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    Published on: March 30, 2009

    Fascinating piece in Advertising Age this morning about Walmart’s online efforts as it “ramps up a host of programs to vault the chain -- which has already distanced itself from value retailers in the offline world -- further ahead in the online one.”

    Walmart’s online programs are many and varied, Ad Age reports. It offers free classified ads on its site. The company has its own in-house social network for employees. It has sites that are used for giving hints about saving money, that bring together the musings and recommendations of “blogger moms,” and is selling digital music. And, Walmart even has a forum for customer reviews.

    "Digital has such an amazing role in how to help people on an emotional, logical and rational level. We want to use it to our full potential to help our customers," Wanda Young, senior director-digital marketing at Walmart, tells Ad Age, adding, "We are really just getting started in digital in helping build up our brand."

    KC's View:
    A guy I know who is about as smart as anyone about online marketing recently made a couple of salient points about this segment of the business:

    • “There’s a staggering figure: 25% of all the people in the U.S. visit Amazon every month. Twenty-five percent! And Walmart’s behind them – Walmart’s trying to catch up to Amazon.” This means that a battle royal is unfolding between Amazon and Walmart over who will have the most dominant digital footprint…and most retailers don't realize that they could end up being collateral damage as the battle unfolds.

    This same guy also told me: “Amazon and Walmart are incredibly focused on the grocery industry. Not because I think they think they’re going to make a lot of money selling groceries. I think it’s because they’re going to loss-lead groceries so they can sell you DVDs and books and Kindles and other things that they make great margins on.”

    Which is why every company – no matter how big or small – needs to focus on this space. It doesn’t matter if companies have CEOs who are analog guys in a digital world…there no longer is the luxury of patience and delay.

    If you’re in the online space, you have to do better. If you aren’t…you need to get moving.

    This recommendation holds even if you don't think anyone in your market is in the online grocery business. Because you’re wrong. Because both Amazon and NetGrocer (which, in the interest of full disclosure, is owned by MNB sponsor MyWebGrocer) are in the national online grocery business, and there are persistent rumors that Walmart plans to start aggressively selling groceries online using a model that would have customers picking them up at store locations.

    Published on: March 30, 2009

    The Irish Times reports that 24-store Superquinn there has reached a deal with three labor unions that will allow the company to lay off 394 employees, but will give the workers who remain a 1.5 percent stake in the business through a formal profit sharing program.

    The deal was voted on by membership in the three unions and approved by a “significant majority.”

    In a prepared statement, the unions said that the deal could be “a blueprint for how partnership should work in difficult times … While it sees workers take some pain in the short term, they will experience benefits when the company returns to profitability.”

    Like many companies in recession-afflicted Ireland, Superquinn – which was acquired by the Select Retail Holdings consortium in 2005 from its founder, Senator Feargal Quinn – has been suffering from declining sales and profits. There have been a number of rumors – denied by management – that the chain has been for sale, but that the company has been unable to find a buyer wiling to pay an acceptable price.

    KC's View:
    I hope it is enough. Kudos to the unions for being willing to cut a deal, but it may not be sufficient to address the severe competitive problems that Superquinn seems to be encountering right now.

    (I wonder if the UFCW and a US supermarket chain would make the same deal?)

    Published on: March 30, 2009

    The Sacramento Bee reports that the California State Health Department has issued a consumer alert, saying that a Bay Area plant owned by Union International Food Company manufactured spices that caused a salmonella outbreak in Northern and Central California.

    The spices primarily were sold to distributors and restaurants, and have been voluntarily recalled by the company. More than 40 people have gotten sick in incidents related to the spices, the paper says, but there have been no reported fatalities.

    KC's View:
    A minor case, people probably will say, and one that should not be blown out of proportion. It seems nothing like the salmonella outbreak caused by the contaminated products distributed by Peanut Corp. of America (PCA), which apparently is related to company negligence.

    Except that the incidents may be related in the consumers’ mind, in that they cause a slow yet steady erosion of public trust.

    Published on: March 30, 2009

    There is an interesting piece on The Lempert Report’s Food, Nutrition & Science newsletter, suggesting that new Country of Origin Labeling (COOL) rules may be putting independent retailers at a disadvantage.

    Phil Lempert writes that while he endorses COOL, he has an issue with meat labeling showing where animals were born, raised and slaughtered: “A single package of ground beef, for example, could say 'Made in the U.S.A., Mexico and Canada' if the cow was bred in America, raised in Mexico and slaughtered in Canada — a process that occurs more often than people realize.

    “This will leave three kinds of meat packages in the case — those with mixed labels, those with foreign origin, and those that say ‘Made in the U.S.A.’

    “ fully expects that large supermarket chains — especially Kroger, which has carved much of its reputation on meat — will use their market clout to corner all or nearly all of the ‘Made in the U.S.A.’ beef available. This, in turn, will bring large operators an enormous marketing advantage in driving traffic to their stores, selling meats, meal solutions and more.”

    This is a marketing advantage, Lempert writes, because “more than eight out of 10 (82%) say they prefer meat that has been completely bred, raised and slaughtered in the U.S. — and 84% are likelier to buy meat bearing this label than other meat. About three out of four (76%) say it ‘matters a lot’ what country their meat comes from. Nearly as many (72%) believe U.S. meat is safer than meat from other countries.”

    Lempert suggests that efforts have to be made to ensure that all retailers – regardless of size – have equal access to “made in the USA” beef.
    KC's View:

    Published on: March 30, 2009

    • The Columbus Dispatch reports that Walmart has decided to close down an optical lab it has operated in Lockbourne, Ohio, a move that the paper calls the largest mass layoff in Ohio during the current recession. The company said that the move would allow it to be more efficient and cut costs about serving Vision Centers in Walmart stores; employees said that the closure came as a surprise since there were people being hired as recently as six weeks ago and raises being handed out last month.
    KC's View:

    Published on: March 30, 2009

    • In the UK, the Sunday Telegraph reports that Tesco plans to open bank branches in 30 of its stores by the end of the year.

    According to Andy Higginson, the chief executive of Tesco Retailing Services, Tesco’s Personal Finance division will be “old fashioned and conservative,” and will reward customer loyalty in much the same way that Tesco’s retail stores have over the years.

    The Wall Street Journal reports that Tesco plans to begin by offering credit cards, loans, savings and insurance, and eventually plans to get into the mortgage business. Tesco bought out Royal Bank of Scotland Group’s half of a financial services joint venture last year, and now is expanding its offerings in the UK.

    KC's View:

    Published on: March 30, 2009

    • There is a new study out from the Centers for Disease Control and Prevention (CDC) saying that US residents tend to consume twice as much salt as is recommended, which can lead to high blood pressure, strokes and heart attacks. Seven out of ten US adults are in high-risk groups when it comes to salt consumption, and yet have done little or nothing to cub their sodium intake, the CDC says.

    The CDC is scheduled to work with the US Department of Health and Human Services (HHS) in an effort to get food manufacturers to reduce the amount of salt in the nation’s foods.

    • Stew Leonard Jr., CEO of Connecticut-based Stew Leonard’s, has been recognized by the National Drowning Prevention Alliance (NDPA) for “his personal advocacy to prevent drowning after the loss of his son Stew, through financially supporting community drowning prevention efforts and increasing education and awareness about children's water safety.” In making the award, NDPA President Johnny Johnson said, "With the development and promotion of the 'Stewie the Duck' program, the Leonards have channeled their personal tragedy into a campaign that has potentially saved hundreds of children's lives."

    • The Stamford Advocate reports that a new Key Food Marketplace is coming to the city of Stamford. The new 7,200 square foot store will be an independently owned member of the Key Food Stores Co-op that has units throughout the New York metro area.

    As noted here on MNB last Friday, Fairway Markets also plans to open a new store in Stamford next year – a 55,000 square foot store in a different part of town.

    KC's View:

    Published on: March 30, 2009

    Chiming in on the ongoing discussion about the nation’s economic meltdown, MNB user Ken Wagar wrote:

    Greed may or may not be an issue in the economic meltdown we are going through but in my opinion the more fundamental problem is the separation of risk from reward and/or the separation of performance from reward.

    Those that take on great risks that result in great performance likely deserve great rewards while those that take great risks that do not pay off likely deserve no reward unless these risks were personal risks taken on behalf of others.

    However the reward should be realized commensurate with the term of the risk. If an action has long-term risk then the rewards should be reflected over the long term regardless of short-term gains. This is exactly where I blame Wall Street for our mess. There is so much pressure for short-term results that the street encourages tactics that produce positive short-term results while ignoring or choosing not to consider long-term risk to long-term success.

    As an individual I have the right to put myself at great risk in the service of others … but I should not have the right to put any business or institution at risk strictly to serve my own wealth, power or position.

    I wrote last week about the possibility that we could soon see “squid muscle hot dogs” on the market, which led one MNB user to write:

    Hey - I could have a hot dog on Friday during Lent!

    That’s looking on the bright side of life.

    I love it when I get emails like this one from an MNB user:

    This week while you were in an admittedly more exotic location, I was attending the Hoosier Hospitality Conference in Indianapolis. (Here is where an Indy No Place joke gets inserted). Despite the economic conditions, the two over-riding themes of the event were Social Networks and Green. It seems that everyone in the state is getting a page on Facebook for their destination attraction, Twittering away about what is happening, using green products in their hotel or restaurant, and trying to comprehend sustainable tourism and what it means to the travel and hospitality industry.

    Just wanted to share because it was striking that despite the fact that our state tourism budget has been slashed, and that everyone knows that things are tough all over and not getting better soon, the focus seemed to be on moving ahead.

    Which we all have to do. And as noted in one of our stories this morning, digital is key.

    I also loved this email:

    I’d like to share with you a positive experience that I had today at Starbucks in their North Haven, CT location.

    A group of us used to frequent Starbucks every morning after the gym but that was two years ago when I used to work across the street and before the schedules of the remaining members of our group all changed. Starbucks was always extremely busy, sometimes with the line to the door at least twenty deep. Our visits became much less frequent to the point that they would be once a month or so, as our schedules permitted. Over the winter, on our infrequent visits, we couldn’t help but notice that this store was noticeably slower in the morning than it used to be.

    This morning, three of the members of our group were able to visit Starbucks after our workout. After waiting in a line that was about four deep, we approached the counter and placed our order, three oatmeals, one venti bold and two venti milds. The barista explained that the venti mild was still brewing and asked if we would like the bold instead. We declined the offer for the bold as we were in no hurry. When we went to pay, we were told that the two venti mild were on the house because they weren’t ready when we ordered.

    I’m not sure if this is Starbucks policy or if it was this Starbucks associates way of saying I’m sorry. Needless to say that we were all pleasantly surprised as this has never happened in the past when we had to wait a minute or two for a brew. If this is fact Starbuck’s new policy then it’s a good one, if not and it was the baristas providing great customer service then kudos to them. When you think about it, what is the true cost of a cup of coffee versus the goodwill gained from such a policy? Job well done to the two baristas (the barista with the infectious smile is named Patricia) at their Route 5 North Haven location who know how to make a difference in their customer’s lives. What a way to start the day!

    I’d like to report that the store is doing something right because today the line was back and it was to the door at one point.

    Starbucks has been getting slammed a lot lately. Nice to hear a good news story.

    KC's View:

    Published on: March 30, 2009

    The Final Four of the NCAA college basketball tournament are now set, and it will be Michigan State vs. the University of Connecticut, and the university of North Carolina vs. Villanova. For the right to play in the final championship game a week from tonight.

    And golfer Tiger Woods won his first victory since his knee surgery with a dramatic win in the Arnold Palmer Invitational.

    KC's View: