retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: May 28, 2009

    Now available on iTunes…

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    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.

    “The “new normal,” I’m afraid, is well on its way to becoming one of the catch phrases that we’re all going to get sick of.

    It’s in headlines everywhere, especially as pundits and consultants try to figure out ways to market their services around a phrase that has more alliteration than meaning.

    There have been a number of stories and columns here on the site since the beginning of the recession that have referenced this phrase. And, I confess, I’ve used the phrase myself, both here in my commentaries and various rants and in the speeches that I give around the country. Mea culpa, mea culpa, mea maxima culpa.

    The phrase popped up again this week in a story that ran on Bloomberg, where it was reported that Americans “may have to get used to unemployment greater than eight percent for the first time since 1983 and an economy that won’t grow much beyond two percent as a consequence of the lost confidence in consumer credit that shattered financial markets.”

    One analyst even suggested to Bloomberg that the nation could be returning to an era like the 1950’s, and that families will resemble the Cleavers from “Leave It To Beaver” … which wouldn’t be so bad since the Cleavers weren't up to their eyeballs in debt and seemed perfectly happy.

    Analysts refer to the situation as a “new frugality,” and suggest that this is “a secular change in household attitudes.” In other words, a “new normal.”

    At the risk of contradicting analysts who almost certainly are a lot smarter than me, I think this is nonsense.

    For lots of reasons.

    The notion that we are returning to a Cleaver-like existence is just silly. Except on TV Land, that world doesn’t exist anymore. In fact, I’m not sure it ever did, except on television sitcoms.

    There are a lot of reasons that the economy tanked. You can certainly rank greed as being somewhere near the top of the list, but the more I think about it, it seems to me that “greed” is an overly simplistic word to use. Sure, there was plenty of naked greed – people who wanted money and toys for the sake of having them.

    Did it get way, way out of hand in some cases? Sure. I know a family where they have a tennis court in the backyard, a full-sized pool in the side yard, a pool house that is bigger than my entire house, and a full basketball court in the basement…and still the mom whines about not being particularly happy.

    But there also were some basic human aspirations at work that had something to do with providing more for one’s family, for doing better than one’s parents, for achieving a certain level of achievement that stood as a marker for success. That got out of hand, too…but a lot of these people had good hearts and nothing but honorable intentions.

    Will the current recession cause a fundamental change in attitudes across the demographic board? I’m not sure the answer is a cut-and-dried yes. For some people it will, and some people will lapse into old habits. And, I think, a lot of people will continue to have aspirations for themselves and their families…and it would be silly to suggest that these have vanished because of a year or two or three of tough economic times.

    Another reason that it is a mistake to paint with such a broad brush – and I include myself in the group that needs to be admonished – is that we have no idea where the bottom is and how long the recession will last. Things have been looking up lately, but let’s face it – in the words of the great William Goldman, “Nobody knows anything.”

    Finally, it is dangerous to think about the American consumer as part of a homogeneous group with predictive behavior. Really, really dangerous. Especially because we have no idea how the younger generation of consumers – you know, the ones who don't remember a world without Google and Amazon and iPods, and whose behavior reflects easy access to information and a sense of entitlement to a life that lives up to their expectations and ideals – we have no idea how this younger generation will react to the economic tumult they see around them. So we cannot predict their behavior. There simply is no blueprint from which to draw judgments.

    Which is why we all should be careful about making pronouncements about the “new normal,” and spent a lot more time listening, especially to the words and cadences of a younger generation that has much to teach us.

    I will suggest one thing, though. I don’t see the whole Ward and June Cleaver thing making a comeback. And I’m guessing that the analyst who suggested that it might has some sort of weird Barbara Billingsley fixation.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: May 28, 2009

    A new food safety bill designed to make the supply chain more transparent, more subject to inspection, and more demanding of manufacturers has been introduced to the US Congress by Rep. Henry Waxman (D-California), chairman of the House Energy and Commerce Committee, and Rep. John Dingell (D-Michigan).

    According to the story in the Washington Post, the bill “would give the Food and Drug Administration broad new enforcement tools, including the authority to recall tainted food, the ability to ‘quarantine’ suspect food, and the power to impose civil penalties and increased criminal sanctions on violators.

    “Among other things, the proposal would put greater responsibility on growers, manufacturers and food handlers by requiring them to identify contamination risks, document the steps they take to prevent them and provide those records to federal regulators. The legislation also would allow the FDA to require private laboratories used by food manufacturers to report the detection of pathogens in food products directly to the government.”

