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    Published on: May 14, 2009

    Now available on iTunes…

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    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.


    So, let me ask you a question.

    Do you think that the Food Marketing Institute (FMI) made a mistake when it postponed its Future Connect and MarkeTechnics conferences in Dallas this month because of concerns about swine flu?

    Actually, cancel that. Because it doesn’t really matter what you think.

    From the vantage point of May 14, it doesn’t look like a necessary decision. But during the last week of April, the scenario looked a lot different. It wasn't just the FMI conferences being affected. Schools were being closed. Planes were being diverted. Health officials were on alert, using words like “global pandemic” in a way that wasn't reassuring.

    FMI, in my view, didn’t have much of a choice. The timing could not have been worse…if the conferences had been just a week earlier or later, cancellation probably would not have been an issue. But at that moment in time, faced with both the reality of the public health situation as defined by organizations like the Centers for Disease Control (CDC) and the World Health Organization (WHO) and expanding consumer concerns as fueled by reports and speculation in the media and on the Internet, bringing thousands of people to Dallas where there was the potential, at least, that the food industry could be blamed for making a pandemic worse…well, I think FMI did the responsible thing.

    Let’s be clear about this. I am not being an FMI “butt boy” on this one. Far from it. My only rooting interest in this is that my business partner and friend, Michael Sansolo, was a prime architect of Future Connect’s educational approach, and I hated to see the results of all his good work get postponed. But he’s a big boy, and life isn’t always fair. He’ll get over it…and whenever Future Connect happens, people will see the fruits of his labors.

    And I’m more than willing to be critical of FMI. For example, I think they’ve made a mistake by not, at least as I write and record this commentary, having almost immediately set a date for Future Connect and MarkeTechnics to take place this fall. I don't think they needed to work out all the speaker and session details…but I think they should have moved faster to let people know when the events would occur so that they could mark their calendars. One of the things that we’ve all learned in recent years is the importance of immediate response…and FMI’s delay in this area only allows retailers and manufacturers – many of whom I have spoken to – to speculate about motivations and plans.

    But you have to look forward, not backward. Focus on the event to come, not the cancellation of the past.

    It has come to my attention that one of the trade books is running an online survey, asking if FMI made the right decision or not.

    This is both ridiculous, and typical of conventional thinking.

    Ridiculous, because as we all know, hindsight is 20/20. The decision was being made in late April, not mid-May. I can tell you now that getting Brett Favre wasn't a good idea for the NY Jets, but that wasn't my position before they signed him…when it seemed like a pretty good idea. My opinion now is worthless.

    Typical, because this industry spends way too much time replaying old strategies, reinitiating old tactics, and thinking about customers as they used to be.

    In fact, it isn’t just this industry. It is a lot of industries. Look at how the automobile business, the banks and the health care industry have missed the signals about where customers and the world are going…they looked backward, not forward, for inspiration.

    A few years ago, when I learned to drive a race car, one of the central lessons was that you always look to where you are going, because the car follows your sight line. Look anywhere else, and the car tends to go in that direction…and that can take you off the track.

    So let’s stop asking silly and ridiculous questions. Let’s move forward.

    Fast. And faster.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: May 14, 2009

    The Boston Globe reports that US District Judge D. Brock Hornby has ruled that “only those customers who weren't reimbursed for fraudulent charges may sue the Hannaford Bros. supermarket chain over a data breach that exposed 4.2 million credit and debit card numbers to computer hackers.”

    The breach took place in late 2007 and early 2008, and reportedly some 1,800 credit card numbers were stolen and used for unauthorized purchases.

    The ruling is a win for Hannaford, which argued that customers reimbursed for any fraudulent charges really had nothing to sue over; the judge tossed out every complaint against Hannaford except one, from a Vermont woman who has not yet been reimbursed.

    However, despite the win, Hannaford continues to be criticized for its handling of the case, with some saying the company waited a month after discovering the breach before it disclosed the problem to the public. Hannaford’s procedures, however, were in compliance with standard operating practices in such cases.

    KC's View:
    In may be that “standard operating practices” simply aren’t good enough in this age of transparency…and that may be the big lesson learned by Hannaford and every other company in this case. I can understand not wanting to go public while investigating the breach, since that might have hindered the ability to catch the perpetrators; however, that may not be a good enough explanation for customers.

    The two most important words in dealing with almost any crisis are these:

    Speed.

    Transparency.

    Published on: May 14, 2009

    BrandWeek reports on a new study by The Nielsen Company saying that “high- and middle-income shoppers are increasingly turning to dollar stores.”

    The Nielsen research suggests that as much as 75 percent of the merchandise carried by so-called dollar stores actually costs more than a buck, but that this actually may be making the format more attractive to a broader constituency. BrandWeek writes, “The increased variety of products and price points are drawing an expanded and more affluent consumer base to these inexpensive retailers. Households with incomes higher than $100,000 spent 18 percent more at dollar stores in the second half of 2008 compared to the year prior. Among low- and mid-income households, dollar stores are outpacing other major consumer packaged goods channels. Overall, 65 million consumers shopped at a dollar store last year.”

    KC's View:
    The ongoing discussion seems to be about whether consumers will continue this kind of behavior even after the economy recovers. I have to be honest here…I’m just not convinced that households making more than a hundred grand a year are going to be going to dollar stores if they don't have to.

    Published on: May 14, 2009

    Bloomberg reports that the US Senate continues to work on legislation that would have an impact on how credit card companies do business in the US, with some expectations that a “bill of rights” measure could be passed today, requiring “lenders to apply payments to balances with the highest interest rates first,” prohibiting the increasing of “a consumer’s rate on existing balances based on late payments to another lender, a practice known as ‘universal default,’,” and requiring “credit-card companies to give 45 days’ notice before increasing an interest rate.”

    Meanwhile, the Senate rejected a proposal that would have capped credit card interest rates at 15 percent.

    The Food Marketing Institute (FMI) yesterday issued a statement praising legislation that would eliminate credit card interchange fee abuses. The legislation, titled The Credit Card Interchange Fees Act 2009 (H.R. 2382), empowers the Federal Trade Commission (FTC) to investigate credit card rules and practices that inflate interchange fees and eliminate those deemed anti-competitive. The bill, according to FMI, would “prohibit higher fees for premium credit cards, such as rewards, corporate or internationally issued cards,” “eliminate card company rules that effectively prevent retailers from offering discounts to consumers who use less costly payments, such as cash, checks and cards with lower interchange fees,” “outlaw the Honor All Cards rule, allowing retailers not to accept credit cards that have especially high fees,” and “require full disclosure of interchange and other merchant fees and credit card company rules to the Federal Reserve and public.”

    KC's View:

    Published on: May 14, 2009

    The National Community Pharmacists Association yesterday asked the US Federal Trade Commission (FTC) to investigate CVS Caremark for what it says is anticompetitive behavior, and asked the FTC to reconsider the 2007 merger between CVS and pharmacy benefits manager (PBM) Caremark.

    At issue is the way CVS appears to be “steering its pharmacy-benefits patients to its own drugstores by raising co-payments for some who fill their prescriptions at other pharmacies,” according to a story in the Wall Street Journal.

    PBMs have long had a practice of offering patients different kinds of incentives to deal with their mail-order operations but at issue is the way CVS Caremark is seen as penalizing people for not using its mail order operation or in-store pharmacies.

    CVS, which has acknowledged that its pricing program has improved its pharmacy sales, says that it is "making pharmacy health care more accessible, more effective and more affordable," and that the independent pharmacists are mischaracterizing its program.

    The FTC has not yet commented on the complaint.

    KC's View:

    Published on: May 14, 2009

    New research from The Nielsen Company suggests that the recession is having an impact on how people buy and consumer alcohol: 42 percent of those surveyed say that the tend to buy larger package sizes, presumably to get the most for
    their money; 28 percent say they are buying domestic rather than imported booze; 25 percent say they prefer “local” products, and 23 percent say they are buying more
    “tried and true” products rather than risk their dollars on something new.

    In addition, 50 percent of those surveyed say that they are buying alcohol based on the best deals, and 37 percent say they are going to bars and clubs less often that before the recession hit.

    KC's View:

    Published on: May 14, 2009

    • Safeway Inc. yesterday issued its annual Corporate Social Responsibility (CSR) Report, pointing to a number of activities undertaken by the company over the past year.

    Some examples: The company raised more than $32 million for breast cancer and prostate cancer research in 2008 alone, and gave more than $175 million in food to local food banks last year. Safeway also said that it “is one of the largest retail purchasers of wind energy, using 90,000 megawatt hours of wind energy, enough to power all 303 Safeway retail fuel stations, all stores in San Francisco, California and Boulder, Colorado, as well as all of the company headquarters and all corporate offices in Northern California.”

    And, company pointed to its development of a healthcare plan for employees focused on prevention and behavior incentives, and its creation of organic and environmentally friendly as indicative of its broad definition of social responsibility.

    • Sprouts Farmers Market announced that it is opening a new 25,000 square foot store in Coppell, Texas, right in the middle of the DFW Metroplex. The store is the eighth Sprouts unit in Texas, and continues the company’s marketing strategy of pitching high-quality natural and organic foods with lower prices than might be charged at higher end natural/organic supermarkets. The opening date is scheduled to be May 22.

    KC's View:

    Published on: May 14, 2009

    • Walmart said that its first quarter income was $3.02 billion, roughly flat compared to the same period a year ago. Sales were off 0.6 percent to $93.47 billion.

    • Whole Foods reported yesterday that its second quarter profit was down 32 percent to $27.3 million, from $40 million during the same period a year ago. Q2 sales were down 0.5 percent to $1.86 billion,, on a 4.8 percent drop in same-store sales.

    • Unified Grocers said that its second quarter net sales were $951.7 million, down from $991.9 million during the same period a year ago. Operating income for the 2009 period was $6.8 million, compared to $8.9 million for the 2008 period.
    KC's View:

    Published on: May 14, 2009

    …will return.
    KC's View: