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    Published on: May 18, 2009

    In the UK, the Sunday Times reports that Andy Bond, CEO of Walmart-owned Asda Group, plans to make a speech this week attacking what he sees as a growing nanny state, restricting what people are able to buy and how they behave through expanded regulation.

    In a speech this week to the British Retail Consortium, Bond plans to say: “We all, including government, need to tread a fine line when it comes to constraining consumer behaviour in areas where we think change is required - whether that be carrier-bag usage, alcohol consumption or even the sale of food deemed unhealthy … We need to ensure we are primarily focused on behaviour change through education, not constraint. This whole trend toward greater central control and constraint has created a new political language where people talk about central government and business in the role of Big Mother rather than Big Brother.”

    KC's View:
    This needs to be said, if only because both government and business need to understand that they cannot force-feed socially responsible attitudes to consumers. If people don’t want to eat healthy foods, all the regulation in the world won’t help. What is important – and hopefully more effective because people actually integrate the healthier foods into their lives – is providing actionable information about why some choices are better than others.

    I would argue, however, that there are some ways in which business can and should lead. If, as I believe, it is concluded that the use of non-disposable canvas bags is better for the environment than the use of disposable sacks, then I don’t think there is anything wrong with a retailer adopting marketing and operational practices that move the company and its shoppers away from the latter through a variety of means. There are limits to the validity of the “I was just following orders” defense, even if the orders are coming from the shopper.

    Besides, I would also argue that the shift to canvas bags is good for a retailer’s bottom line, which would ordinarily be reason enough to make the move and nobody would be discussing the nanny state; it’s only when you use words like “the environment” that people suddenly get suspicious and cynical about motives.

    Published on: May 18, 2009

    There was an excellent column in the Seattle Timesover the weekend by Jon Talton in which he contemplates Starbucks’ current problems and poses the following question:

    “What if Starbucks is an artifact of an economy that's not coming back? A time of rising, if fleeting, American affluence as we moved from dot-coms and telecoms, to day trading and house flipping, all based on the biggest run-up of debt in the history of the world. For this venti, triple-shot America, it might have been the quintessential bubble drink.”

    Talton suggests that there are plenty of reasons to believe that Starbucks is past its prime: “For all his confident talk to analysts about new initiatives, Chief Executive Howard Schultz led off by emphasizing $500 million in cost reductions for this fiscal year and a commitment to more discipline. Those are the defensive measures of a company no longer young and sexy.

    “Indeed, Schultz may have inadvertently let the master-marketer mask slip when he spoke of the continued relevance of its brand. If you have to say it ...

    “The company's troubles before the recession are well-known, chiefly overexpansion and the need to make the transition from being a young growth stock. Yet it did not expand merely out of corporate hubris. Wall Street demands high growth, and this was the way Starbucks could appear to deliver rising profit margins. (It went public in 1992, with about 165 stores.) And Wall Street might not be happy if Starbucks aged gracefully into a value stock.”

    And he writes, “Schultz is a marketer, and he may have grown into a disciplined manager. In another environment, he might have had time to cut stores, tinker with the menu, find a way to fend off McDonald's and develop new avenues to grow profits.

    “Unfortunately, that's not the one we're in now, with a historic cutback in consumer spending, massive unemployment and millions more worrying about their jobs. In that environment, will people still be willing to spend for Starbucks? Will what Schultz calls the emotional connection and reservoir of trust built between the company and customers hold up?

    “Looking back, Starbucks' fall was a leading indicator of the trouble massing across the land. Now the question becomes whether the America that emerges from the financial shock of the Great Disruption will have the appetite, and the cash, to fund Starbucks' hopes.”

    KC's View:
    There is no reason that Starbucks cannot emerge from the “Great Disruption” – I like this name for the current economic situation – is perfectly good shape. As I’ve said here many times, I’ve never walked into a Starbucks that was empty. Ever. There remains significant customer goodwill for the company, even if there’s less cash to spend there.

    But as I wrote here on MNB back on January 29, it is time for Starbucks to find another leader.

    Howard Schultz must go.

    It remains my sense that Starbucks has lost its way, and that blaming the economic downturn almost misses the point. After all, great brands and great thought leaders find ways to transcend these kinds of challenges, profound as they may be. They find ways to reinforce the differential advantages of the brand, and to see the challenges and opportunities for strategic innovation. This doesn’t seem to be happening at Starbucks. Rather, since Schultz took back the reins of the company, it has seemed like management has embarked on a series of tactical decisions designed for short-term fixes rather than long-term growth.

    And that’s no way to nurture a brand.

    If the nation is going to be “different” after the Great Disruption, then Starbucks – which has in so many ways served as a barometer for the country’s economic well-being – needs to have different leadership, too.

    Published on: May 18, 2009

    California-based Raley’s announced that it wants to buy out the contracts of 100 of its employees, and will offer buyouts to 3,000 employees and will accept the first 100 takers, giving them nine months’ pay.

    According to reports, the company is looking to reduce its labor costs. However, the chain said that it hoped to actually create room for some people who were laid off at the end of last year in seasonal cutbacks, and that it offered the buyouts in response to expressed interest by some employees.

    KC's View:

    Published on: May 18, 2009

    The Los Angeles Times has a piece about Burt’s Bees, the boutique lip balm/shampoo/skin cream manufacturer that has seen its sales double in the last three years and continues to hire new employees – even as much the nation grapples with the recession.

    How has it managed to do so? According to the Times, it is by aligning the company with so-called “small indulgences” that people are unwilling to sacrifice even in hard times. “Burt's Bees hit on its recession-proof formula years ago,” the Times writes. “It went natural before natural was cool. And it made specialty personal-care products before such items went mainstream.”

    And, the company is able to capitalize on two growing consumer interests – products that are good for them as well as being good for the environment.

    "We've never attracted our consumers on price," Peter Alberse, who's in charge of Burt's Bees' customer development, tells the Times. "It's always about what's in the product, and what's not in the product."

    KC's View:
    As John Mellencamp sings, “You’ve gotta stand for something, or you’ll fall for anything.”

    You’re almost always better off if you have something more than just low price going for you. Even in a tough economy. Especially in a tough economy. Because when things turn around, you represent both value and values.

    Published on: May 18, 2009

    Time has a story noting that “McDonald's did so well with its dollar menu that Walmart decided it will create one, too. The difference is that the Wal-Mart version will be merchandise and not food.” Walmart’s goal will be to create a menu of “irresistible bargains” that will both entice consumers on a budget and help boost its own sales and earnings.
    KC's View:

    Published on: May 18, 2009

    Costco Wholesale is being sued by an employee charging tat the company has broken California wage and hour laws by forcing employees to work off the clock and locking them inside stores – and not paying them – while managers performed closing activities at the end of the day.

    While the lawyer for the employee who filed the suit says the end-of-day practice constitutes false imprisonment, Costco reportedly has said that it is a matter of security.

    The attorneys for the plaintiff are seeking class action status for the suit and have said they are seeking damages and fees of no less than $50 million.
    KC's View:
    See, I was almost with the employee until we got to the “$50 million” part…which seems like a lot of money for 15 minutes here and there.

    The Costco practice, if it actually is as described, doesn’t sound like the best idea in the world. But the lawsuit’s parameters sound a little over the top, to put it mildly.

    Published on: May 18, 2009

    On June 3, I am going to have the opportunity to participate in a panel discussion at the annual GS1 US "U Connect" Conference in Orlando, moderating a panel discussion about supply chain issues with a distinguished panel of retailers: Gary Maxwell, senior vice president, International Supply Chain, Walmart; Ramesh Murthy, vice president of inventory replenishment at CVS Caremark; Mike Mabry, executive vice president of logistics and distribution for Lowe’s; and Peter Longo, president of logistics, Macy’s.

    We’ll be discussing a lot of issues, focusing mostly on how their individual supply chains are changing to cope with an evolving global business climate. But what I’d like to know is this:

    What do you think I should ask them?

    It’s pretty simple. Since we’re going to have four supply chain experts from four very different retail models all sitting together on the same stage, I’m curious what you'd like to know. Send me your questions, and I’ll do my best to fit them into the discussion…and will report back on the answers I get here on MorningNewsBeat.

    KC's View:

    Published on: May 18, 2009

    • Delhaize Group reportedly has offered to acquire for the equivalent of about $182 million (US) the 34.73 percent of Greek supermarket chain Alfa-Beta Vassilopoulos that it does not already own.

    Delhaize became Alfa-Beta’s principal shareholder in 1992.

    • The Daily Press reports that between now and June 4, Harris Teeter is awarding a coupon for one free grocery shopping trip to every 400th shopper at each of its stores.

    "Each participating store has its own customer count. Every 400th customer at each participating store will be a winner. For instance, if 1,600 customers shopped at our Newport News stores today, four customers from that store would have won," Catherine Reuhl, communications specialist for the grocery chain, tells the paper.

    The only caveat: winners have to be enrolled in Harris Teeter’s VIC loyalty marketing program.

    • North Carolina-based L&M Cos. has recalled a single shipment of cantaloupes after one tested positive for salmonella.

    The lot of cantaloupes came from one small farm, according to the company, and were all shipped to Walmart Supercenters in Virginia, North Carolina and South Carolina.

    There have been no reports of illness.

    KC's View:

    Published on: May 18, 2009

    The Los Angeles Times reports that Robert B. Choate, an “engineer-turned-consumer advocate whose campaign against sugary breakfast cereals led manufacturers to bolster the nutritional value of their products,” has died at age 84.

    Choate made headlines when he testified before Congress about cereal nutrition in 1970, saying that many popular products “offered such poor nourishment that they were essentially empty calories” – a statement that prompted a national debate and forced manufacturers to reformulate a number of products.

    KC's View:

    Published on: May 18, 2009

    Responding to a piece and commentary about the growth of dollar stores, one MNB user wrote:

    I think you are wrong about households earning over $100k not going to dollar stores, because of your premise "because they don't have to". They might not have to, but they might "want to".

    One retired colleague put the value equation quite succinctly when he told me that "rich people don't get rich by wasting money", e.g. price matters to everyone. It's about the perception of value, which sometimes is lacking at certain retailers in certain categories. I rarely frequent dollar stores but when I do, I find myself picking up greeting cards and gift bags, generally at about a 1/3 of the cost your typical Hallmark sells them for. And that's not all that often ends up in my purchase. They are also a lot more convenient than fighting your way through a Walmart.





    Last week, MNB took note of a Boston Globe report 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.

    MNB user Thomas D. Murphy wrote:

    As an industry consultant in technology, I am aware of two similar cases with other grocers (which never became as contentious as the Hannaford case) where the management team was prevented from releasing information to the public while the crime was under investigation by the Secret Service and the FBI. In both cases, the perpetrators were caught ONLY because once the crime was discovered, the grocer continued operations allowing the investigators time to make an arrest.

    Doesn’t make it right for the consumer, but there is justice in this for the grocer!




    There was a story last week comparing Walmart and Whole Foods through the prism of their stock market performance, and I commented:

    I continue to have the quaint, anachronistic view that a company’s success ought to be gauged by how it takes care of customers on Main Street, not customers on Wall Street. This is not to say that share price isn’t important…but I prefer to get a feel for how a store is working by wandering the aisles, chatting with the checkout people, and tasting the food. Which is probably why I’m a blogger/pundit and not a broker…

    MNB user Doug Campbell responded:

    I agree with your old-fashioned perspective. If you take care of your customers, the stock price will take care of itself. Treat the customer like nothing more than a revenue source, they will figure it out and go where they are welcome to spend their money. In time, that will show up on Wall Street. I gladly do most of my shopping at Publix, despite the ever so slightly higher prices. Another national chain is much closer, but the environment, until very recently, was not at all welcoming or customer friendly. By the way, the other national chain just emerged from bankruptcy. Funny how suddenly the customers are now treated well.




    We reported last week that Kmart is opening its first in-store health clinic, and noted that it will be right next to the store’s pizza parlor.

    Which led one MNB user to write:

    Am I the only person who gets the heebie-jeebies thinking about a clinic for sick people being located right next to the pizza place and both sets of customers walking in the same set of doors? I certainly understand the need for easily accessible, low-cost healthcare options - but really think putting them in public locations is not the best option. Considering the recent concern about pandemic potential, do we really want to expand in-store clinics, bringing sick people into a public environment in order to be treated? Maybe it's an indication of obsessive-compulsive traits - but I get out the hand sanitizer when I pick up maintenance prescriptions at the pharmacy and there's someone sitting in a chair coughing and sneezing waiting for their prescription so they can feel better. Great innovation making healthcare options available to the masses - Bad innovation putting them somewhere the healthy and sick masses will all be shopping and touching the same stuff.

    On the other hand, maybe they know something about the quality of the pizza that we don't…and figure that this is actually a pretty savvy adjacency…



    And, on another issue, one MNB user wrote:

    I have to react and respond to your comments about food safety. You state that you’ve never seen anyone stick a thermometer in a frozen food container. I have to assume that means you never have. With your education and intelligence, why not? Do you trust your health to someone else?

    I work in a deli/prepared foods department of a supermarket and take food safety very seriously (I don’t want to kill anyone) though most others around me don’t. I am food safety certified with a grade of 98% so I think I’m qualified to weigh in on the subject. (The 2% wrong drives me nuts because they don’t tell you what you got wrong. What if that’s the most important 2%?)

    Manufacturers most definitely should guarantee food safety but that won’t cut it. A guarantee is a promise and promises can be broken. My auto has a guarantee but that doesn’t guarantee it from breaking down, it only it only guarantees they will fix it. I’m still sitting on the side of the road waiting unproductively for a tow and an alternate means to get me where I was going. As to food, even with a guarantee mistakes will happen. The difference is, instead of being stranded on the side of the road, I am sick, or worse, dead. Also, one third of chicken is contaminated with salmonella. How does a supplier guarantee the chicken you buy at the supermarket? It can’t. It’s your job to kill the salmonella when you cook it.

    Food safety begins and ends at home. It is your last line of defense. Ask a skydiver, “Who packs your parachute?” the answer is: HE DOES! One can’t trust one’s life to anyone else.

    Food safety information is readily available but, sadly, not used enough. It’s not rocket science. Wash your hands, before and after. Thoroughly wash the cutting board after preparing the chicken and before preparing the salad. Keep cold foods, cold and hot foods, hot. The danger zone is between 40 degrees and 140 degrees. Everyone should have and use a thermometer. 145 degrees for beef, 155 degrees for pork, 165 degrees for poultry, ground meat, and everything else.

    If everyone did these things we wouldn’t need a guarantee.





    Finally, I took a gratuitous potshot at the designated hitter rule last week, which led MNB user Lance Hollis McMillan to observe:

    “The designated hitter is like letting someone else take Shaq’s free throws.”

    Don’t know who said it, but I know I didn’t think of it…..


    But you shared it. And you are absolutely right.
    KC's View:

    Published on: May 18, 2009

    Why is the shift from disposable plastic bags to reusable cloth bags so critically important?

    Because plastic bags are quite literally choking our environment…and only by eliminating plastic waste products can we begin to have a positive impact on this serious problem.

    As a public service, EcoBags suggests that you spend a few minutes watching this video, which features Captain Charles Moore of the Algalita Marine Research Foundation, in which he vividly describes the growing, choking problem of plastic trash in the world’s seas.

    Click here

    And, if you’d like more information about our solution to the problem – canvas bags that MNB “Content Guy” Kevin Coupe has described as “the best on the market” – come visit our website:

    http://www.ecobags.com

    KC's View: