retail news in context, analysis with attitude

Published on: May 6, 2009

by Kate McMahon

Content Guy’s Note: The blogosphere is sort of like an alternate universe, a place where people are living different lives, exploring different interests, and voicing their concerns and passions about a wide range of issues – and much of this focus is on the stores, products and services with which MorningNewsBeat concerns itself on a daily basis.

While I read the business sections of 20-30 newspapers every day to get a sense of what’s going on – and how the media is covering it – there simply aren’t enough hours in the day to peruse all the blogs and social networking sites relevant to our coverage. So it is with great pleasure that I introduce a new voice to MorningNewsBeat – Kate McMahon, a former writer and editor with Money magazine and the NY Daily News, who also brings the additional and invaluable experience of being the mom of two terrific kids. On a regular basis, Kate will be writing about what people are talking about on the Internet and adding her own unique perspective to our ongoing conversation.


Swine Flu, Susan Boyle, Nutella: Three hot properties on the social media circuit today.

Yes, you read that right. You’re up to speed on the first two, but Nutella? The Italian creamy chocolate hazelnut spread?

Welcome to the wildly unpredictable world of social media, where the term “go viral” applies to much more than the Swine Flu.

In a recent listing of the most popular Facebook pages, Nutella ranked No. 3, just behind President Barack Obama and Coca-Cola. The Nutella page was created by a fan, not the manufacturer, Ferrero USA. And it’s just one example of how consumers are making their voices heard on blogs, vlogs, Facebook pages and through Tweets on Twitter.

That’s why MorningNewsBeat.com has assigned me report on the blogosphere, and more importantly, what it means to retailers, manufacturers, and consumer product companies in today’s economy.

We’ve all shared our opinions on the most recent multi-million click YouTube sensations, from frumpy Susan Boyle’s stunning performance on “Britain’s Got Talent” to the stomach-turning video prank by a pair of Domino’s employees in Conover, N.C

But across the country and the world, computer screens and cell phones are lit up 24-7 by “communities” sharing opinions on consumer products, food and recipes, health, coffee, tech innovations, computer games, parenting, the stock market and more.

This column will be checking the pulse of social media sites that impact the MNB reader universe, and will be seeking your input for Kate’s BlogBeat as it evolves and appears every other Wednesday.

At the top of the list will be the burgeoning “Mommy Blog” world, where mothers turn to share parenting tales, post thoughts and videos, and review products ranging from Huggies’ Pure & Natural premium diapers to Ford SUVs. Blogger Anne-Marie Nichols calls it “the electronic back fence” and it has empowered its passionate users to be heard loud and clear.

Just ask the makers of Motrin, which found itself in a “Twitter Storm” over a “baby wearing” ad posted on its website seen as likening baby slings to pain-inducing fashion statements. Within hours the “Motrin Moms” had mobilized on Twitter, posted clips on YouTube, called for a boycott, and eventually forced Motrin to withdraw the ad and apologize.

This column will also be culling the shopping, health and food blogs, from the entertaining foodgoat.blogspot.com to the encyclopedic foodbuzz.com, which allows the reader to search 1,001,900 posts from 8,382 food blogs.

And it’s no surprise that one click yields 1,561 results for, you guessed it, Nutella.

Kate McMahon can be reached via email at kate@morningnewsbeat.com .

Published on: May 6, 2009

The 12th annual Shop.org “State of Online Retailing” study is out, revealing that “while Internet sales continue to outpace traditional retail sales, companies are realistic about current challenges. According to the survey, half of respondents (54%) expect overall retail growth to slow during the next 12 months and 57 percent acknowledge the economic slowdown is hurting their company’s bottom line. That said, companies are bullish about web operations: four out of five retailers think the web is better suited than other channels to withstand the recession and one-third say the downturn has enabled them to capture greater market share. Illustrating the resilience of the web, retailers report that their conversion rates continue to hover between 3 percent and 3.5 percent as they have for years.”

Among the other numbers being cited by the study:

• “Under pressure from the economy, nearly one-third of companies (30%) are spending less than originally planned on web retail operations this year. Among retailers cutting costs, most (88%) will scale back hiring and staffing plans and slightly more than half (56%) will spend less on search.”

• “Almost half of retailers surveyed (46%) have no plans to cut back original budgets and will spend as planned on their web business, while one in four retailers (24%) will spend more on their online business than originally planned. Companies planning to spend more will increase investments in several areas, including search (80% of respondents), email (65%), and social marketing (60%).”

• “A majority of retailers (88%) list email as a high priority for the year, largely to retain customers. Almost three-fourths of retailers (71%) plan to send segmented emails to customers based on stated preferences or purchase data. In addition, more than half will use emails that highlight new product availability (55%), extend invitations to participate in surveys or garner customer feedback (55%), and feature online-only promotions (53%).”

The Shop.org study was conducted by Forrester Research.

Published on: May 6, 2009

The New York Times reports this morning that while US unemployment has reached 8.5 percent, a 25-year high, and more than three million jobs have been lost in the last six months, there is actually some good news on the employment front: “While 4.8 million workers were laid off or chose to leave their jobs in February, employers across the country hired 4.3 million workers that month.”

Reuters reports this morning, by the way, that “planned layoffs at U.S. firms fell for a third consecutive month in April, hitting their lowest since last October and providing yet another sign that the world's largest economy may be bottoming out.”

Who is hiring? The Times writes that the list includes “hospitals, colleges, discount stores, restaurants and municipal public works departments. IBM is hiring more than 700 people for its new technical services center in Dubuque, Iowa, while the Cleveland Clinic has 500 job openings, not just for nurses but also for pharmacy aides and physical therapists. And after President Obama’s stimulus package kicks into gear, state, local governments and road-building contractors are expected to hire more.”

The retail sector is cited as one place where hiring is happening…both at small and big retailers:

“’It’s easier to hire in a recession — we have about five applications for every position,’ said Howard Glickberg, principal owner of Fairway Market, the well-known grocery company based in Manhattan.

“Fairway just hired 350 people for its month-old store in Paramus, N.J., the first Fairway outside of New York State. The company plans to add 1,200 more workers over the next two years by opening stores in Queens; Pelham Manor, N.Y.; and Stamford, Conn.

“’What you have to be afraid of is hiring someone who can’t find something better at the time, and when they find something better they leave you,’ Mr. Glickberg said. ‘I want to hire someone who will make a career of it.’

“The nation’s largest private-sector employer, Walmart, is also hiring aplenty. Walmart, with 1.4 million workers nationwide, hires several hundred thousand workers each year because of employee turnover, and expects to increase its domestic work force by nearly 50,000 this year, thanks to plans to open 150 new stores.”

Published on: May 6, 2009

Affiliated Foods Southwest, based in Little Rock, Arkansas, filed for bankruptcy yesterday, saying that its "relationships with its primary lender group have continued to deteriorate, with product inventories being reduced drastically, which have resulted in losing a number of key customers."

Published reports say that the company had 2008 revenues of $730 million, down from $763.2 million a year earlier. Affiliated also reportedly had up to $50 million in assets and as much as $50 million in liabilities.

About half of the company’s 530 employees have been laid off.

Affiliated reportedly is closing some of its corporately owned stores and is looking for buyers for those that will remain open for the time being; Associated Wholesale Grocers of Kansas City is prominently mentioned as a possible/probably/likely buyer.

Published on: May 6, 2009

The Wall Street Journal has an interesting story that sort of implies that the US food industry is engaged in an enormous bait-and-switch scheme – food that people believe is good for them isn’t everything it is cracked up to be.

An excerpt:

“Take chicken. The average American eats about 90 pounds of it a year, more than twice as much as in the 1970s, part of the switch to lower-fat, lower-cholesterol meat proteins. But roughly one-third of the fresh chicken sold in the U.S. is ‘plumped’ with water, salt and sometimes a seaweed extract called carrageenan that helps it retain the added water. The U.S. Department of Agriculture says chicken processed this way can still be labeled ‘all natural’ or ‘100% natural’ because those are all natural ingredients, even though they aren't naturally found in chicken. Producers must mention the added ingredients on the package -- but the lettering can be small: just one-third the size of the largest letter in the product's name.” And the added salt, for example, can be a problem for people who are trying to maintain a low-sodium diet.

The Journal also suggests that while the reduction of trans fats in foods has been a major priority for a lot of manufacturers, even products that are said to have “zero” trans fats may have some because producers are allowed to round down. And depending on how products are formulated, labels like “wheat bread” and “high fiber” may not be as meaningful as consumers think.

Published on: May 6, 2009

Employees at Denver-based King Soopers represented by the United Food and Commercial Workers (UFCW) reportedly have rejected the latest contract offer from management, objecting to proposed provisions that would have frozen wages and cut pension benefits for some workers.

The vote came a day after Safeway employees rejected an offer from that retailer.

Existing contracts with King Soopers, Safeway and Albertsons are scheduled to expire this weekend, and negotiations reportedly continue. Tentative agreements have been reached between management and labor for health care provisions in a new contract, but other issues remain a wedge between the two sides.

Published on: May 6, 2009

• Newsday reports that Walmart has agreed to pay “an unspecified sum” to the victims and relatives of victims hurt in a “Black Friday” stampede of shoppers at a Long Island store. That stampede, the day after Thanksgiving that serves as the traditional first shopping day of the holiday season, killed one security guard when 2,000 shoppers broke through a door at the store as it was about to open.

Walmart also has agreed to make ongoing security and safety improvements to its stores on Long Island as part of the negotiated agreement.

There are reports that a grand jury has been empanelled in the case, which would indicate that criminal charges remain possible.

• Bloomberg reports that Walmart has begun testing a new prescription drug program in Michigan, providing free mail order delivery and offering “a toll-free telephone number to order more than 3,300 prescriptions, including a 90-day supply of 300 generic medicines for $10 each.”

• Walmart reportedly is testing a trio of convenience stores in China, experimenting with a new format that will allow it to increase its presence in one of the world’s fastest growing markets. The name of the c-store format: “Smart Choice.”

Published on: May 6, 2009

• The coffee wars roll on. As McDonald’s continues to roll out McCafes and Starbucks turns to advertising to make the case that more expensive coffee is better coffee, Dunkin’ Donuts announced that it is rolling back its prices by 15 percent in the New York metropolitan area on all latte beverages.

• There are published reports that French retailer Carrefour is negotiating to buy Sedmoi Kontinent, a Russian supermarket chain. The cost of the acquisition, if it goes through, is expected to be in the range of $1.2 billion (US).

• The National Association of Convenience Stores (NACS) said yesterday that its NACStech conference, scheduled for May 18-20 in Dallas, will take place as planned, though it continues to monitor the swine flu situation and “will provide updates if there are changes.”

The Food Marketing Institute (FMI) postponed its Future Connect conference, originally scheduled for Dallas this week, because of swine flu concerns.

• The Food Marketing Institute (FMI) Future Connect meeting may have been postponed, but not the election of its new board of directors, which will be headed for the next two years by Hy-Vee CEO Ric Jurgens, who will serve as chairman of the board.

Steven C. Smith, president and CEO of K-VA-T Food Stores, Inc., will serve as immediate past chairman.

Elected as FMI vice chairmen to the board are Gregory Calhoun, president and CEO of Calhoun Food Markets, Inc., Montgomery, AL, who will serve as chairman of the public affairs committee; William Coyne, president and CEO of Raley’s Family of Fine Stores, Sacramento, CA, who will serve as chairman of the finance committee; Ed Crenshaw, chief executive officer of Publix Super Markets, Inc., Lakeland, FL, who will serve as chairman of industry relations committee; and Dave Skogen, owner and chairman of the board of Festival Foods, Onalaska, WI, who will serve as chairman of the member services committee.

Four new members were elected to the FMI board: Mark Batenic, chairman, president and CEO, IGA Inc., Chicago, IL; Rudy Dory, owner, Rudy’s Markets, Inc., Bend, OR; Jerry Garland, president and CEO, Associated Wholesale Grocers Inc., Kansas City, KS; and Dean Peterson, president and CEO, Harmon City, Inc., West Valley City, UT.

Published on: May 6, 2009

• Price Chopper Supermarkets/Golub Corporation announced that Dan Koch, its Vice President of Bakery, has been promoted to the position of Vice President, Deli/Food Service.

Published on: May 6, 2009

• Kraft Foods reports that its first quarter profit was $662 million, up from $601 million during the same period a year ago. Q1 sales were off 6.5 percent to $9.4 billion.

Published on: May 6, 2009

Actor Dom DeLuise died yesterday at age 75. While a lot of people may remember him from Mel Brook’s “Spaceballs” and a brief (though hysterical) appearance in “Blazing Saddles,” as well as from a series of lousy Burt Reynolds movies, check out his performance in an early Mel Brooks movie, “The Twelve Chairs.”

Published on: May 6, 2009

…will return.