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    Published on: May 13, 2009

    The Desert Sun reports on some of the efforts being used by Stater Bros. and its CEO, Jack Brown, in dealing with the tough times that consumers have been experiencing.

    Examples:

    • “When the economy soured, grocery store staff began to stroll through the aisles more frequently and chat with shoppers and help keep spirits up.”

    • Stater increased its private label penetration, offering lower-priced products to cash strapped shoppers.

    • “As California parklands were devastated by wildfires, the Stater Bros. team began raising funds for reforestation and fire prevention. By April, its customers provided enough funds to plant more than 1 million new trees.”

    • “When capital expansion across the nation came to a grinding halt, Stater Bros. opened a new store in Carlsbad.”

    Brown tells the Sun, “Sales volume rose. Customers were buying less, but they gained in number. Wall Street jumped on me because our profits were down 66 percent by January 2009. But our point was, we held price. We didn't pass it off to the customers.

    And what did that do for our year-end report for 2008? Our customer counts were up 70,000 a week across our stores — that's about a 5 percent increase. They were buying a little less, had less to spend. But our message was getting across.

    “Now, six months into 2009, our customers are up 85,000 a week. When this recession is over, and it will be over, I know the message we're delivering is the right message.”
    KC's View:
    And a consistent one. Stater Bros. always has been terrific at establishing its image as being a procurement agent for the consumer, not a sales agent for manufacturers. That’s a real difference…and it transcends the bells and whistles often offered by fancier stores with bigger public relations departments and marketing budgets.

    Published on: May 13, 2009

    Safeway CEO Steve Burd was among the business leaders praised by President Barack Obama yesterday for innovative approaches to health care, saying that the retailer was among "the best practitioners of prevention and wellness programs -- in the private sector."

    The comments took place after a White House conference focusing on the health care issue.

    Safeway’s approach - to make employees responsible for living healthier lifestyles, including losing weight, stopping smoking, while rewarding them for positive steps – has saved the company millions of dollars. Safeway’s program – which has 75 percent buy-in from nonunion employees – essentially gives discounts on health insurance costs to employees who attain and maintain certain minimum standards, while those who do not meet established levels pay more for health insurance premiums. And while Safeway spends $1 billion a year on health care costs, that number has not gone up since 2005.

    KC's View:
    Perhaps it is fair to suggest that while a lot of people were complaining about the rising cost of health care, Steve Burd led a movement to change to say, in essence, “Yes, we can.”

    Published on: May 13, 2009

    The Wall Street Journal reports that the US Senate is ready to consider an increase in federal taxes on soft drinks and sugary beverages as a way of helping to pay for $1.2 billion worth of changes in the nation’s health care system – an effort that has been considered by cities and states, but never before contemplated on a nationwide basis.

    According to the story, “The taxes would pay for only a fraction of the cost to expand health-insurance coverage to all Americans and would face strong opposition from the beverage industry. They also could spark a backlash from consumers who would have to pay several cents more for a soft drink … Proponents of the tax cite research showing that consuming sugar-sweetened drinks can lead to obesity, diabetes and other ailments. They say the tax would lower consumption, reduce health problems and save medical costs.”

    The Journal reports that the Center for Science in the Public Interest (CSPI) supports the move, and also plans to propose “that the government sharply raise taxes on alcohol, move to largely eliminate artificial trans fat from food and move to reduce the sodium content in packaged and restaurant food.”

    KC's View:
    I was with them until they got to a booze tax. Which seems unfairly targeted at people affected by the recession, especially journalists who are watching newspapers go down the toilet.

    Published on: May 13, 2009

    Reuters reports on the heightened price competition in Chicago between Safeway’s Dominick’s chain and Supervalu’s Jewel-Osco stores, noting that while their strategies “may signal a shift in how some grocers promote lower food prices,” it is “complicated by packaged foods companies' refusal to lower product costs despite falling ingredient costs, rising unemployment and a lingering recession.”

    Examples of what they are doing, often funding the initiatives out of their own pockets:

    • Jewel-Osco has “cut prices up to 20 percent on thousands of staple products in what it calls a ‘Big Relief Price Cut’.”

    • Dominick's “offered some holders of the retailer's Fresh Values card 10 percent off their bill when they shopped in April.”

    But there is a risk, analysts say, because in essence both chains may be “renting customers,” encouraging shoppers to cherry pick before eventually returning to the stores they traditionally have patronized.

    KC's View:
    Seems to me that there is a real danger to being in the business of “renting customers,” that this by its very definition does not focus on the long-term and enduring relationships with shoppers that make a retailer viable.

    Published on: May 13, 2009

    The Los Angeles Business Journal reports that the 28-store Henry’s Farmers Market chain in Southern California is expanding with a new store that “places the chain in an area that could be called ‘Organic Avenue,’ with a deluxe Ralphs Fresh Fare, Whole Foods Market and Trader Joe’s along a two-mile stretch of Ventura Boulevard.”

    The goal is to use a approach that emphasizes discount prices on organic and fresh foods – as well as mainstream products - to “slice away customers” from higher-priced competition

    The Business Journal writes, “Henry’s could be viewed as a downscale, wanna-be Whole Foods. But company officials reject the comparison. They don’t see themselves as downscale, they call it lower cost. And they point to the eclectic selection on their shelves: Just steps away from gluten-free products, organic vegetables and $20 bottles of olive oil are cases of Budweiser beer, gummy worms, and a variety of Asian and Latino foods usually found at other supermarkets.

    “We see ourselves as a transitional store,” Janet Little, chief nutritionist for Henry’s, tells the paper. “Henry’s is about catering to people who want to start eating healthier but still shy away from going all vegan or organic, and still want those indulgence items like cheap candy or beer.”

    KC's View:

    Published on: May 13, 2009

    The Wall Street Journal reports that the US Food and Drug Administration (FDA) has informed General Mills that the cholesterol claims that it makes for Cheerios cereal are a “serious violation” of federal law.

    According to the story, “the agency said statements that the product is ‘clinically proven to help lower cholesterol’ make the product a drug under federal law.”

    General Mills says that what it has been saying the same thing about Cheerios – that it can lower cholesterol by four percent in six weeks – has been clinically proven…and that it has been saying the same thing for more than two years.

    The FDA says that General Mills has to make changes or face enforcement actions.

    KC's View:

    Published on: May 13, 2009

    A new study from The Nielsen Company says that “significant demographic and economic shifts over the next 10+ years will dramatically reshape the growth and decline of consumer packaged goods (CPG) products in the future … According to Nielsen, the category shifts are directly tied to the changing face of American consumers. For many years marketers have relied on middle class families as the primary target for many CPG products.

    “By 2020, however, Nielsen predicts new challenges for CPG manufacturers and retailers due to fewer households with children, an aging population and the continued growth of lower-income consumers. While the aging population will be dominated by non-Hispanic white consumers, the majority of new families will be multi-cultural in less than two decades.”

    The analysis was presented at Nielsen’s Consumer 360 conference in Orlando.

    Relevant quotes, from Doug Anderson, senior vice president, Global Research and Development, The Nielsen Company:

    • “While some companies have multi-cultural marketing initiatives in place today, by 2020, multi-cultural marketing will be a necessity -- rather than an option -- for doing business. This shift will impact product selections, product flavors, and the methods marketers use to reach their new target audiences.”

    • “As spending for consumer products falls, marketers will no longer be able to rely on an overall growing marketplace and taking their brands along with it. This means that every dollar in incremental sales in most CPG categories will have to be taken from a competitor rather than coming from a growing marketplace. The near future will bring a whole new relevance to the phrase ‘share wars’.”

    KC's View:

    Published on: May 13, 2009

    The Grocery Manufacturers Association (GMA) yesterday released the private sector initiatives that it says will improve the nation’s food safety system.

    They include:

    Product recall modernization: “The Food Marketing Institute (FMI) and GS1US, with the support of GMA, have developed and launched an electronic, Web based product recall portal that facilitates the rapid and accurate flow of information between manufacturers and retailers during product recalls. Enhanced communication ensures that recalled products are removed from the marketplace as quickly as possible. GMA will participate with FMI and GS1-US to expand the use and capability of this recall communication tool.”

    Accredited third party food safety audit certification: “To ensure rigor and integrity in third party certification, policymakers and industry leaders should encourage the engagement of auditors employed by certification bodies accredited to international standards by recognized organizations such as the American National Standards Institute (ANSI). ANSI is widely respected as the recognized accrediting body for conformity assessment systems in the United States, and recognized by the federal government as well as internationally for that role. In addition, GMA is working with other public and private partners, including FMI, to progress the implementation and recognition of certification systems. By increasing the number of well-qualified auditors and developing universal food safety auditing criteria, industry leaders and policymakers will ensure that auditors are competent to review a particular facility, discourage duplicative audits, reduce auditing costs, and encourage wider use of third party certification/audits throughout the food industry.”

    Modernization and implementation of good manufacturing practices: “FDA is in the process of updating and issuing its Good Manufacturing Practices (GMPs) regulations for food, which are a critical component of our nation’s food safety system. The issuance of updated GMPs is essential and GMA will provide industry-wide training and education to ensure rapid and wide-spread adoption of the new and updated GMPs.

    KC's View:

    Published on: May 13, 2009

    • In the UK, J Sainsbury reportedly plans to expand its new store program – building 50 new convenience stores in 2009, 100 new c-stores in 2010, and overall increase its sales floor square footage by more than five percent this year. The strategy comes as the company points to four years of sales and market share growth.
    KC's View:

    Published on: May 13, 2009

    • The Great Atlantic & Pacific Tea Co. (A&P) reports that its fourth quarter sales were $2.3 billion, compared to $2.2 billion in the prior year, on same-store sales that were down 1.3 percent. For the 13-week fourth quarter, reported loss from continuing operations was $83.4 million compared to a loss of $44.6 million for last year’s 12-week quarter.

    Sales for the 53-week full year were $9.5 billion versus $6.4 billion for the 52-week fiscal 2007. Same-store sales increased 2.0% for A&P and increased 0.8 % for the just-acquired Pathmark. Reported loss from continuing operations for the fiscal year was $86.2 million compared to income from continuing operations of $87.0 million for the 52-week fiscal 2007, which included a gain of $184.5 million from the sale of Metro Inc. shares.

    A&P CEO Eric Claus said in a statement, “This year we once again saw our Fresh, Gourmet and Discount businesses grow top and bottom line while attaining our synergy targets and completing the integration of the Pathmark business. Our Price Impact or Pathmark stores were a challenge for the year … “this year we once again saw our Fresh, Gourmet and Discount businesses grow top and bottom line while attaining our synergy targets and completing the integration of the Pathmark business. Our Price Impact or Pathmark stores were a challenge for the year.”
    KC's View:

    Published on: May 13, 2009

    …will return.
    KC's View: