retail news in context, analysis with attitude

Published on: March 26, 2009

LAS VEGAS -- More random notes and comments from “Content Guy” Kevin Coupe from the annual summit sponsored by Information Resources Inc. (IRI), that took place Tuesday and Wednesday at the Wynn Las Vegas…

• Perhaps it is because the discussion connected so clearly with the editorial mission here at MorningNewsBeat, but one of the best sessions I’ve seen in some time came when Thom Blishock, IRI’s president of consulting and innovation at IRI, brought to the stage four “Blogger Moms” who run various websites in which they talk to moms all over the country, provide a forum for discussion of relevant issues, and offer companies a unique opportunity to get insights about how their customers see their products and services.

These women are representative of, and give voice to, hundreds of thousands of women all over the country. And they hardly are a homogenous group…in the space of just 30 minutes, they expressed a variety of opinions and perspectives.

For example, “a lot of women are embracing private label,” said Alma Klein of www.marketingmommy.net and www.chicagomomsblog.com, “because they are not the…generics that our moms brought into the house that we were embarrassed about.” However, she added, there are limits: “I would never buy no-name shampoo from a dollar store because I am not convinced it is going to work.”

Christine Young, a mother of six, of www.fromdatestodiapers.com said that she believed that brand loyalty was selective, and said that she was intensely committed to Johnson baby products (and was even before the company hired her to be a spokesperson for the brand). But she also said she felt the same kind of loyalty to another brand – Kirkland products at Costco, which is, of course, a private label.

And Liz Gumbinner, of www.mom-101.blogspot.com, said that as a former ad agency creative director she remains firmly committed to the power of brands, suggesting that it is only brand equity that helps a company survive when its products are found to be contaminated with cyanide or melamine.

The “Blogger Moms” agreed that transparency was an enormous issue for them. “We want clear labeling,” said Lynnae McCoy of www.beingfrugal.net. “If you are using GMOs in your products we want to know about it … we get to make the decision…if we find out abut it later, we’ll feel like we can’t trust you anymore.”

Klein pointed to the practice of shrinking product sizes and charging the same price – hoping that customers won’t notice – as a major pet peeve. “It gets people angry,” she said. “Be up front .. show us some respect, and maybe we’ll show more respect for you.”

Another point of agreement – high fructose corn syrup (HFCS) is going to be the next trans fats of the food industry, and food manufacturers better get used to the idea.

“The relationship between brands and consumers is about to forever change,” said Gumbinner, “because your future is in the hands of consumers.” It is inevitable…and both retailers and manufacturers would be better off embracing the idea instead of denying or ignoring the reality.

That reality was live and on stage at the IRI Summit – vigorous, vibrant, engaged and more than a little frightening to an audience that largely seemed unfamiliar with the existence of Twitter.

• Private label seemed to be a major touch point for many of the other sessions…which makes sense, since the recession has prompted a growth in private label acceptability in the US, which makes CPG manufacturers a little nervous and makes retailers a little more willing to put the screws to their suppliers.

Some pertinent comments from various sessions…

“It isn’t private label. It is a private brand.” …Tim Hammonds, president emeritus, the Food Marketing Institute.

“If a manufacturer wasn’t the number one, two or three brand in a category, you were in real trouble before the economic downturn…there is a very distinct need for good private label development…it is good for the shopper…it keeps pressure on manufacturers to innovate. …Steve Goodroe, executive-in-residence, Terry College of Business at the university of Georgia.

“I’ve heard manufacturers say that they are not bringing new ideas to retailers because they are afraid they might steal them.” …Thom Blishock, IRI.

“Private label is here to stay and is going to grow. You can either fight it or live with it. The ones that fight it will probably be victims of private label growth over time.” …Jeff Martin, executive vice president, merchandising and supply chain, Giant of Landover.

• In another presentation, Mike Salzberg, president of the Campbell Sales Company, noted that his brand was prepared for the economic downturn because “we’ve gone through 30 recessions since 1869.” He suggested that the company’s message has always been about wellness, convenience, price and value…and that consistency of message has helped the company frame its message for the latest downturn.

