retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: March 20, 2009

    Walmart said yesterday that it will be awarding $2 billion in bonuses, profit sharing and discounts to its hourly workers, a continuation of a program begun by former CEO Lee Scott. In announcing the new bonuses, the new CEO, Mike Duke, told employees, “I believe the key to our success was how associates in every area of our company came together around our shared purpose.”

    According to the Wall Street Journal, “The financial incentives for hourly workers include $933.6 million in bonuses that the retailer is handing out Thursday. There is another $788.8 million in profit sharing and 401(k) contributions, and hundreds of millions of dollars in merchandise discounts and contributions to the employees' stock purchase plan.”

    The bonus averages $933.60 for each qualified hourly employee.

    In his memo, Duke wrote, "Now we need to accelerate and broaden all of our efforts. We have a vision for where we want to take Wal-Mart. Our strategy is working and we're building momentum. As we move with a new sense of urgency and with every associate participating, we will make our business even stronger."

    The announcement of the bonuses being given to hourly employees came as the nation has virtually erupted in outrage over $160 million in bonuses paid by AIG to executives, including those who had worked in parts of the company’s business that contributed to a financial collapse that caused the federal government to invest $170 billion to bailout AIG.

    KC's View:
    Listen, Walmart is not without blemishes. But there is much to admire about the company, especially at a time when the spotlight is on so much corporate excess in the United States.

    Some execs spend millions redecorating their offices, and millions more to feather the already plush nests of senior execs. Walmart forces people to share rooms when on the road, famously decorates some of its offices with store-bought lawn furniture, and distributes billions in bonus money to hourly workers who are being hard-hit by the recession.

    I still think that Lee Scott ought to be on the short list for some job in the Obama administration. (Though probably not in the Department of Labor.) He’d bring instant credibility and a track record.

    Published on: March 20, 2009

    The Wall Street Journal this morning details complaints made by members of the US House of Representatives yesterday at a hearing into the nation’s food safety apparatus.

    Much of the criticism was focused on both public and private inspections performed at the Georgia facility operated by Peanut Corp. of America (PCA), which apparently engaged in negligent practices that led to a salmonella outbreak that has sickened more than 600 people and may have killed nine.

    Kellogg CEO David Mackay told the lawmakers that his company requires certifications and audits for the 3,000 ingredients it buys from 1,000 suppliers…but conceded that it wasn’t enough.

    USA Today reports that Nestlé was either more vigilant or just luckier when it inspected the PCA plant – it sound “grossly unsanitary conditions” during two different visits, and decided not to do business with the company.

    KC's View:
    Would it be too much to ask of a system that would allow, encourage or require a company like Nestlé to sound a very public alarm – telling the government, which would then spread the word among other manufacturers – if it found “grossly unsanitary conditions” at a supplier?

    Sure, it might be helping the competition. But the damage that has been done to the entire food industry by the PCA scandal may not be fixed for years…and hurts everyone.

    Published on: March 20, 2009

    • The Wall Street Journal reports that Tesco’s desire to expand aggressively in the nonfoods arena, which has resulted in the company having an 8.5 percent market share of the nonfood retail market, now is facing economic challenges because the recession has caused consumers to stop spending on anything except necessities.

    According to the Journal, “The cutback in consumer spending saw Tesco record worse Christmas sales than its more food-focused peers. Reductions in nonessential purchases such as clothes and DVDs hit its sales figures. That trend is likely to continue when it publishes full-year results next month.”

    This could explain why Tesco’s grocery market share has been in small but steady decline, the story suggests, because retailers with a more focused approach to groceries – such as William Morrison Supermarkets – are seeing strong growth as consumers respond to its marketing and merchandising efforts.

    KC's View:

    Published on: March 20, 2009

    The Tampa Tribune reports that Aldi is launching a new budget beauty line in its US stores. According to the story (and we do love a clever lead), “with lipsticks for under $2 and cleansers for $2.99, the chain hopes to lure bargain shoppers looking for products that make them look like a million bucks.”

    Aldi says that it has sold the line – which is up to 95 percent cheaper than national brands - in Europe to great success, and is positioned to compete L'Oreal, Olay and Helena Rubenstein.

    KC's View:

    Published on: March 20, 2009

    Costco announced that it will open a new Costco Business Center today in Hawthorne, California, described as stocking more business products than the average membership warehouse store that the company operates, and also offers delivery services to area businesses.

    According to the company, “The Hawthorne Costco Business Center is the sixth Costco Business Center in the United States. Other locations are in Lynnwood, Wash.; Fife, Wash.; Hayward, Calif.; Las Vegas, Nev.; and Phoenix, Ariz. There are also two Costco Business Delivery locations -- in Buena Park, Calif., and San Diego, Calif. The first Costco Business Center opened in 1996.”

    KC's View:

    Published on: March 20, 2009

    There is a good story from Reuters saying that a number of major US food manufacturers – including Campbell Soup, Hormel, and Sara Lee – are looking to emerging markets – such as China, Russia, and Brazil – as a major source of growth in coming years. The feeling seems to be that as recession causes a contraction in consumer spending in the US, there plenty of markets elsewhere on the planet to sell high profile US brands.

    It isn’t just manufacturers. Bloomberg reports that Starbucks – which has been having its own recession issues – said that its new store openings outside the US will for the first time exceed those inside the US. However, the goal will be to open new stores in existing markets rather than expand into new countries.

    Three big markets where Starbucks plans to expand its presence – China, Russia and Brazil.

    KC's View:

    Published on: March 20, 2009

    • The Los Angeles Times this morning reports that the Obama administration has “sided with women suing Wal-Mart Stores Inc. for discrimination, urging a federal appeals court to let the current and former workers sue as a group and proceed with the biggest sex-bias case in U.S. history.” The lawsuit was originally filed in 2001, but Walmart has argued that the two million employees should be forced to bring their cases individually rather than in a class action.

    The appeal of a previous decision – in which Walmart lost – is scheduled to take place Tuesday at the U.S. 9th Circuit Court of Appeals in San Francisco.

    • Walmart reportedly is using the DVD release of “Twilight” – the hugely popular movie about teen vampires based on the hit series of books - to bring bloodmobiles to select stores across the country.

    KC's View:
    There is probably a bloodthirsty joke somewhere in the juxtaposition of these two stories…but I can’t quite find it.

    Published on: March 20, 2009

    The Obama administration has announced that First Lady Michelle Obama and a group of Washington, DC, elementary school students will break ground today on a vegetable garden that will be on the White House South Lawn. The garden, according to reports, will be an “edible landscape” that will allow the White House chefs to harvest local, sustainable foods.
    KC's View:
    I have no idea whether these kinds of moves have any impact in terms of behavior beyond the Beltway.

    But I think the imagery is powerful. This garden has been promoted aggressively by chef Alice Waters, and she mentioned it last Sunday during her “60 Minutes” profile.

    So I’m guessing that they’ll be raising a glass of organic champagne at Chez Panisse tonight.

    Published on: March 20, 2009

    • The Greenbrier, the posh West Virginia resort which as home for many years to the summer conference sponsored by the Grocery Manufacturers Association (GMA) – until last year, when a labor dispute at the resort caused the meetings to be cancelled – has declared bankruptcy, and is likely to be acquired by Marriott Corp.
    KC's View:

    Published on: March 20, 2009

    Yesterday, in our story about Kellogg CEO David Mackey’s testimony before a US Congress subcommittee about needed changes in the nation’s food safety infrastructure, I wrote:

    “Mackey will tell the subcommittee that Kellogg lost $70 billion as a result of the recent salmonella outbreak that has been traced to a plant operated – by all accounts, negligently – by Peanut Corp. of America (PCA).”

    At least, that’s what it said before a number of people pointed out to me that the number actually was $70 million, not $70 billion. Luckily, the deluge of email came within 30 minutes of MNB being posted, so it was quickly corrected before most people saw it.

    Sorry about that. It was one of those “too little sleep and not enough coffee” mistakes that sometimes happen.

    I just confused the number with one of those AIG bonuses…

    KC's View:

    Published on: March 20, 2009

    …will return.
    KC's View:

    Published on: March 20, 2009

    Today is the first day of spring.

    Thank goodness. Because winter seemed like it lasted about six years.

    There was an interesting piece in the New York Times the other day about how a variety of marketers – ranging from Walt Disney to Campbell Soup, from Motts apple juice to JC Penney – are expanding their efforts to target children and mothers, believing that even in a recession, this market will allow them to maintain or even grow market share.

    At first, I sort of breezed by the story; it seemed mildly interesting but not revolutionary. But the more I thought about it, the more it occurred to me that while mothers and children traditionally have been the primary target consumer for most supermarkets – after all, they are a big part of the families that generate the big transactions on which most stores depend – there aren’t that many departments in most stores that speak directly and uniquely to these folks … or at least, speak to them differently than how they speak to, say, me when I walk the store.

    At some level, maybe that is a good thing, Especially now, when all the indications are that since more men than women are being laid off from their jobs, suddenly the percentage of men doing the supermarket shopping is likely to increase.

    Then again, if more men start doing the food shopping, shouldn’t stores talk to them differently than they talk to female customers? And if they don’t, isn’t the store running a risk of losing that customer, or at least losing potential sales?

    It is all about being more targeted…about being more specific. These days, it seems to me, there is no excuse for anything less.

    Did you read the piece in the Wall Street Journal the other day about the return of lard, which the paper said is “newly popular in culinary circles, where it has been embraced by revisionist foodies who extol its ability to make crispier fries, flakier pastries, and generally bring out the flavor of food better that other cooking fats like butter or vegetable oil.”

    Now, I’m in favor of culinary adventures. But I’m just not sure that this is the moment in our history when we want to be re-embracing lard as an everyday ingredient.

    And while I know they say that maybe lard isn’t as bad for us as once thought, my suggestion is that this will be an easier case to make if they change the name.

    Lard. It just sounds unhealthy.

    So apparently Discovery Communications has sued, claiming that the retailer has infringed on its patents with the development of the Kindle.

    I certainly hope this isn’t true, mostly because I have so much affection for Amazon.

    But I will tell you this.

    They’re not taking away my Kindle until they pry it from my cold, dead fingers.

    I have an excellent and oh-so-smooth Australian red to recommend to you this week - the 2006 Benchmark Grant Burge Shiraz.

    And go figure. The damn thing has a screw top.

    Would this count as personal growth on my part?

    I don’t know about you, but there are two shows on television right now that I can't stop watching, even though I have no idea where they are headed and how they are going to wrap up their seasons.

    “Damages,” the legal thriller on FX that stars Glenn Close, continues to create a labyrinth of a plot that makes it impossible to figure…and it has a cast of characters that are among the most duplicitous, without-redeeming-characteristics group that I’ve ever seen on TV.

    However, the “Damages” plot seems almost pedestrian compared to that of “Lost,” on ABC, which has embraced a time travel plotline that has the audience as confused and off-balance as the castaways.

    What they have in common – and what I love – is that they both reject linear storylines, and jump all over the place to create intricate plot puzzles that take shape at their own pace rather than be dictated to by the conventions of television.

    Very cool.

    More traditional in scope, but continuing to be very engaging, is the just-completed season of “Burn Notice” on USA Network, the Miami-based spy thriller that has an off-kilter almost Elmore Leonard-style sensibility.

    Here’s the great thing about all three series. You don't have to watch them when they are on TV. All of them are available on iTunes…which means that the consumer – not the provider – has control over the supply chain.

    That’s it for this week. See you Monday.


    KC's View: