News America settled a lawsuit brought against it by competitor Floorgraphics by buying the company for an undisclosed sum.

The original court filing by Floorgraphics said that News America ““illegally accessed plaintiff’s computer system and obtained proprietary information from the computer system; disseminated false, misleading and malicious information about the plaintiff; and incorrect information about themselves to plaintiff’s existing and prospective clients, in an effort to induce retailers and clients to avoid doing further business with plaintiff.”

In announcing its new acquisition, News America’s rhetoric was considerably less inflammatory: ““We’re pleased to be expanding our network of stores to better serve our customers and we’re very excited to incorporate the quality network so ably developed by Floorgraphics.”

The Times notes that the case “included a former employee of News America who emerged as a whistle-blower and provided Floorgraphics with information about the company’s business tactics.” News America bought Floorgraphics “after witnesses began testifying in the trial in federal court in New Jersey.”

Published on: March 16, 2009

In western New York, the Democrat and Chronicle reports that Wegmans’ $36 million Culinary Innovation Center has become fully operational, “an R&D test kitchen for creation of new food products, as well as a central kitchen and meat production area to turn out the retail-sized or bulk servings of soups, sauces and raw materials that are used in either Wegmans-brand take-out meals or prepared foods. The center also is the food factory where employees will assemble prepared foods, such as packages of chicken cordon bleu, that customers then take home and cook.”

According to the story, the new Center centralizes operations that variously took place in stores and in another central kitchen facility, providing not just larger and better equipped facilities that will allow it to be more creative and productive, but also an ability to focus on efficiency issues such as per-unit costs and shelf life.

Without giving specifics, Wegmans has said that its take-out meals business has been growing as the recession has affected customers’ ability to go out for dinner.

Published on: March 16, 2009

In his weekly Saturday address to the nation, President Barack Obama pledged to improve the nation’s food safety infrastructure and apparatus, and created an advisory group to help develop recommendations and legislation.

As part of the announcement, the White House said that the slaughter of cows too weak or sick to stand on their own has been permanently banned, a move seen as minimizing the chance that mad cow disease could enter the food supply.

In the speech, President Obama said, “I’ve often said that I don’t believe government has the answer to every problem or that it can do all things for all people. We are a nation built on the strength of individual initiative. But there are certain things that we can’t do on our own. There are certain things only a government can do. And one of those things is ensuring that the foods we eat, and the medicines we take, are safe and don’t cause us harm. That is the mission of our Food and Drug Administration and it is a mission shared by our Department of Agriculture, and a variety of other agencies and offices at just about every level of government.

“The men and women who inspect our foods and test the safety of our medicines are chemists and physicians, veterinarians and pharmacists. It is because of the work they do each and every day that the United States is one of the safest places in the world to buy groceries at a supermarket or pills at a drugstore. Unlike citizens of so many other countries, Americans can trust that there is a strong system in place to ensure that the medications we give our children will help them get better, not make them sick; and that a family dinner won’t end in a trip to the doctor’s office.

“ But in recent years, we’ve seen a number of problems with the food making its way to our kitchen tables. In 2006, it was contaminated spinach. In 2008, it was salmonella in peppers and possibly tomatoes. And just this year, bad peanut products led to hundreds of illnesses and cost nine people their lives – a painful reminder of how tragic the consequences can be when food producers act irresponsibly and government is unable to do its job. Worse, these incidents reflect a troubling trend that’s seen the average number of outbreaks from contaminated produce and other foods grow to nearly 350 a year – up from 100 a year in the early 1990s.

“ Part of the reason is that many of the laws and regulations governing food safety in America have not been updated since they were written in the time of Teddy Roosevelt. It’s also because our system of inspection and enforcement is spread out so widely among so many people that it’s difficult for different parts of our government to share information, work together, and solve problems. And it’s also because the FDA has been underfunded and understaffed in recent years, leaving the agency with the resources to inspect just 7,000 of our 150,000 food processing plants and warehouses each year. That means roughly 95% of them go uninspected. That is a hazard to public health. It is unacceptable.”

In announcing the new advisory group, President Obama said, “This Working Group will bring together cabinet secretaries and senior officials to advise me on how we can upgrade our food safety laws for the 21st century; foster coordination throughout government; and ensure that we are not just designing laws that will keep the American people safe, but enforcing them. And I expect this group to report back to me with recommendations as soon as possible.

“As part of our commitment to public health, our Agriculture Department is closing a loophole in the system to ensure that diseased cows don’t find their way into the food supply. And we are also strengthening our food safety system and modernizing our labs with a billion dollar investment, a portion of which will go toward significantly increasing the number of food inspectors, helping ensure that the FDA has the staff and support they need to protect the food we eat.

“In the end, food safety is something I take seriously, not just as your President, but as a parent. When I heard peanut products were being contaminated earlier this year, I immediately thought of my 7-year old daughter, Sasha, who has peanut butter sandwiches for lunch probably three times a week. No parent should have to worry that their child is going to get sick from their lunch. Just as no family should have to worry that the medicines they buy will cause them harm. Protecting the safety of our food and drugs is one of the most fundamental responsibilities government has, and, with the outstanding team I am announcing today, it is a responsibility that I intend to uphold in the months and years to come. ”

Published on: March 16, 2009

The Los Angeles Times reports that California legislators are considering the creation of a program that would mandate the use of supermarket scanner technology to flag recalled food products before people are able to buy them, bring them home and eat them.

According to the story, “A system of automatic warnings … would help ensure that food, such as the more than 2,600 recently recalled brands of ice cream, cake mixes, snacks and other items possibly laced with salmonella bacteria, are stopped at the point of purchase.”

The story notes that Kroger already has programmed such functionality into its checkout systems, but that it has not been embraced on an industry-wide basis.

Published on: March 16, 2009

The St. Louis Business Journal reports that Supervalu-owned Save-A-Lot will open three stores in New Orleans this week, which the company said would offer “extreme value” groceries to a city still recovering from the effects of Hurricane Katrina.

“Save-A-Lot has always looked for growth opportunities in underserved communities, opening stores where other chains won’t,” the supermarket chain said in announcing the most recent store openings. “To that end, the company has identified three additional target areas in New Orleans and a number of others within 100 miles of the city.”

Published on: March 16, 2009

Time has an interesting piece about why Walmart seems to be doing so much better than Target these days. Relevant excerpts:

• “When times are tough and consumers are ‘trading down’ to buy more inexpensive goods, you'd think that a discount retailer like Target would flourish. After all, it's the place you go for quality clothes at affordable prices — cheap-chic designer Isaac Mizrahi offers a line — low-cost home accessories, and perhaps a grocery item or two.

“Alas, therein lies Target's problem. Things are so bad, even cheap clothes are a luxury now. Why pull a new shirt off the store rack, when you can just snatch one out of the closet for free? Food, however, is not discretionary. Everyone has to eat, and more consumers want to dine at home to shave expenses. And there's a certain merchandising mammoth fulfilling that crucial grocer's role for consumers much better than Target.”

• “Not only does Wal-Mart sell more of the grocery items that you need—the company is the world's largest food retailer—it sells them at better prices. Britt Beemer, founder of America's Research Group, says that customers have fled Target because they think of the company as an apparel retailer, and they believe that the groceries they do sell are overpriced.”

Time notes that Target is trying to fix the problem, both by opening new supercenters and improving its fresh food merchandising…but that it has a long way to go if it is to compete effectively with Walmart.

Published on: March 16, 2009

USA Today reports that SC Johnson has decided to remove “controversial chemicals called phthalates from Windex, Shout, Pledge and its other popular cleaning products, and will begin disclosing all ingredients on its labels. The company plans to phase out phthalates, chemicals that interfere with the hormone system and have been linked to genital abnormalities in newborn boys, within two years, the company said in a statement.”

The story says that SC Johnson continues to believe that phthalates are safe, but is responding to consumer concerns about them.

Published on: March 16, 2009

• The Phoenix Business Journal reports that Bashas’ is reopening a store in the Fountain Hills section of the city, described as featuring “an Italian kitchen and gelato bar, Wi-Fi lounge with flat-screen TV, organic food section, community meeting room, and children’s Cub House.” The new and larger store replaces a unit that was demolished in April 2008, and that itself had replaced one that had been opened in 1974.

• Published reports say that Costco is preparing to open its first Australian store this July, in Melbourne’s Docklands district, and that it also is looking for a suitable location in Sydney.

• The Wall Street Journal reports that Sara Lee Corp. is considering the sale of its European household and personal care good business, believing that the best way to improve its sales and share price is to focus on its core food and beverage segments.

• A strike that could have paralyzed Safeway’s operations in Manitoba has been averted, with the retailer coming to an agreement with the United Food and Commercial Workers (UFCW) on a new five-year contract; the new deal has been overwhelmingly ratified by an 83 percent majority.

• The Wall Street Journal reports that former President Bill Clinton has severed his connections to Yucaipa Cos., the Ron Burkle-owned investment company that has been highly active in the supermarket industry over the years. The report says that Clinton began disengaging from Yucaipa when his wife, Hillary Clinton, was running for the Democratic presidential nomination, but now has finalized the separation because of her new role as US Secretary of State.

Published on: March 16, 2009

We continue to get email about Michael Sansolo’s column last week about the nature of variety and his contention that sometimes, less is more. MNB user Jack Flanagan wrote:

"Variety" is only variety when it's meaningful to customers. It's only meaningful to customers when enough of them will pay for the item being hailed as "variety" for the item to be successful - either on it's own or as a clear asset to related items which, taken together, are profitable.

What we have today is far too many line extensions which are not viewed by customers as "variety" - rather they are seen as needless, confusing, and ultimately unprofitable inconveniences whose costs have to be absorbed by other items. When the 'search' costs up and down the aisle or throughout the category become too onerous for the customer she'll quite often look for what great merchants are expected to do – wisely edit the assortment.

Just to be clear, I've no issue with manufacturers developing/trying genuinely new items, many of which will likely fail on the way to better determining customer wants. However, please don't call interminable line extensions or changes in pack size "variety". More often than not they are simply duplication which is not valued by customers. Worse yet, it becomes needlessly confusing.

And responding to one email that we ran last week, MNB user Gary Harris wrote:

Amen to Philip Bradley’s take on the toothpaste aisle. I’ve used that example in some of my training sessions over the past several years, admitting that I may be becoming an old fuddy-duddy (which I must be otherwise I’d never use that term) but wondering why in the h-e-double-hockey-sticks do we need such an expansive variety of toothpaste, no less, that we end up with one item that’s ‘Tarter Control with Whitening’ and another that’s ‘Whitening with Tarter Control.’ What, is it just a matter of priority?

I do remember a study that was done a while back comparing gourmet jam displays at a local shopping mall. When the whole variety was on display and being sampled, sales were significantly less than when only a few (6 or less) varieties were sampled. People got so confused they gave up and walked away.

On the same subject, MNB user Kathy Schuster wrote:

Regarding the “view” on choosing toothpaste, etc. – Agree 100%. I ran into a similar situation some time ago when my daughter called and asked if I could pick up a package of “Always”. (This may be uncomfortable for you to hear, but Mrs. Content Guy will appreciate it.) It had been a while since I had to shop for them, but there I was in the aisle knowing exactly what I was looking for BUT not only were there too many choices, there weren’t enough “words”. I saw 1, 2, 3 (maybe more) little raindrop looking things (I finally concluded after much study that they represented absorbency) and I couldn’t make heads or tails out of if they were thin or thick, wings, no wings AHHHHHHHHHHHHHHHH. The few words on the package might’ve been French and might as well have been Greek. So, between the symbols and wording I couldn’t understand, I was about totally NUTS and so frustrated that I bought a different brand because they told me on the package what I needed to know to make a choice!!! I was forced to betray brand loyalty to preserve my sanity, and daughter was cranky because that wasn’t the brand she wanted. I wonder how many other people they drove crazy (and possibly away). I noticed they have gone back to more practical labeling. There are still too many choices, but at least I can figure it out now. The episode still sticks in my mind believe it or not and it won’t happen again. I’m not going to spend that kind of time picking out anything.




Regarding Walmart’s new Hispanic format, MNB user Phyllis Palmer wrote:

This is the bullet for the LA market where WM’s efforts have been thwarted. Going in as a specifically Hispanic targeted Neighborhood Market-sized store will give … the smaller Hispanic chains, stiff competition. Dang those guys (WM) are smart!



On another subject, MNB user Clay Dockery had a criticism:

Your Offbeat observation on dietitians having a negative bias to overweight and obese people was a pretty interesting comment, particularly with respect to a comparison to Mother Teresa having a bias against poor people.

Considering the number of diseases and health problems that occur because of the overweight, sedentary lifestyle of so many Americans, is it really any wonder that this preventable problem would not become a bias for those individuals that have the greatest knowledge of the negative consequences.

Would you express dismay that physicians who treat patients with lung cancer have a negative bias toward smokers?

Fair criticism. I was actually trying to be funny, but maybe was less funny than I thought I was.




I mentioned last Friday in “OffBeat” that there was a funny piece in “The Onion” joking about the FDA approving salmonella as being safe for human consumption, which led MNB user Jackie Lembke to write:

Salmonella as a diet aid sounds like the next marketing coup to me. The principles at FDA just needed to change their strategy and remarket their peanut butter as the newest aid in weight loss.




in “OffBeat” on Friday, I made a brief mention of writer Pete Hamill and his longtime feeling that Walter O’Malley was one of the world’s most evil people for having moved the Dodgers from Brooklyn to Los Angeles. It always amazes me that stuff that sets people off…and in this case, the reactions were generally uniform. I won’t post all of them because they all made pretty much the same reference. But let me mention one of them…

MNB user Byron Hadley wrote:

Hamill is the evil one and you're not far behind. His continuing vilification of Walter O'Malley 30 years after his death is unfair, unjust, and completely unjustifiable. There was an article in Sports Illustrated just a week or so ago about this very topic. You should read it. I thought you were a journalist.

Let’s be fair about this. I can't read everything…and to be honest, I missed the Sports Illustrated piece. (I still haven’t gotten through the swimsuit issue…) But I try.

The piece that Hadley and other correspondents mentioned actually is an excerpt of a new book by Michael D’Antonio called “Forever Blue: The True Story of Walter O’Malley, Baseball’s Most Controversial Owner, and the Dodgers of Brooklyn and Los Angeles.”

Immediately upon getting all the emails, I went to the SI site and read the piece, and it is excellent…and I’ve already ordered the book to be downloaded to my Kindle when it comes out on Thursday.

One of the points made by D’Antonio is that almost nobody knew that there were extenuating circumstances that make O’Malley less culpable, because O’Malley made sure that those details were kept secret. I suspect – though I don't know this – that Hamill’s opinion of O’Malley may change based on the book. (I’m sure he’ll be interviewed about it, and he might even get hired to review the book. It’ll be interesting to read.)

But Hamill evil? Don't think so. He’s one of the best journalists of his generation, capable of provocative thought and graceful prose.