    After the bill was introduced, Pamela G. Bailer, president/CEO of the Grocery Manufacturers Association (GMA), released a statement in which she said that GMA shares “the broad goals” of the legislation, but is “concerned that the draft legislation released today by Chairman Waxman proposes significant new fees on food companies and ultimately consumers at a time when they can least afford it and in the face of an unprecedented increase in appropriated funding for FDA food safety activities. In addition, like many consumer groups, we are concerned about the inherent conflict of interest created by asking industry to fund government inspections. We are also concerned about provisions that increase the cost of food without improving the safety of the food supply.”

    KC's View:
    In the time it takes for this bill to make its way through both houses of Congress, various interests will have a chance to weigh in on its strengths and weaknesses. I only know that something has to be done to improve the system we have now, and I hope that it doesn’t get weighed down by so many compromises that the bill becomes ineffective and inefficient. And let’s be clear – it has to be both effective and efficient.

    Published on: May 28, 2009

    A new study by the University of Pennsylvania says that while there are more than 1,200 in-store health clinics in the United States in retailers like Walmart, Walgreen and CVS, only 123 of them are in poor neighborhoods that would be defined as “under-served.”

    Such clinics have been designed to supplement traditional health care options and make basic medical services such as flu shots and vaccinations, as well as treatment of minor ailments. But while they are focused on being convenient, they overwhelmingly have been located in stores that serve blue collar, middle class and upper middle class customers – and not the poorest citizens who may be most in need of their services.

    According to reports, the study suggests that financial incentives may be needed to bring in-store health clinics to such neighborhoods.

    Reponses to the study note that while the clinics have been designed to be convenient, they are not intended to be a safety net to catch every citizen falling through the cracks of the health care system. Furthermore, industry experts say that not every person who lives in a poor area shops there…and that they often will use clinics in other neighborhoods.

    KC's View:
    The first thing that occurs to me in reading about this study is that you need a store in order to have an in-store health clinic. And I wonder how many of these poor neighborhoods actually have the chain stores that generally tend to be opening these clinics.

    Just wondering.

    Published on: May 28, 2009

    Food Lion has debuted a new advertising campaign called “Great Price Hunters,” that is designed to reinforce and highlight what it calls a “unique price position and neighborhood convenience in key markets.” The campaign includes TV commercials as well as print, radio, online and outdoor advertisements.

    “Food Lion has a long history of delivering competitive prices and great convenience to our customers,” said Ken Mills, vice president of Marketing. “In the midst of a tough economy and various retailers focusing on price messaging, we want to remind our customers that they do not have to hunt from store to store for great prices. Food Lion delivers excellent prices on items throughout our stores every day.”

    KC's View:

    Published on: May 28, 2009

    Chicago Public Radio reports that three years after Walmart opened its first store in Chicago, on the West Side, the retailer continues t work to marshal support for a store on the South Side…and that while there remains significant opposition from labor activists, the company seems like less of a political liability than it used to – especially in a recessionary environment where people have less money to spend and most companies are laying off employees.

    “Wal-Mart supporters say the store has brought hundreds of new jobs and shopping options to the Austin community,” the station reports. “They praise the millions in tax revenues. Skeptics say it’s too soon to measure success, and there’s been some discussion about the so-called big box store having a negative effect on smaller local businesses.”

    Walmart spokesman John Bisio tells the station, “What we’ve learned in Chicago is that we need to do a better job of telling our story and setting the record straight. Because people had wanted certain special interest groups, competition have wanted to keep Walmart out and protect their turf at the expense of the customer. We’ve been in this position where we’ve had to play defense.”

    • The Wall Street Journal this morning has a piece about Walmart’s new business in India, noting that the retailer plans to open this Saturday “its deep-discount retailing formula … targeted at a more than $350 billion a year retail industry made up almost entirely of small merchants such as Ranjit Singh.” The project is a joint venture with Bharti Enterprises because of Indian laws that preventing from sole ownership and from selling directly to consumers.

    KC's View:

    Published on: May 28, 2009

    The Washington Post reports that there are at least some in Washington, DC, who are pushing for a national sales tax. Such a tax – called a Value Added Tax (VAT) in other countries – has long been “politically taboo” in the US, but the Post writes that “advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.”

    The Post writes, “A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American -- a tangible benefit that would be highly valuable to low-income families.”

    KC's View:

    Published on: May 28, 2009

    The Seattle Times reports that Costco, under attacks from NY Attorney General Andrew Cuomo because of its unwillingness to accept food stamps at an East Harlem location under construction in a neighborhood where some 30,000 local residents use them, has decided to accept them at two stores in a test that will commence as soon as the appropriate technology can be installed.

    The two stores are in Queens and Brooklyn.

    "In the past, we have not been convinced that there was sufficient demand among our membership to justify the expense and possible inefficiencies associated with accepting food stamps," CEO Jim Sinegal said in a statement Wednesday. "However, we are mindful that many of our fellow citizens are facing unprecedented economic challenges at this time, and it seemed to us that it was worth reconsidering our position in that light."
    KC's View:
    Smart move. In fact, the only move that Costco could make on this issue. Better to just do it and move on.

    Published on: May 28, 2009

    The Wall Street Journal reports this morning that today is the day when the two-month proxy fight between Target Corp. and dissident shareholder William Ackman will be resolved at the company’s annual shareholder meeting in Wisconsin.

    Ackman, who owns almost 10 percent of the company’s stock and options and has recruited a slate of board candidates that includes former Pathmark and Starbucks CEO Jim Donald, has criticized the retailer for not making the strategic decisions necessary to be more competitive with the likes of Walmart.

    Target Chief Executive Gregg Steinhafel has been fighting back, saying that the company is making needed changes and that Ackman really is only looking for short-term profits, not a long-term and sustainable business strategy – a position that Ackman has disputed.

    RiskMetrics, a leading proxy adviser, is advising its clients to vote for Bill Ackman and Jim Donald next week when an election takes place for Target Corp.’s board of directors. But Glass Lewis, another leading proxy adviser, said it was endorsing Target’s four nominees and not supporting any member of the alternative slate.

    KC's View:
    I’ve said it before and I’ll say it again. Any retailer is better with Jim Donald on the board.

    Published on: May 28, 2009

    The Los Angeles Times reports this morning that Starbucks “is in the cross hairs of a new-media campaign designed to bolster union representation at the retail giant and beyond. For five years, Starbucks has been the target of a limited but sometimes nasty unionization drive that has tarnished its reputation for high-minded benevolence.

    “But last week, Brave New Films in Culver City launched an ambitious ‘Stop Starbucks’ offensive, including a website ( featuring a four-minute video that was also posted on YouTube assailing Starbucks' treatment of workers, along with a petition demanding that (CEO Howard) Schultz ‘quit following Wal-Mart's anti-union example.’ By week's end, almost 12,000 had signed the petition, while nearly 40,000 had viewed the video, organizers said.”

    The company has responded to the campaign by saying it is being smeared, and that the charges do not reflect the feelings and opinions of the vast majority of the employees that Starbucks always refers to as “partners.”

    KC's View:
    How fast and far the mighty have fallen. Starbucks is a company that used to have an employee-centric culture and reputation…and somehow has lost, at the very least, its ability to define the story and control the “spin.”

    I’m guessing – and this is very much a guess – that part of the problem is that top management has been so occupied with being efficient and managing to the stock market’s demands over the past few years that it has taken its eye off the ball when it comes to the stores and the day-to-day work of connecting with employees.

    Published on: May 28, 2009

    USA Today this morning carries a story about how Charles Conaway, the former CEO of Kmart, is engaged in a civil lawsuit brought by the federal Securities and Exchange Commission (SEC) charging that he deceived the company’s board of directors, analysts and shareholders about the company’s “woeful” finances.

    Conaway has been defending himself by saying that he inherited an almost impossible situation, and that he informed the board about all the company’s problems and proposed solutions.

    Marketing Daily reports that sales of functional foods in the US were up eight percent in 2008 to $30.7 percent, compared to $29 billion the year before.

    • The Atlanta Business Chronicle reports that Aldi plans to build a 780,800 square foot distribution center in Georgia. Aldi came to the Atlanta market in 2001, and currently has 20 stores in the metro area.

    • The New York Times this morning reports that Toys R Us has reached a deal to acquire FAO Schwarz, including the company’s legendary Fifth Avenue flagship store in Manhattan. (Remember Tom Hanks dancing on the piano there in “Big?”) Terms of the deal were not disclosed.

    • Fresh & Easy Neighborhood Market has joined the U.S. Environmental Protection Agency's GreenChill Advanced Refrigeration Partnership, voluntarily committing to reduce refrigerant emissions to minimize the impact on climate change and protect the ozone layer.

    • The Pacific Daily News reports that the first IGA store on Guam is opening this week, representing a $5 million investment for Canada’s Northwest Company, which is opening the store as a way of serving a market that it believes is under-served.
    KC's View:

    Published on: May 28, 2009

    • Ahold this morning said that its first quarter net profit was down 24 percent to the equivalent of $272.4 million (US), on Q1 sales that were up 15 percent to almost $12 billion (US).

    • Costco Wholesale said that its third quarter earnings were down 29 percent to $209.6 million, from $295.1 million during the same period a year ago. Revenue decreased 4.8 percent to $15.48 billion from $16.26 billion, on same-store sales that were down seven percent.

    • Dollar Tree said yesterday that its first quarter sales were $1.2 billion, up 14.2 percent compared to the same period a year ago, on same-store sales that were up 9.2 percent and earnings that were up 37.5 percent.

    • Campbell Soup Co. said that its third quarter profits were $174 million, down from $532 million a year earlier (though the year-ago numbers were inflated by its sales of the Godiva business). Q3 revenue fell 10 percent to $1.69 billion.

    KC's View:

    Published on: May 28, 2009

    • The Golub Corporation/Price Chopper supermarkets announced that Steven Duffy has been hired as Vice President of Architectural Design and Purchasing Services, a new position that has him overseeing the design of new and remodeled stores and the purchase of equipment and fixtures for the 117-store chain. Duffy, a former executive at Safeway and Toys R Us, comes to Price Chopper from Talbots, Inc, where he held the position of director of Store Planning and Design.

    • Price Chopper also announced that Glen Bradley, the company’s Manager of Business Intelligence, has been promoted to the position of Director of Business Intelligence.

    • And, Price Chopper has promoted Benny Smith, its Director of Facilities, to the position of Vice President of Facilities.

    KC's View:

    Published on: May 28, 2009

    Yesterday, Michael Sansolo wrote about a book called “The Big Sort,” by Bill Bishop (not the Bill Bishop many of us in the retail industry know), which he described as must reading for understanding today’s environment. 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. 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 .. which means that stores and products can and should come to market very differently than in the past.

    One MNB user responded:

    While I wouldn’t for a second argue that the Big Sort isn’t happening or isn’t inevitable, taken to its logical conclusions I find it to be very, very scary! While it is not news that like minded people tend to gravitate towards others of similar leanings whatever they may be it can also be regarded as social segregation. We have spent the last 20 or so years working toward an appreciation of diversity that it clearly seems we do not really want to embrace in any way be it racial, educational, ethnic, religious, or any of a hundred other things, but in fact we seek enclaves without diversity to live in. So all of a sudden I become unwelcome in some significant portion or portions of the great USA because I don’t share the local thinking and they have no interest in my POV. I could ramble on and on about scary ways such changes could destroy the social fabric of the US but I suspect you get my point even if you don’t agree with it.

    Didn’t many of our ancestors move here to escape places with laws and societies they believed were discriminatory in some way to a new land where they could be valued for their differences rather than penalized for them?

    In fact, when taken to its logical conclusion you could think about doing away with “Your Views” as we will likely end up with only those people finding consistent agreement with all of your views will be subscribing and reading MNB and there will be no point in having an area for different views.

    Except that there is a difference between a store and consumer product and a site like MNB, which thrives on differences and irreverence.

    BTW…check out Nicholas Kristof’s column in today’s New York Times, which reports on a study suggesting that people sort themselves not just because of their opinions but because of how their DNA is wired.

    MNB user Brian Cook wrote:

    This concept is very interesting and questions some big Retailers’ point of view of that one type of market fits all. Independents have and are now doing an even better job of recognizing their demographics and catering their offerings to that market segment. It will be interesting to see if times go back to multiple ads based on demographics and bringing in the right product mix based on the consumers that shop in those markets.

    Responding to my commentary on a couple of stories recently about how print is dying, one MNB user wrote:

    I don't dispute the growing power of on-line media sources, nor that greater numbers of younger consumers are relying more on internet-based sources for news and information.

    But as a child of aging parents with no internet access or computer capabilities, I am concerned about what could be the disenfranchisement of certain, still relevant segments of our communities. The aging population collectively has more buying power than the younger generation – some grandparents are spending more on grandchildren than parents. "They have benefited of favorable economic decades and the improvements of pension insurance. They have managed to accumulate substantial savings that add to a regular income from pension funds.." ( Yet unless they step up and invest in resources / training, they're left without access to information.

    And what about the impoverished, or even the lower middle class - who don't have a blackberry, IPod, or even the wherewithal to travel to a local library, which may not have computer access available? "In a city the size of Chicago, with the poverty areas that we have, there can be an information rich and an information poor society," said Alice Calabrese, executive director of the Chicago Library System. A survey by the Metropolitan Chicago Information Center last winter found that 41 percent of whites in the six-county area have home computers, compared with 19 percent of blacks and
    18 percent of Latinos. (Chicago Reporter) And that's only in the US…

    If I use a 'glass-half-full' perspective, then this becomes an opportunity to broaden the availability / accessibility of technology.....for my parents, and other socioeconomic groups, however, it seems to represent diminishing connection with a broader world.

    Fair point.
    KC's View: