retail news in context, analysis with attitude

Published on: April 13, 2009

A coalition of 29 groups that includes farmers and consumer advocates has urged Kansas Gove. Katherine Sebelius to veto legislation passed by the State Legislature that would require that dairy products from cows not treated with recombinant bovine growth hormone (rbGH or rbST) carry a disclaimer that says, “The Food and Drug Administration (FDA) has determined there are no significant differences between milk from cows that receive injections of the artificial hormone and milk from those that do not.”

The goal of the disclaimer is to lessen the impression that cows not treated with the artificial hormone that induces them to produce more milk are any safer than cows that are.

Gov. Sebelius, a Democrat, has ten days to veto the bill. The clock is running in other ways: she also is President Obama’s pick to be his Secretary of Health and Human Services (HHS).

According to the announcement, “Kansas farms, consumer groups and businesses Catalpa Grove Gardens, Pretty Prairie, Community Mercantile Consumer Coop, Creek Four Mill, Iwig Family Dairy, Janzen Family Farms, Kansas City Food Circle, Kayala Emu Estates, Hesston, Larson Acres, Little Red Hen Bakery, Norm’s Flour, Sierra Club Kansas Chapter, Spring Creek Ranch, and Wichitaw Food Coop signed the letter to Governor Sebelius urging her to veto the bill, along with national groups AllergyKids, Breast Cancer Action, The Cornucopia Institute, Organic Consumers Association, Center for Environmental Health, Center for Food Safety, Center for Media and Democracy, Family Farm Defenders, Food and Water Watch, The Humane Society of the United States, Institute for Responsible Technology, National Family Farm Coalition, Oregon Physicians for Social Responsibility, Organic Farming Research Foundation, Sierra Club, and Stonyfield Farm, Inc.”

Published on: April 13, 2009

In Oregon, the Beaverton Valley Times had an interesting story in which it took note of the growing competition between Kroger-owned Fred Meyer and Trader Joe’s, which it says took on new urgency when the Fred Meyer in Hawthorne, Oregon, underwent a $15 million renovation that positioned it as being sustainable and more “hip” than in the past.

So, the Times looked at both stores to see which one has the edge and discovered:

• “The health-conscious, anti-corporate vibe and low prices at Trader Joe’s have created a devout following locally, flooding its parking lots with customers … but it has no deli, clothing, toys, furnishings or automotive section, not to mention home and garden center, in-house coffee concession or bank branch. (But) Fred Meyer practically invented one-stop shopping when it created its first hypermarket … It has built on that model since, allowing customers to limit travel time and expense. That means less fuel used, reduced wear and tear on vehicles and the road, and lower emissions.”

• The Times concludes that while the two chains are about even when it comes to prices, Trader Joe’s gets the edge when it comes to being hip, since Fred Meyer, despite its best efforts, remains “decidedly corporate.”

• Fred Meyer also seems to have the advantage when it comes to accessibility – there are far more of them than Trader Joe’s – and even health food sections and organic foods. Fred Meyer also is said to be ahead of Trader Joe’s in terms of local job creation, in part just because its size and reach.

Here’s the conclusion reached by the Times: “For all of its warm and fuzzy feel, TJ’s disguises the origin of many of its products, is openly secretive about its business practices and is privately held by a retailing empire in Germany. Freddy’s, despite its acquisition by the giant Cincinnati food retailer Kroger in 1999 ($76 billion in sales last year), remains a beloved local institution to Oregonians. As it also evolves to meet the demands of an increasingly green-minded populace – as with the Hawthorne store – it also becomes a more effective model of sustainability.”

Published on: April 13, 2009

The Conference Board is out with its “Measure of CEO Confidence,” which is up to 30 from its historical low of 24 during the last quarter; according to the press release, “a reading of more than 50 points reflects more positive than negative responses.”

“CEOs remain pessimistic about current conditions, but have grown more optimistic about the short-term outlook,” said Lynn Franco, Director of The Conference Board Consumer Research Center. “This improved outlook, however, does not extend to the labor market. The majority of chief executives still expect employment levels to decline further in the coming months.”

“Less than 3 percent of CEOs anticipate an increase in employment levels in their industry, down from about 26 percent a year ago,” according to the Conference Board. “The proportion of CEOs who anticipate a decrease in hiring surged to 86 percent from 28 percent a year ago.”

The release said that “when looking ahead six months, CEOs’ outlook improved. Now, 17 percent of business leaders expect economic conditions to improve in the next six months, up from approximately 11 percent last quarter. Expectations for their own industries were also less pessimistic, with more than 26 percent of CEOs anticipating an improvement in the months ahead, up from about 12 percent last quarter.”

Published on: April 13, 2009

The Texas Department of State Health Services has levied a $14.6 million fine against a plant there owned by Peanut Corp. of America (PCA), the company implicated in a salmonella outbreak that has sickened hundreds of people and may be related to the deaths of nine.

The fine was based on unsanitary conditions and product contamination found in the Texas plant, which was closed two months ago.

PCA has filed for bankruptcy protection.

Published on: April 13, 2009

The New York Times writes that the US Centers for Disease Control and Prevention (CDC) has issued a report saying that the nation has not measurably improved its food safety system over the past three years, and that the salmonella problem in the US may actually be worsening.

According to the story, the report suggests that the US food safety system, “created when most foods were grown, prepared and consumed locally, needs a thorough overhaul to regulate an increasingly global food industry.”

Officials at the Food and Drug Administration (FDA) said they agreed with the conclusions, and that the lengthening and more complicated supply chains makes them harder to police. However, the Times writes that the conclusions may exacerbate tensions between FDA and the US Department of Agriculture (USDA), which have sometimes conflicting and sometimes overlapping responsibilities in the food safety arena.

Published on: April 13, 2009

• There are reports out of the UK that Waitrose has decided to eliminate all delivery fees for its online shopping business – a move that is expected pressure competitors such as Tesco to match the offer.

Published on: April 13, 2009

The New York Times reports on how a wide variety of retailers – ranging from Home Depot to Target, JC Penney to Whole Foods – are embracing the notion of value as a core concept around which to build their marketing campaigns.

Among the efforts cited by the story is Whole Foods’ attempt to move away from the “whole paycheck” image it traditionally has had, lowering the prices “of its private-label brand, 365 Everyday Value, in regional ads with headlines like ‘Sticker shock, but in a good way’ and ‘No wallets were harmed in the buying of our 365 Everyday Value products’.”

Target, the Times says, has a different problem – not only does it have to push value, but it has to differentiate itself from Walmart, which has done well with its “save money, live better” ad campaign. Its solution: a new campaign that asks, “Why pay more for more?” that the Times says “seeks to explain the value proposition within the longtime ad theme, ‘Expect more. Pay less’.”

Published on: April 13, 2009

• Crain’s Chicago Business reports that that Milwaukee-based Roundy’s, which has been planning to open as many as a dozen stores in the Chicago market, is in negotiations to open a store in the Ravenswood neighborhood of the city, northwest of downtown. At least two other locations have already been secured by Roundy’s as Windy City locations.

• There are reports that Kroger has introduced triple coupons in the Columbus, Ohio, market, with an ad saying that “Manufacturers Coupons Valued up to 50 cents are tripled [over 50 cents to 75 cents are doubled as before].”

Electronic and Internet coupons are not included in the promotion.

• Published reports say that the United Food and Commercial Workers (UFCW) has begun contract negotiations in Colorado with Safeway, Albertsons and Kroger-owned King Soopers.

• The Wall Street Journal reports this morning that “U.S. beer imports fell 19% in the first two months of the year, one of the steepest declines in years and the latest indication that the weak economy is hurting even hardy industries … The beer industry's overall sales in the U.S. were down about 4% in the first two months of this year compared with the same period in 2008.”

• The Pittsburgh Business Times reports that BJ’s Wholesale Club is looking for store locations in the Steel City – which would put the membership club chain into a market where both Costco an Walmart’s Sam’s Club stores already are operating.

According to the story, “BJ’s is opening a handful of stores this year and has virtually surrounded western Pennsylvania, operating 13 stores in the eastern part of the state as well as six in Ohio.

“A half-dozen local real estate sources have told the Business Times they are privy to the company’s search in the Pittsburgh area but asked that their names not be published because of their relationships with the company and its potential plans here. They said BJ’s is eyeing the market for possibly three locations that would range in size between 71,000 and 115,000 square feet.”

• BrandWeek reports that “Kimberly-Clark, noting more eco-awareness among consumers of paper products, has introduced Scott Naturals, a line of bath tissue, towels, flushable wipes and napkins with green credentials.”

• Troubling story from Reuters Health, especially for parents of teenagers, as it reports that young people who become vegetarians may actually be masking eating disorders – they are far less likely to be overweight, and reportedly are more likely to have engaged in binge eating, purging, or abusing laxatives.

The study, by the College of Saint Benedict-Saint John's University in St. Joseph, Minnesota, notes that teenaged vegetarians do not necessarily have eating disorders, but that parents need to be vigilant about possible problems.

Published on: April 13, 2009

• Walmart said last week that its March sales fell 1.9% to $36.2 billion, on same-store sales that were up 1.4 percent.

Published on: April 13, 2009

• Tom Furphy, Amazon.com’s VP of Consumables and AmazonFresh, who has been running Amazon.com's grocery business for the past three and a half years, has announced that he will be leaving the pioneering online retailer at the end of the month. Furphy said he was leaving Amazon to pursue entrepreneurial opportunities.

Published on: April 13, 2009

Second Thoughts by The Content Guy…

Every once in MNB has a story and commentary that I think needs a but more analysis after I’ve had a chance to think about it some more, either because of new information or just a feeling that I missed something the first time around.

Such a story was last week, when MNB reported that Diageo “is installing computer screens in liquor stores to help people plan parties. Customers type in the cocktails they want to serve and the number of guests they are expecting, and the computer prints out a list of ingredients and quantities, including ice. The machines, which the company says are in 500 liquor stores in 38 U.S. states, can also send cocktail recipes via email.”

Now, when I commented on what Diageo is up to, I paid more attention to another initiative, which has the company developing branded walk-in coolers for retailers.

But what I should have pointed out is that while the idea of computer screens or kiosks would seem to be modern, it is fact strikes me as dated technology. Diageo ought to be looking forward more, and considering in its plans the fact that as more and more people have smart phones, they are walking into stores with miniature kiosks in their pockets…and that building screens and kiosks is an investment in technology that soon will be obsolete.

Published on: April 13, 2009

Commenting on the possibility that Blockbuster could go out of business, and the competition that has driven the video rental giant to this point, MNB user Jerome Schindler wrote:

Our public library - free, and you can keep the DVD for 5 days, and renew on-line for another 5 days. There may be a waiting list for recent releases but otherwise the selection is very good and you can't beat the price. As pay back I often donate DVD’s I have purchased, viewed, and really don't have any good reason to keep. If for some reason I want to see that movie again I can "borrow" it back for 5 days.

And MNB user Garry E. Adams wrote:

I agree with your recent comments on Blockbuster. Mainly, because of my decades of experience with many national /successful retailers in several areas… There are 2 types of retailers:

1) The quick, and
2) The dead.

If you can’t adapt to today’s customers/demands… you die.




MNB took note of a Connecticut physician who is handing out chicken soup packets to patients, and I suggested that in-store health clinics should be doing the same, which prompted one MNB user to write:

Give a patient a pack of soup and sustain them for a day.

Teach them to make their own chicken soup without all of the salt and processed ingredients and you are sustaining them for a lifetime.

(Does not hurt that the basket size will go up as well…)




We had a piece about Brazilian retailer Pao de Acucar last week, which led MNB user Jim Lukens to write:

I did some consulting with (at that time family owned) Pao de Acucar in 2000 and during my visit to Sao Paulo the concern was centered around companies, like Walmart, coming to South America and changing the dynamics of the South American food industry. Although the Sam Walton story and his company's rise to dominate in the US is pretty incredible, Pao de Acucar has a story that is equally amazing. They started from a tiny store in Sao Paulo and continued their growth at a similar pace to Walmart.

They are humble people - their new stores 10 years ago were as good as most US progressive supermarkets and better than most of the national supermarket chains in America.

Pao de Acucar was already competing with other Hypermarkets favorably with their own Hypermarket format but also had a solid family of other format offerings. Carrefour was gaining traction in South America with their hypermarkets, following their introduction of new stores in the US in 1998.

Aside from the logistics of getting deliveries "just in time" in areas that the infrastructure wasn't ideal (traffic jams in most areas), Pao de Acucar was well positioned to compete with Carrefour with their formats and technology and I expect they will continue to do well with Casino's backing going forward.

I've been in the supermarket business for 40 years and seen many cycles of success and failures in the US. The Pao de Acucar story and progression in South America is truly amazing and I hope it continues.




Writing about Diageo’s desire to put walk-in beer coolers in retail locations, one MNB user wrote:

While the beer coolers are neat, they are also a neat place to hide and shop lift! Retailer’s nightmare.




Last week, I referred to the North West Company has being located in northwestern Canada, which led MNB user Brian Fox to write:

Northwestern Canada? Better get the ole Google map app fired up, Kev…. Last time I checked we are located at The Forks in Winnipeg, which is almost the exact geographic center of North America…. Or at least according to all the road signs!

You are bang on about the cold though, however personally having lived in northwest Canada (Whitehorse Yukon to be precise) COOL (pun intended) may be a better description!

Point taken. Though to be honest, since I live in Connecticut, you might as well have been above the Arctic Circle.

Published on: April 13, 2009

In an exciting three-way playoff at the Masters golf tournament, Angel Cabrera of Argentina won on the second hole of sudden death, defeating Chad Campbell and Kenny Perry.