And, Salzberg reiterated the “speed” message that was emphasized on the first day of the summit. “You have to question every decision you made 30 days ago, because it might not be the right answer anymore, and you have to be willing to cut bait and move on.”

• Mike Haaf, senior vice president/chief marketing officer for Food Lion, took the audience on a guided tour of the journey that his company has made from being a “one size fits all” retailer to one that has created multiple formats and store clusters that are uniquely customer-centric…and emphasized that “the journey toward customer-centricity is not over…it continues to evolve.”

• And Steve Forbes, the former candidate for the GOP presidential nomination and longtime editor-in-chief of Forbes magazine, delivered an assessment of the current economy that included some small degree of optimism. “As someone once said, the world can only end once,” Forbes joked. “And this is not it.”

“With all the pessimism in the air,” he added, “the virtue of a free people is not that we don't make mistakes…we make plenty of mistakes…but you recover from those things, you learn from those things, and you figure out how to move ahead…eventually we get it right.”

Published on: March 26, 2009

Now available on ITunes…

To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las


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

Like a lot of people, I can’t quite figure out the totality of the financial mess that the country is in, nor do I have any real idea how to get out of it. I know that I understand Jon Stewart more than I understand Timothy Geithner, and I know that I trust Jon Stewart a lot more than I trust Jim Kramer.

We’re all probably reading a lot more about things like derivatives and subprime mortgages and credit swaps that we used to or want to. Though I have to admit that there is some fairly entertaining journalism coming out of this whole disaster. There was, of course, the Jon Stewart skewering of CNBC in general and Jim Kramer in particular, which made a lot of people wonder how come it took a comedian to ask basic questions and speak truth to power in a way that made common sense.

I’d also recommend Matt Taibbi’s piece in the new Rolling Stone as a lucid, occasionally funny, sometimes profane description of the events that have brought us to this point; it is righteous indignation and good, finely honed writing. The only problem with Taibbi’s piece is that it makes you want to grab a pitchfork and make like the crowd from “Frankenstein,” hunting the monster that strikes fear into our very souls.

While there are a lot of intricacies to the financial meltdown, I guess it is fair to say that it all comes down to a couple of basic facts. A lot of people got greedy and behaved as if only tomorrow mattered. Right? Isn’t that sort of the whole thing in a nutshell?

While it is possible, I suppose, that some of these people actually thought that prosperity could go on forever, I don't think that was it. I think that they didn’t care about the long term because they figured that it didn’t matter – they’d be out before it ever came time to reckon with the results of their greed. They were all about short-term tactics that would generate big-time revenues and commissions, not long term strategies that would create sustainable companies. They were all about their own priorities, not the best interests of their customers. Or their shareholders, for that matter.

(That’s why the whole AIG bonus situation is so galling. There are, apparently, legions of people who believe that bonuses promised in their contracts take precedence over behavior that put their company billions of dollars in the red, requiring a government bailout. Even as they watch their business circling the toilet, they don't seem to understand anything other than their own short-term greed. It isn’t even the money…or at least, it isn’t only the money. It also is the principle of the thing.)

Which is the moral of this story. (You knew there had to be one.)

Even those of us not in the financial services business need to take this lesson very seriously. We have to be careful in all of our businesses to make a concerted effort to move away from cultures that make tactics more important than strategy. Sustainability – and I define this word in the broadest sense, not in the environmental context – is the ultimate goal. Satisfying the customer’s needs – not our own priorities – has to be the top priority.

Every once in a while, I hear some commentator on television talk about people wanting their money back. Well, I hate to be the bearer of bad news, but none of us are getting our money back. What we will get, if we’re lucky, is the opportunity to rebuild and create an environment in which ethical, responsive, strategic and sustainable businesses can again thrive.

But if we don't learn our lesson…if we as a culture take any small evidence of an economic rebound as an indication that we can once again think tactically and only of ourselves…well, then, we won’t get that opportunity.

I’m even pretty sure that we won’t deserve it.

For MorningNewsBeat Radio, I’m Kevin Coupe.

Published on: March 26, 2009

Earlier this year, Kraft scored big with its iFood application, which allowed shoppers with smart phones to access a website filled with meal suggestions and recipes that, not coincidentally, used Kraft Foods products.

And now, Advertising Age reports, comes the next logical step in the food chain…SitOrSquat, a smart phone application created by Procter & Gamble’s Charmin toilet paper brand that has “the goal of turning the digital masses into a mobile army of restroom reviewers. It both helps locate public restrooms and provides star ratings based on their cleanliness and other amenities.” It also allows users to rank them, review them, and even post images of them.

Unlike Kraft’s iFood effort, SitOrSquat isn’t aimed specifically at selling toilet paper, and it isn’t like P&G is in the restroom business. Rather, as Ad Age notes, “it's just another effort at nontraditional branding.”

The app is seen as having particular relevance to road warriors, who often can find themselves seeking clean and friendly restroom facilities…which could be a little tougher now, Ad Age writes, now that Starbucks is closing down hundreds of stores.

And here’s where SitOrSquat is wiping up, according to the story: “As of last month, SitOrSquat had logged more than 52,000 toilets in 10 countries, more than half a million unique visitors and more than 1,600 downloads of its mobile apps. All those numbers are growing rapidly, and Charmin hopes publicity regarding its sponsorship helps them grow faster.”

Published on: March 26, 2009

The California Grocers Association and member companies Safeway Inc. and Save Mart Supermarkets announced that they are partnering with Governor Arnold Schwarzenegger and Sacramento Mayor Kevin Johnson to provide toiletry kits for approximately 200 homeless individuals living in an encampment near the American River Parkway that has become known internationally as “Tent City.”

Published on: March 26, 2009

CNN reports on a growing health care trend in corporate America – rewarding employees who engage in healthy lifestyles and penalizing those who do not.

HR consulting firm Watson Wyatt, according to the story, did a survey of 453 large employers last year and found that half of them are using a “carrot-and-stick” approach to health care…with that number expected to grow to 74 percent in 2009.

The rationale for such programs is simple – people who are healthy are more productive and cost less to insure. But people who smoke, are obese, have high cholesterol or blood pressure tend to lower productivity and raise insurance costs.

Those who pass basic health ratings tests can get discounts on their insurance premiums or other incentives, according to the story, while those who do not pass sometimes have to pay higher insurance rates that are commensurate with the higher risks that they present. While companies have to be careful not to appear to discriminate against less healthy employees, the notion of penalizing people who are at least partly responsible for high health care costs seems to be getting some traction.

Published on: March 26, 2009

Supervalu announced yesterday that it is launching “Simply Good Meals,” which it describes as “new easy-to-recognize, branded destinations within its family of stores where consumers can go to find complete easy-to-make meal solutions in one spot. The program does the planning for consumers by bringing together all of the components needed to create a good, balanced meal for the entire family. “The Simply Good Meals program is making its debut in the aisles of the company’s family of grocery stores including Acme, Albertsons, bigg’s, Cub Foods, Farm Fresh, Hornbacher’s, Jewel-Osco, Lucky, Shaw’s/Star Market, Shop ‘n Save, and Shoppers Food & Pharmacy.

According to the announcement, “most stores will initially feature up to four Simply Good Meals destinations, including two in the produce area, one in the meat section and one in the deli department. Some stores will also have additional meal and soup destinations in the deli area. One of the destinations — known as 4:15 — will feature a selection of items that allow busy moms to create a good, easy, home-cooked meal for a family of four for under $15 and, in many cases, in 15 minutes or less … The Simply Good Meals program addresses consumers’ needs for convenience, value and family meal-time help at a time when concerns about the economy are causing changes in their eating and shopping behaviors.”

Published on: March 26, 2009

Interesting story in the St. Louis Post-Dispatch that puts a face on the impact that economic difficulties are having on business – in this case, a new gourmet grocery store called The Market at Busch's Grove that opened last December. Because “frugal is in” and gourmet is out, The Market has laid off 20 of the 45 people that were hired for the opening, and while word-of-mouth seems be helping sales somewhat, revenue is below projections.

The message is clear: companies that are offering deals, private label programs and other ways for shoppers to stretch their dollars are going to do better than those specializing in more indulgent items…particularly if the retailer, like The Market, is new and hasn’t had the chance to create loyalty and forge a connection with shoppers.

Published on: March 26, 2009

• Walmart announced that it has created a new line of home furnishings for teens called “Your Zone,” described as “a platform for teens to create their own space and express their evolving personality, for less.”

Published on: March 26, 2009

Earlier this week, the story was about a study saying that consistent eating of red meat will shorten your lifespan. Today, the Wall Street Journal reports that this may be a little less of a problem than it used to be, since beef sales are down because consumers aren't eating as much at restaurants, which account for half of all beef sales. “Beef sales to food-service establishments were down nearly 5% last year, according to figures from food-consulting firm Technomic Inc. Sales to supermarkets and other retail outlets rose 2% as consumers started cooking more at home.”

According to the story, the beef industry is responding by promoting “more cuts of meat from a wider variety of the steer's muscles. Traditionally, consumers have favored the so-called middle meats -- premium cuts from the rib and the loin like rib-eye and T bone steaks. Middle meats also tend to be more profitable for beef processors.

“But now as consumers scour delis and supermarkets for deals, the industry is trying to spotlight cheaper muscle cuts like round and chuck that have tended to be less tender and contain more muscle fiber. The industry says new cutting techniques have made the cuts more palatable.”

Published on: March 26, 2009

• NamNews reports that UK e-grocer Ocado has a new offering on its website called “Instant Order,” designed to keep an ongoing purchase history for customers so that they can reorder regular items more easily.

Published on: March 26, 2009

• The Wall Street Journal reports that Anheuser Busch InBev has lost a court battle in the EU, and will not be able to register the Budweiser name as its own trademark. It had been opposed by the Czech brewer Budejovicky Budvar, which has been using the name since the 19th century.

While Anheuser will continue to use the Budweiser name in 23 European countries – Budvar also sells beer under that name in those countries – it will not be able to do so in Germany. The journal notes that the legal setback makes it tougher for A-B to expand in that beer-loving country.

Published on: March 26, 2009

• Sprouts Farmers Market announced that it has hired Rick Kaiser, most recently senior vice president of operations at Raley’s Supermarkets, as its new senior vice president of operations.

In addition, Sprouts has hired Joe Dobrow, formerly of Whole Foods, Balducci’s and the Discovery Channel, to be its new vice president of marketing.

In the announcement, Sprouts noted that it “will open eleven new stores this year, boosting the economy in California, Texas and Colorado. And, senior executives are not the only new additions to the Sprouts team. In fact, at a time when the unemployment rate is soaring, Sprouts stands out as a hub of modest activity, hiring more than 500 employees to staff the new stores.”

• Ralcorp Holdings announced the resignation of Richard Scalise, president of its frozen bakery products division. Scalise reportedly will take a position with an as-yet unidentified food company.

Ralcorp said that Kevin Hunt, co-CEO/president of Ralcorp, will assume his responsibilities.

Published on: March 26, 2009

• Dollar General Corp. announced that its fourth quarter net income was up 48 percent to $81.9 million. Q4 revenue was up 11 percent to $2.85 billion, on same-store sales that were up 9.4 percent. With not a little bit of irony, the Wall Street Journal noted that this performance made Dollar General – “a deep-discount retailer selling $1 dog treats and $2 bleach to lower-income shoppers” – the best performing asset owned by private equity firm Kohlberg Kravis Roberts & Co.

Published on: March 26, 2009

Yesterday, in letters about the Bi-Lo bankruptcy, MNB user David Livingston called the retailer “just another sterile Winn Dixie-esque grocer stuck in no-man's land between Wal-Mart/Aldi and Harris Teeter/Publix. Just like Winn Dixie, they've been around for a zillion years, supported all the local sports teams, fell asleep at the wheel, and have driven off a cliff.”

In retrospect, I probably should have called Livingston on what now seems like a gratuitous slam on Winn-Dixie, which is doing a lot better these days than a lot of people – me included –probably expected. But I didn’t…which is why we have an MNB community.

MNB user Glenn E. Harmon wrote:

I certainly don’t expect you to print this, but since you consistently praise Publix and “constructively criticize” Winn-Dixie, I thought you might be interested in this…

I wrote to Winn-Dixie CEO Peter Lynch the other day and complimented him on WD’s improvements. The store by my house is nice. It’s farther than Publix, but I like it better. At the same time, I copied Charles Jenkins and Ed Crenshaw on my e-mail and related how I had always believed that Publix was higher priced, but didn’t realize to what extent that really was. In fact, when I checked, I found that Publix is obscenely high priced, and I see no difference in service. In terms of quality and variety, I like WD’s produce and Deli better than “my Publix”. Any way, the point of my e-mail is this…

When I sent my e-mail, I put a return receipt on it… Peter Lynch wrote back to me within the hour and thanked me for my comments. On the other hand, someone named Barbara Reynolds at Publix (to whom I didn’t even send the e-mail) read my e-mail and ignored it. I haven’t heard anything from Charlie Jenkins or Ed Crenshaw.

At the end of the day, an organization is exemplified by its leadership. Obviously Peter Lynch is listening. Publix doesn’t appear to care.

Point taken.

And Dan Portnoy, Winn-Dixie’s SVP, Chief Merchandising & Marketing Officer, also had a reaction:

David Livingston hasn’t been in a WD for many years-why don’t you suggest he visit one next time before remarking about us. He’d be amazed at the night and day difference between then and now.

Suggestion made. Again, point taken.

I have no idea what David Livingston will do, but I’ll tell you this. Next time I’m in Florida, I’m going to go out of my way to visit at least a couple of Win-Dixie stores. Because I’m listening, and I care.




Responding to our piece about the study saying that daily consumption of red meat will cut one’s life expectancy, MNB user Mike Holman wrote:

I'd be interested in more research into the role that bovine growth hormone, antibiotics and other industry methods of increasing yield have contributed to the health risks. Personally, I don't think that organically or "natural" (hormone and antibiotic-free) meats would have the same effect.

Good point.

As for me, if indeed red meat isn’t the best thing in the world to consume, my assumption has been that if I have mine with lettuce and tomato, Heinz 57 and French fried potatoes, a big Kosher pickle and a cold draft beer, it’d have essential restorative effects…




Regarding yesterday’s recap of the IRI Summit, one MNB user asked what the phrase “channel dislocation,” used by one speaker, meant.

What he meant was fragmentation, as customers move from format to format without a sense of loyalty or commitment…often looking for the best deal in an economic downturn.

Just FYI…




In a comment about the growing enthusiasm for grocery auctions, I said I was worried by the fact that that people are ignoring expired “sell by” dates if the deal is good enough … which is absurd, especially given everything we know about food safety.

Which led one MNB user to write:

What is "absurd" is the generalization that "expired" food products are unsafe. Especially for dry groceries and frozen foods, the expiration or sell by dates are more useful for stock rotation purposes than food safety. Sure, these "old" products may lose a bit of their quality, but their consumption is rarely if ever associated with a health issue. An expiration date on a hard cheese like Cheddar is virtually meaningless from a food safety standpoint. Even some refrigerated products are fine weeks or even months after their sell by date if adequately refrigerated, particularly if unopened. Sour cream and yogurt are examples. Storage conditions make a lot of difference in the extent of quality decline over time. Ice cream kept properly frozen for 5 years (probably not the conditions found in a frost free home freezer) not only would be safe to eat but probably still be of very high quality. I have some "expired" cans of soup, vegetables and fruit in my pantry that I am not about to toss out, as well as a jar of Jif peanut butter "best by Dec. 2008" that I will have no hesitation eating myself or even feeding to my grandchildren. And the multivitamin pill I took at lunch - Use by Jan 2009 - it's probably still at 95%+ potency.

Good for you. And maybe you are correct.

As for me, I believe in expiration dates. I also believe in the hanging curve ball, high fiber, that Lee Harvey Oswald acted alone and that there ought to be a constitutional amendment outlawing artificial turf and the designated hitter. But that’s for a different day…