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: April 7, 2009

    by Michael Sansolo

    Try as we might, we simply can’t things back to normal. Three stories in MorningNewsBeat last week gave us a stark reminder of how much we might have to challenge the notion of conventional wisdom in very un-conventional times.

    The three topics were food safety, store hours and religious habits—incredibly unrelated issues, but all with common threads. And if you examine them through the view of today’s volatile times, you can see how companies might want to radically change how they meet these challenges.

    • Food safety came up with the less than startling news that consumer confidence in the food supply is down following months of attention to the Peanut Corporation of America. However, NPD, a really good research firm, predicted the number would rebound soon, just as it always does.

    Except that these are different time. In the past, confidence always came back quickly after any kind of problem. But falling confidence in food safety worries me this time for two reasons. First, the PCA problem is different in that for the first time a company seemed casually indifferent to the problem it caused. That could taint consumer opinion for a long time to come.

    Secondly, think about how long it has been since we have had a period free of some kind of recall. You can easily stretch back in your memory to the problem with: spinach, dog food, toothpaste, peanut butter, tomatoes (or was it peppers) and more. As if to punctuate the point, just last week we learned of a problem with pistachios that now isn’t going away either.

    So sure, conventional wisdom says confidence will come back in food and everything else. But maybe this time it won’t and that means it’s time for a new aggressive approach to bring information, transparency and assurance to shoppers. Sitting back and waiting for confidence to rise might be a risky way to go.

    (Sidenote #1: A special thank you to Wegmans for taking pro-active steps. I had a strange case of intestinal distress two weeks ago. A call from my Wegmans notifying me that the “pistachio mix” I purchased was a problem did help ease my mind if not my gut.)

    • The second story came from Kroger, which announced it was scaling back 24-hour operations at some stores. This is hardly an earth-shattering announcement, except once again, in unconventional times. Is it possible that the inexorable march toward 24/7 operations is beginning to come to an end? A very good retailer once told me the best thing companies could do to preserve the health of associates and stores would be to find one day of the week to close. That might well be a step too far for most, but reexamining 24-hour operations is probably an excellent idea.

    No doubt, there are some stores that do well in the overnight hours. And no doubt, there remain some financial reasons that make it reasonable to be open at 3 a.m. But as with many things, it shouldn’t be a blanket decision. When a company as big and as good as Kroger makes a move like this you wonder who might go next. And then we wonder if the conventional wisdom on store hours is about to crumble too.

    • Conventional wisdom also comes into play on the debate we’ve had on this site over the past few days about a Dunkin’ Donuts franchisee who refuses to serve pork because he is Muslim. It’s been interesting to follow the comments and wonder why everything has been discussed but business realities.

    Let’s say this franchisee is serving a heavily Muslim neighborhood (many of which do exist in this country.) By selling pork he might lose his entire customer base, which might refuse to visit a store where these products are sold. The exact same conditions would happen in a religious Jewish neighborhood, where the presence of the bacon or ham sandwiches would render the restaurant useless.

    In a country of increasing ethnic diversity, we face the challenge of marketing to groups with very different rules and traditions. But if we have learned anything in the past decades it is that companies need to think locally as often as possible. Conventional wisdom says that the company gets to determine the menu; unconventional wisdom says the menu should fit the market.

    Unconventional wisdom is why McDonald’s has slightly different menus in different areas; it’s why Coca-Cola sells a special version of Coke during the Jewish holiday of Passover; and it’s why fish fries still dominate Friday sales during Lent in other markets. It is also why certain retailers and restaurateurs refuse to open their doors on Sunday.

    George Carlin used to describe the difference in possessions this way: if it’s mine, it’s stuff; if it’s yours it’s junk. Traditions can be viewed the same way.

    We won’t all agree on any of this and we won’t all make the same decisions. That’s fine, too. It’s part of the complex world we live in today, which is why unconventional wisdom is so important and why fighting the status quo matters more than ever. No one ever said change would be easy.

    Michael Sansolo can be reached via email at .
    KC's View:

    Published on: April 7, 2009

    Consumer Reports has released its survey of the best national and regional grocery chains, and concluded that the best supermarket chain in the country is Wegmans, followed by Trader Joe’s, Publix, Raley's, Harris Teeter, Fareway, Costco, Whole Foods Market, Market Basket, WinCo Foods, and Stater Bros.

    According to a statement released by Consumer Reports, “Overall, grocers earned higher marks than in CR's last supermarket survey (2005) for service, checkout speed, quality of store brands, baked goods, and produce. But finding the perfect store was difficult. The few chains that were spotless, offered standout meat and produce, and had helpful and friendly staff and quick checkout earned only average scores for price, at best.

    “The survey found it's hard to find the perfect store. Respondents found Trader Joe's, Costco, Market Basket, WinCo, Aldi, and Sav-a-Lot, to be better than others at offering low prices. Wegmans and Whole Foods offered praiseworthy meat and produce and Wegmans, Trader Joes and Raley's earned high marks for service. On the other hand, the least expensive markets generally offered so-so perishables and service.”

    Walmart ranked near the bottom of the Consumer Reports list, with low scores for fresh foods and service.

    Consumer Reports also suggested how shoppers can save money at the supermarket…and in doing so, revealed some criticisms of how supermarkets do business:

    • “Supermarkets are in the real-estate business, and prime selling space includes the middle or eye-level shelving. Vendors sometimes pay retailers hundreds, even thousands, of dollars in slotting fees to take on new products or display products prominently. Check whether similar products on top or bottom shelves are less expensive.”

    • “Many sales tempt you to buy more than one bag or box -- by touting, for example, four boxes of cake mix for $5. But rarely are you required to buy all four to get the discount. Retailers are just planting a number in your head, hoping you'll buy a lot.”

    • “Some produce is much cheaper by the bag than by the pound. One ShopRite location recently offered a 5-pound sack of potatoes for $2.99, compared with 99 cents per pound for loose ones in a bin. If the product has a long shelf life, bagged produce is a better buy, unless, of course, the only alternative is the 20-pound behemoth.”

    • “Organic means expensive, so buy organic versions of produce that's most likely to harbor pesticides when grown conventionally, such as peaches, strawberries, and bell peppers. Organic meats and dairy foods might be worthwhile but not ‘organic’ seafood because standards aren't in place.

    • “More and more supermarkets sell store-made baked goods, often for less than the commercial alternatives. At ShopRite, six hot-from-the-oven rolls cost $1.99; a packaged half-dozen from Freihofer's cost $3.19.”

    KC's View:
    It is interesting to see the range of supermarkets represented in the top ten…especially when Wegmans and Winco can be on the same list. Couldn’t be two more different chains, but they both speak to the 2009 shopper in unique ways that tap into their psyches.

    Published on: April 7, 2009

    The St. Louis Business Journal reports on how local companies – retailers such as Save-A-Lot, Dierbergs and Schnucks, and private label manufacturers such as Ralcorp and Gilster-Mary Lee – are finding that the recession can be good for business and the higher margins that own label products usually carry.

    According to the story, Schnucks’ store brand sales are up by double digits and now account for more than 20 percent of total revenue; Dierbergs’ own label sales, while not specifically divulged by the company, are growing but are not as big a percentage as Schnucks’. Discounter Save-A-Lot’s private label sales are 80 percent of sales, with about 800 of the chain’s 1200 average SKUs being in private brands.

    KC's View:
    We are going to see a lot of these kinds of stories, I suspect. In part, that’s because we’ve reached a kind of nexus that allows private label to grow more than in the past. There are more own label products, their quality is higher, supermarkets are starting to put some marketing muscle behind them, and recession-weary customers are more open to such products than ever before in the US.

    Published on: April 7, 2009

    Supervalu-owned Albertsons has decided to drop its online shopping and home delivery service in the Boise, Idaho, and Portland, Oregon, markets, saying that the economy made the service problematic.

    "Economic conditions often foster change and allow time to step back and re-evaluate how business is being done -- especially as it relates to the best way to serve and deliver value to customers," the company said in a statement.

    However, Albertsons has left open the possibility that it could revive the service when conditions change.

    KC's View:
    Would it overly commercial to suggest that Albertsons ought to be talking to one of MNB’s sponsors about how to make an online service profitable?

    Because while I understand the desire to cut services that seem unprofitable, I think the decision pulls Albertsons out of the online business at a time when more and more shoppers are going to be interested in it.

    Published on: April 7, 2009

    Crain’s New York Business reports that drug store chains Walgreen, CVS Caremark and Duane Reade are in competition for vacant commercial real estate in the New York City area, believing that foreclosures and business closings over the past year have created opportunities for them to dominate the city’s retail footprint.

    “While other retailers plunge into bankruptcy, drugstores are expanding their locations and product offerings to increase market share,” Crain’s writes. “Many have added clinics that provide consumers with simple health services or are ramping up grocery aisles. The goal is to become more of a one-stop shop.”

    KC's View:

    Published on: April 7, 2009

    The Houston Chronicle reports that Texas state lawmakers will be considering legislation that would ban the use of trans fats from meals served by restaurants – legislation that is being embraced by the Texas Restaurant Association because it would give chains until September 2010 to comply, and wouldn’t impact all establishments until a year after that.
    KC's View:

    Published on: April 7, 2009

    There is an interesting story in Forbes about how Tesco has decided to address the notion that UK consumers don't like pollock, and prefer cod and haddock.

    It decided to rename it “colin,” which is a French word for “hake,” which is a related fish.

    KC's View:
    Now, Tesco is saying that it is making this move to protect the cod population, which is in danger of being overfished. But I don’t know…that is sort of like saying that one way to address concerns about mad cow disease is to call it lamb. It’s a solution…but maybe not the most transparent one.

    Published on: April 7, 2009

    • Published reports say that the US Food and Drug Administration (FDA) has confirmed that it has found traces of salmonella bacteria in the Setton Pistachio plant in central California, and it says that it believes the contamination came from the mixing of raw and roasted nuts.

    • A new study is out, from Ohio State University and Temple University, saying that almost 20 percent of American four year olds are obese – that’s a half-million kids, with the rates higher among Natïve Americans, Hispanics and African Americans.

    • Whole Foods said this week that one year after it eliminated the use of disposable plastic bags in its US stores, it has seen the use of reusable bags triple – and has kept 150 million plastic bags out of the nation’s landfills.

    • PCC Cooks, a comprehensive cooking program operated by Seattle-based PCC Natural Markets, has been honored by the International Association of Culinary Professionals (IACP) with a 2009 Award of Excellence at the IACP Gala Awards dinner held in Denver, Colo.

    PCC Cooks was founded in 1983 by Goldie Caughlan, PCC’s nutrition education manager. Starting with in-store cooking demonstrations, she developed a curriculum of demonstration classes encompassing cooking, nutrition and health topics called FoodWorks. Classes are taught by experienced instructors and emphasize local and seasonal ingredients, practical kitchen skills and tested recipes. Daytime, evening and weekend classes for adults, as well as classes and summer camp programs for kids, are available.

    • The Grocery Manufacturers Association (GMA) has released a proposal for food safety reform that includes “a requirement that all food manufacturers have a food safety plan in place, a requirement that all food manufacturers have a foreign supplier safety plan, an increase in FDA food-related spending, the establishment of new federal agricultural standards for fresh fruits and vegetables, the adoption of a risk-based approach for FDA inspections, and the establishment of mandatory recall authority for FDA in certain circumstances.”

    “Our industry has a tremendous track record of success when it comes to product safety, but we can do even better,” said GMA president/CEO Pam Bailey, addressing the joint Grocery Manufacturers Association-Food Marketing Institute supply chain conferences in Miami. “We have a rare opportunity to enact meaningful reforms, and we urge Congress and the Obama Administration to enact those reforms right away.”
    KC's View:

    Published on: April 7, 2009

    • Coinstar named Gregg Kaplan, CEO of its Redbox division, to be its president/COO, succeeding Dave Cole, who is retiring.

    It also named John Harvey, the Redbox CFO, to be its CFO. He replaces Brian Turner, who “elected to leave the company.”

    Constar acquired Redbox in total last February.

    • Starbucks has named Olden Lee to be its interim executive vice president, partner resources. He will oversee the strategy for human resources and succeeds Chet Kuchinad, who resigned due to a family illness.

    KC's View:

    Published on: April 7, 2009

    …will return.
    KC's View:

    Published on: April 7, 2009

    In the NCAA men’s basketball championship game, the University of North Carolina beat Michigan State University 89-72.
    KC's View: