retail news in context, analysis with attitude

Two major retail-oriented stories broke this morning just as MNB was being posted…

• Four major yet troubled retailing brands announced yesterday that they are being acquired by a major Chinese-owned venture capital firm, and that they will use their new alliance to develop mini shopping centers built around their individual concepts.

The China-based investment firm, Marco Polo Finance, is quoted as telling major media outlets that it is a government-funded operation created out of concern about the huge amount of American debt being purchased by China. “If we’re going to buy something, we might as well buy retail brand names that have some value,” Raymond Shaw, the American named as Marco Polo’s CEO, is quoted as saying. “This way, we actually will have some control – and hence, can make a profit - over the coffee, books, music and drugs being purchased by decadent Americans used to self-indulgent lifestyles. We would have bought a fast food chain, but they are too expensive at the moment. But that’ll change eventually.”

The retailers initially involved in the deal – Starbucks, Target, Borders, and Rite Aid – are all chains that have found themselves in varying degrees of trouble as the recession has worn on, and have been trying to figure out ways to regain past levels of profitability. Sources say that Marco Polo Finance has plenty of money left, and plans to acquire other chains in coming months; Marco Polo was planning to buy Circuit City, according to reports, but the company’s fortunes sank too fast and eventually it was not worth spending money on; Best Buy is projected to be a likely target of the Marco Polo group.

Executives from the US chains were not available for comment, though local Seattle media said that Starbucks CEO Howard Schultz was happy with the deal, saying that this would take off some of the financial pressure under which he has been operating, plus open up the possibility of building “about a trillion” Starbucks stores in China, where it plans to introduce a new $2 instant tea product called ‘Tia.’ “Just put it in water, and you get a cup of tea that won’t just refresh you, but will change your life,” said one Starbucks development executive. “We’ve never seen anything like this before.”

One of the goals of the Marco Polo retail consortium is to put Target’s supercenter growth plans on a fast track, sources say. “The Chinese government is one of the few entities in the world that has almost as much money as Walmart,” Shaw is quoted as saying. “So we think we can start building Target Supercenters at a fast clip, providing our own financing and taking advantage of the troubled US real estate market.”

There are reports that the US government has antitrust concerns about the Chinese government’s entry into US retailing, and Sen. John Yerkes Iselin has scheduled hearings into the matter for later this month.

• Ahold USA announced that it will shortly complete the integration of its Super Stop & Shop and Giant of Landover chains, going one step beyond the meshing of staff and operations that it began several years ago as a way of trimming costs and bringing new efficiencies to the company.

According to sources, by the fourth quarter of this year all of the Super Stop & Shop and Giant stores in the fleet will be rebranded as “Super Giant Stop & Shop,” except at stores where the physical location is such that this is too long a name to put on the building and sign.

In addition, Ahold USA executives said that, having been frustrated by charges that moving Giant’s operational center to Stop & Shop headquarters in Massachusetts has made its staff out of touch with the Baltimore-DC market, they now plan to move the headquarters for both chains to Boise, Idaho, where the state has offered tax breaks and infrastructure improvements to lure Ahold’s operational center. “Being local is overrated,” said one Ahold USA source. “We can do everything from a remote location two thousand miles away and be just as effective as we’ve been over the past few years.”
KC's View:
It’s extraordinary how these kinds of stories always seem to happen on this particular date every year. It must be something about the first of April…

Content Guy’s Postscript: Shortly after this piece appeared, we got a phone call from the folks at Stop & Shop. While they had a sense of humor about this piece, apparently they have been deluged with phone calls from people within the industry as well as members of the local media…none of whom looked at a calendar.

So let me be clear here, so that the folks who work Stop & Shop’s switchboard can get a break. Today is April 1, and this is the latest in a long line of APRIL FOOL’S JOKES that we’ve posted here on MNB.

Remember…if we didn’t laugh we’d all go insane!