retail news in context, analysis with attitude

Published on: May 27, 2009

by Michael Sansolo

Just prior to the 2000 presidential election, famed author Arthur Miller posed a strange question: “How can the polls be neck and neck when I don’t know one Bush supporter?”

I had a strange reminder of that comment this past Thursday morning when I was warming up for my spinning class (stationary biking for lunatics, that is.) A woman just in front of me asked out loud, “How is it possible Kris Allen won American Idol?” Without prompting at all, another four or five women quickly echoed her point, questioning how Kris managed to beat Adam Lambert if no one they knew supported him.

Welcome to the Big Sort: an issue that industry had better start taking very, very seriously.

America is one big beautiful country that I have had the good fortune to see state by state. The people are also wonderful and I delight in visiting supermarkets to see how they live and shop through my own strange little lens. But increasingly, there are divides that lie just below the surface, which could increasingly explain vastly divergent behaviors from one community to the next. It’s why Manhattanite Miller couldn’t find a Bush supporter or why the women in my class all voiced the same feelings about American Idol.

“The Big Sort,” by Bill Bishop (not the Bill Bishop many of us in the retail industry know), should be must reading for understanding today’s environment. Published in 2008, it’s finally made it to the top of my reading list and thankfully just in time for the Kris vs. Adam vote.

Bishop’s point is that Americans have starting clustering into like-minded groups, neighborhoods and communities, making average behavior across a state or a metropolitan area more meaningless than ever. This sort has been going on for a couple of decades and manifests itself in ways far more important that the American Idol vote.

One main basis for this theory is the voting patterns in recent presidential elections go far beyond the Red/Blue state divide. In competitive elections (those decided by a few percentage points) a stunning change has occurred. In the 1948 Truman-Dewey election, only 35.8% of Americans lived in counties that voted overwhelmingly - a 20-percentage point victory margin - for one candidate. In 1976, the Ford-Carter election, only 27.6% of counties recorded those landslide choices.

By 1996 (Clinton-Dole) 42% of counties gave those landslide margins and then the situation got worse. In 2000 and 2004, nearly 50% of counties produced landslides for Bush or either of his opponents. In short, somehow Americans in increasing numbers sorted themselves into groups that think and voted a lot more alike.

For retailers and manufacturers of all types of products, the challenge isn’t limited to voting. As Bishop writes, the sort creates enormous divides in all manner of activity, from church attendance to patent applications to even centers of creativity. Overlooking these underlying community trends means the store or product that does so well in one location might fare very differently a few miles away without any major change in more obvious demographics.

It’s possible we may increasingly find ways to sort out this mess. Products may get marketed to Fox News vs. MSNBC counties. Store offerings might change based on the number (and attendance) of churches in an area. But the complexities will become too numerous to count.

Marketers might find increased importance on political issues such as carbon footprints in one community, while rejection of the same information one community away. The industry might need whole new indices for products that sell well in Red communities, but flop in Blue ones and vice versa. Support for specific organizations might be applauded in some towns and denounced in others and controversial decisions, like Walmart’s ban of Green Day’s newest CD, might be completely without controversy in many markets.

In short, “The Big Sort” promises to make a complex environment ever more so.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .

Published on: May 27, 2009

The Wall Street Journal reports this morning that Margaret Hamburg, the new commissioner of the federal Food and Drug Administration (FDA), has written that she intends for the agency to be more focused on public health issues and less focused on helping the food and drug industries market their products.

“The agency's success should be measured by its impact on promoting health, preventing illness and prolonging life, not the number of facilities inspected or drugs approved, she wrote in a New England Journal of Medicine editorial published Tuesday,” the WSJ notes. “The article … took the food industry and the agency to task over the salmonella outbreak linked to contaminated peanut products, saying it ‘represented more than a sanitation problem at one troubled facility’,” and “blamed the agency's inability to enforce preventive controls and food manufacturers' inadequate monitoring of products from the peanut processor.”

Published on: May 27, 2009

Crain’s Chicago Business reports on a new report by Mediamark Research noting that while the median age of adults in the US has increased 1.3 years to 45.2 since spring 2004, “adult readers at the nearly 200 publications and publishing groups … saw their median age rise 1.6 years to 44. About 56% of the titles tracked … posted age increases higher than the general adult population's.”

This suggests is that print media has less influence with the general population – younger people are using digital media instead of print, middle aged people are peeling off and using online sources with greater frequency, and print publications increasingly are being read by a rapidly aging population.

Published on: May 27, 2009

Procter & Gamble CEO A.G. Lafley is scheduled to speak at the Sanford C. Bernstein analysts conference tomorrow, and Advertising Age reports on speculation that he will announced significant initiatives to earn back market share and volume at a time when P&G global revenue is down five percent and earnings are expected to be down by about the same percentage.

Among the possible announcements that could be made by Lafley is the introduction of value brands that could compete with the private label lines that have seen considerable growth during the recession; creation of a “green” version of Tide that could cater to consumers with environmental concerns; and a major product launch in the company’s Duracell battery line.

Ad Age notes that whatever decisions are made and announced by Lafley, they are likely to have repercussions throughout the packaged goods business, as P&G often sets the tone and direction for how other companies respond to a changing marketplace.

Published on: May 27, 2009

The Puget Sound Business Journal asks if Amazon.com is considering a move into brick-and-mortar retailing.

The journal reports that Amazon “was granted a patent Tuesday for a building design that looks a lot like a mini-store location,” and that it has an “ornamental design for a building structure” that is “box-like with some kind of awnings.”

Published on: May 27, 2009

AdWeek reports on a new survey that says “fewer than 5 percent of social-media users age 13-54 … regularly turn to these sites for guidance on purchase decisions in a range of common product/service categories.”

Just two percent of social media users turn to such services for groceries or food advice, and one percent for prescription or OTC advice.

AdWeek writes, “In light of such numbers, it's not surprising that just 16 percent of the social-media users surveyed said they're more inclined to buy brands that advertise on social sites. Then again, most are not hostile to advertising on those venues: 63 percent agreed that the presence of ads is ‘a fair price to pay’ for being able to use social sites.”

Published on: May 27, 2009

• Walmart has been fined $7,000 by the federal Occupational Safety and Health Administration (OSHA) for inadequate crowd control last year when there was 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, and is paying victims and their families up to $2 million.

• The Arizona Republic reports that Walmart “has agreed to pay $1 million and hire independent monitors to ensure price accuracy at its Arizona stores under terms of a settlement with the Arizona Attorney General's Office.” The settlement resolves a consumer fraud lawsuit filed against the retailer in 2006 after “the chain failed more than half of its pricing inspections in the state over a five-year period.”

Published on: May 27, 2009

Good piece in USA Today this morning about how the restaurant industry is rethinking its traditional marketing strategies. KFC is pushing grilled chicken, Pizza Hut is selling pasta, McDonald’s is hyping lattes and cappuccinos, Domino’s is selling sub sandwiches, Starbuck’s is selling value meals, Arby’s selling burgers, and even Morton’s is selling $5 burgers at the bar. And that’s just the tip of the restaurant iceberg.

This “redefining of boundaries” has created a surreal restaurant landscape, the paper writes, and “many of the food innovations appear to be the opposite of some chains' founding principles, and carefully honed brand image.”

Published on: May 27, 2009

Newsday reports that Connecticut lawmakers have voted to ban the use of Bisphenol-A (BPA) in plastic baby bottles, food containers and cups. Governor Jodi Rell is expected to sign the bill, which addresses charges that BPA is carcinogenic – allegations that hardly are unanimous, but have gained greater currency in the court of public opinion.

Earlier this month, Minnesota became the first state to ban BPA.

Published on: May 27, 2009

Whole Foods announced that it is beginning a new delivery service in its home market of Austin, Texas…using bicycles to deliver lunch or dinner to homes and offices for a flat $5 fee for orders under $50, and free for all orders more than that.

Published on: May 27, 2009

• The Conference Board says that its Consumer Confidence Index was up 14 points, to 54.9, for May 2009 from the month before, driven largely by an improved Expectations Index, which was up 22 points to 72.3.

• Reuters Health reports that a new study by the National Institutes of Health (NIH) and the American Association of Retired Persons (AARP) suggests that there is no connection between the consumption of red meat and the risk of breast cancer in older women, contradicting other studies that have indicated that there could be a link between the two.

• The San Francisco Chronicle reports that after seven years of planning, “Berkeley Bowl, the landmark grocery famed for its fresh produce and gourmet fare, is slated to open its sprawling sister store next week. Berkeley Bowl West will be a larger, more spacious version of the original, offering everything from organic soybeans to 24-ounce cans of Pabst Blue Ribbon.”

• Whole Foods said yesterday that its Local Producer Loan Program has provided producers throughout the United States with $2.5 million in low-interest loans that are designed “to make it easier for local and independent farmers, producers and food artisans to grow their businesses and bring more local products to market.” Some 50 loans have been made, and there are 20 applications still pending.

• Food Lion took note yesterday that its Bloom format is five years old this week…and since its launch, has grown to 64 units in four states in he Mid-Atlantic and Southeast US.

Published on: May 27, 2009

MNB reported yesterday that Brookshire Grocery Co. has adopted a new format for its print advertising circular, using a smaller size and slicker paper to differentiate it from other circulars, and on the front page featuring “five high-velocity items compared to 12 in the previous ad.”

I commented:

I hope that the folks at Brookshire Grocery Co. have begun considering the probability that at some point in the not-too-distant future, print circulars will go the way of the buggy whip as a way of driving sales. There won’t be any newspapers in which to place these freestanding inserts (FSIs), and so they’ll have to avail themselves of new technologies and targeting mechanisms to reach current and potential shoppers.

Maybe not today, maybe not tomorrow, but soon…

MNB user Rick Ellis, Brookshire’s senior vice president/CMO, offered the following response:

BGC does have a multi-pronged approach to our marketing strategy, with our print ads being only one leg of our program----so, I agree with your comments. We pretty much have moved the majority of our print ad distribution today to direct mail, which goes directly to our customers, versus the hit-and-miss newspaper insert programs. Also, we have a very well developed loyalty marketing program that is designed to reward our top shoppers in various ways other than just price discounts. We use this shopper information extensively throughout our marketing, category management, store development, and many other areas of our business.

So, while we have launched a brand new ad format that we believe will continue to attract shoppers to both our banners (Brookshire’s and Super One Foods), we rely on much more than print alone to drive our business!

Thanks for the comment, and we always look forward to Morning News Beat.

Thanks for elaborating. Sounds like you are making all the right moves.




MNB took note yesterday of a Reuters story saying that Target plans to relaunch its private label brand under a new name, “Up & Up,” and “will even ditch Target's famous bull's-eye logo in favor of a more visible arrow design.” The company says that this move builds on its private brand success, which has seen the Target brand grow by 25 percent over the past five years.

I commented:

Maybe I’m just being disagreeable here, but it seems to me that one of the things that Target has going for it is a highly recognizable logo, and “ditching it” may not be the best solution for its recent sales and profit woes. The problem isn’t that people don't understand what Target is, it is that people aren’t sure what the retailer stands for, and if it is the best choice during a recessionary environment during which people are re evaluating their shopping choices.

The bulls-eye is one of Target’s best weapons. The problem is that Target hasn’t been hitting it with any degree of regularity.

One MNB user responded:

This really got me yesterday as I stood in the baby aisle with my 19-month-old looking for the darn Target wipes! They are actually the best wipes I’ve used, but I thought they had been discontinued. The Up & Up packaging is, as you reported, almost totally devoid of the Target name. There is a giant cotton logo on the front of the package though, leading me to momentarily think the cotton industry is now producing baby wipes, and a teeny tiny Target logo on the side of the package. Very odd, as I am accustomed to seeking out and purchasing the Target brand – it is typically of high quality and value.

MNB user Don Stuart wrote:

Touché on Tarzay! English or French the logo translates. Why mess with positive equity when it’s time to ramp up delivery against the promise.

Target’s store brands, however, could always be stronger---many brands and many tiers that don’t integrate well. At least an arrow can be on the “Up & Up”.

“Up & Up” sounds to me like the illegitimate love child of “Up With People.” It just doesn’t work.

Another MNB user wrote:

I am not sure why Target would “toss” aside their famous bulls-eye when you state that their private label business has grown nicely 25% the past 5 years. I think that they will be hard pressed to match that kind of growth with a different logo. This seems like yet another example of a retailer grasping at straws hoping to latch on to Wal-Mart’s success… They are known for very imaginative commercials, I cannot imagine that they cannot find a way to use that advantage to further promote why consumers should shop there.

MNB user Craig Espelien wrote:

I also saw over the weekend that Target was changing its private brand away from the bulls eye. Of all the challenges they face this would seem pretty far down the list. As you correctly point out, that particular logo has pretty good meaning – but I think Target did not define what that meaning was supposed to be and with their decentralized approach to brand management they allowed it to stray too far from whatever their initial intended core was (clearly another problem).

Target’s issue is not with its brands necessarily but with what they mean internally and externally and how they fulfill that meaning with the product. Their larger issue is one of relevance to the consumer – as brands age and their consumer’s needs shift, brand relevance becomes critical – and too often brand managers are fixated on what they feel the brand means rather than on what it means to the consumer.

I would like to see the research on the “Up & Up” brand and will be interested in the marketing material they create for it to educate the consumer. The name in and of itself does not seem to have a lot of legs – sort of a light, airy and meaningless name. The key for Target will be to closely define what it means and then be consistent with that message both inside the company and from a consumer facing perspective.

It appears to be a case of fixing symptoms rather than addressing (or even identifying) root cause issues.

Which is probably why a dissident shareholder is supporting an alternative slate of board candidates – that will deal with problems, not symptoms - in an election scheduled to take place tomorrow.