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: June 8, 2009

    BENTONVILLE, Arkansas - The Walmart annual meeting, as usual, featured more than its share of star power to keep the crowd of 16,000 people entertained.

    Ben Stiller hosted, and took note of the 7 am start time, saying, “They’re still sleeping over at Target.”

    There were musical performances by Miley Cyrus (who last week announced that she’d be working with Walmart to develop an exclusive line of budget clothing for girls), Smokey Robinson (who magically seems to have smoother skin than people half his age), and “American Idol” winner/Arkansas native Kris Allen, who performed three songs and noted that when he’d arrived in Los Angeles, he hadn’t seen any Walmarts and couldn’t figure out where people bought stuff. (The notoriously straight-laced folks at Walmart were probably glad that the somewhat less wholesome Adam Lambert didn’t win “Idol”; inviting him might have been problematic.)

    Even and old and paunchy Gene Simmons of Kiss was there (sans makeup), though he never got anywhere near the stage and simply seemed to be wandering the floor of the Bud Walton Arena at the University of Arkansas getting a lot of attention from young and not-so-young women.

    Michael Jordan, the legendary Chicago Bulls player, showed up on stage to chat with Walmart executive vice president Susan Chambers about the importance of teamwork in any environment – from the basketball court to the sales floor of a supercenter.

    There were cheerleaders and marching bands and dancers galore, punctuating the moments when associates from Walmart banners round the world testified to the might and power of their employer. Indeed, “testified” may be precisely the right word, since the proceedings at some moments resembled nothing so much as a very enthusiastic revival meeting. Except, of course, when the contingent from Walmart’s Chile operations got vocal – which was often – and it seemed more like a World Cup match.

    The meeting came at a good time for Walmart – sales, profits and market share are up as the nation and the world continue to grapple with an economic recession that gives consumers less money to spend, and apparently a greater impulse to spend what they have at a store that has turned “save money, live better” into a mantra that drew cheers from the audience every time it was uttered on the stage. Which was often.

    It also is a time when Walmart has been working to develop stores that will appeal to more than just its traditional customer, but rather has wide and less cluttered aisles and a more targeted selection with stronger fresh food sections where appropriate. "Our customers will stay with us when this economy turns around. I promise you that," Mike Duke, celebrating the first annual meeting since his ascension to the CEO position, told the crowd.

    Duke added, "I do believe that this economic crisis worldwide has brought a fundamental shift in consumer behavior. There is a 'new normal,' in which people want to save money and are getting smarter about saving money.” But, "This is not a time to slow down and take comfort in our success … We need to be obsessed with understanding customers however they shop, whether it's on a mobile phone, a laptop, or in a local store … We have to conduct ourselves not as a giant but as a nimble and innovative competitor in every market.”

    Other highlights:

    • In the media Q&A following the annual meeting, company vice chairman Eduardo Castro-Wright said that the company had considered – and would continue to consider – eliminating tobacco products from its stores. He said that “first and foremost, we serve customers” and sell them what they want, but acknowledged that selling tobacco seems at odds with Walmart’s increased emphasis on health. “It is an issue we debate constantly,” he said.

    • Castro-Wright also said that there are no plans to expand the company’s small-store Marketside concept. At this point in time, there has been “a protraction in demand,” and he said that the company would not be “accelerating the effort until we are in a better position to make a decision.”

    • Leslie Dach, executive vice president of corporate affairs and government relations, said at the same press conference that he believes at this point that the proposed Employee Free Choice Act – which would make it easier for unions to get certified by removing the requirement of a secret ballot election by employees – will not get passed by Congress. “A lot of members of the Senate have come to recognize the flaws in the bill,” he said, and added that it has become increasingly clear that “the arbitrary provisions of the bill will hurt the economy … I think it is going to be difficult for them to find the support that they need.”

    • Asked whether he shared former CEO Lee Scott’s passion for sustainability, new CEO Mike Duke said, “Sustainability was personal for Lee, but it also is personal for me. And, it is personal for out 2.2 million associates.” Duke added that it has been amply proven that “sustainability has been good for business … I am very, very committed to leadership.”

    • Shareholder votes announced at the meeting defeated six shareholder proposals, including one to combat gender discrimination and another to more closely align executive pay with performance.

    • Walmart also announced a new program to repurchase $15 billion of its shares, a plan that replaces a two-year-old $15 billion repurchase plan that had bought $11.6 billion in stock.

    • Duke also spoke about a President's Global Council of Women Leaders created by the company, designed to develop more women in leadership positions at a company largely run by men. It is made up of 14 members representing various markets in which Walmart operates, and Duke said that he is “not satisfied” with diversity efforts at the company that have taken place up to this point.

    • Company chairman Rob Walton, along with his sister Alice, and brother Jim, presented this year's Sam M. Walton Entrepreneur Award to Rick Webb, senior vice president for innovation at Walmart, recognizing “outstanding retail leadership and entrepreneurial spirit.”

    FYI…to read last Friday's exclusive “Bentonville Blog I,”:

    Click here

    KC's View:
    Just some final random musings compiled on the plane while flying home from Bentonville…

    • At what point, I wonder, will Michael Jordan cease to have the kind of celebrity status that he currently enjoys? Sure, most people today still remember his basketball prowess…but at some point he’s going to be better known as the guy in the underwear commercials. It’s inevitable. And I’m just wondering when that will be.

    • One of the performers at the meeting was a Latin singer named Paulina Rubio, who looked like Sue Lyons in “Lolita,” complete with heart-shaped sunglasses, as images of bar codes and oranges flashed on the screen behind her. This was a little surprising, because I didn’t think that the “Lolita” image was what Walmart was going for.

    • I may be wrong on this, but it looked to me that former Walmart CEO Lee Scott’s hair is longer and curlier since he stepped down.

    Published on: June 8, 2009

    The Credit Card Fair Fee Act was introduced late last week in the US House of Representatives, focusing on creating greater transparency in the negotiation of the purchase-based interchange fees that credit card companies charge retailers.

    According to the Reuters story, picked up by a number of newspapers, “Merchants and some lawmakers have complained that merchants and retailers have been blocked from being able to negotiate a fee structure with credit card networks Visa Inc and MasterCard Inc, whose members are banks. Visa and MasterCard set the fee structure and control almost three-fourths of the volume of transactions on general purpose cards … Store owners and retailers have also complained that banks collude to set the fee structure and block them from being able to negotiate lower fees, even going as far as calling the practice anti-competitive.

    “Critics have said those fees are passed on to consumers.”

    Last year, interchange fees rose to about $48 billion, up from $42 billion in 2007 and $36 billion in 2006.

    "This legislation will give merchants a seat at the table in the determination of these fees," said House Judiciary Committee Chairman John Conyers in a statement.
    "It is not an attempt at regulating the industry and does not mandate any particular outcome. This bill simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees."

    Credit card legislation passed by Congress last month addressed the interest rates that could be charged by banks and card companies, but did not focus on the interchange fee issue, which has been a major legislative priority for retailers in a wide variety of venues.

    KC's View:
    If consumers really understood the interchange fee issue, and how those costs are manipulated by the card companies and inevitably passed onto them in the form of higher prices, they’d be outraged.

    What’s amazing is that they don't understand. I’ve often engaged in conversations with shoppers about the difference between using a pin-based debit card (lower interchange fees) and signature-based debit cards and credit cards (higher fees), and people have said to me, “Why should I care?” And when I’ve said to them, “Because you get charged more in the long run,” they sort of get this odd, vacant stare. Go figure.

    Published on: June 8, 2009

    CIES is out with a mid-year edition of its annual Top of Mind survey, and it suggests that retailers and manufacturers are adjusting their priorities in the face of economic pressures from the recession. According to the CIES, “This latest survey shows that corporate social responsibility (CSR) is dropping down the list of priorities for the international food business sector, as the global economic crisis calls for changes to pricing, assortment and store formats.

    “The Top of Mind Survey shows ‘corporate social responsibility’ – including sustainable development, social standards and corporate governance – progressively falling from the industry’s number one priority in January 2008 to third place in January and now fifth in June 2009 as recession bites across the world.

    “By contrast, ‘the retail/brand offer’ – which includes pricing, assortment and format – climbed to third place, up from fifth in January. Another mover was ‘consumer marketing’ (such as loyalty programmes, promotions, advertising) which rose one place to rank seventh.”

    CIES says that “the economy and consumer demand” is ranked as number one on food industry executives’ minds.

    “While the fall of CSR may initially look troubling, I personally don’t feel there is cause for concern,” said Gareth Ackerman, chairman of South Africa’s Pick ‘n Pay Holdings and chairman of the CIES Summit Committee. “Between January 2008, when leaders gave it top priority, and now, retailers and manufacturers alike have completely rebuilt their business models to incorporate environmental and social sustainability into the DNA of their companies. Going forward, all business decisions must pass through the sustainability filter, or be rejected.”

    KC's View:
    One of the things that CIES will emphasize in its upcoming World Food Business Summit – scheduled to take place in New York City on June 17-19 – is the fact that there are numerous “ingredients for success” if you are in the food business…and that you can't depend on any one ingredient to create a relevant, viable offering.

    FYI…as we have for as long as we’ve been in business, MNB will be providing exclusive reporting a commentary from the CIES Summit…which will feature such outstanding speakers as Brenda Barnes, chairman/CEO of Sara Lee; Pierre-Olivier Beckers, president/CEO of Delhaize Group; Justin King, CEO of Sainsbury; AG Lafley, chairman/president/CEO of Procter & Gamble; David MacKay, president/CEO of Kellogg’s; Jeff Noddle, chairman of Supervalu; Indra Nooyi, chairman/CEO of PepsiCo; Irene Rosenfeld, chairman/CEO of Kraft Foods; and Lee Scott, former CEO of Walmart.

    It is an extraordinary list of speakers…and I’m pleased that MNB is contributing to the agenda … having produced a series of videos that will be shown at the conference, spotlighting some of the most interesting retailers in the US and focusing on their individual “ingredients for success.”

    The CIES Summit ought to be “top of mind” for retailers and manufacturers that want to be both relevant and compelling…

    Published on: June 8, 2009

    The Albany Times-Union reports that Price Chopper Supermarkets is suing upstate-New York based Giant Food Markets for $20 million, accusing the 12-store chain of stealing its sales circulars for the purpose of undercutting it on price.

    According to the story, Price Chopper has video of a beer distributor employee stealing advertising fliers from a employees-only section one of its stores, and evidence that the fliers were then passed on to Giant.

    Price Chopper reportedly has suspected the espionage for some time. But once it had video evidence, says CEO Neil Golub, it decided to act. “We’ve had enough,” he tells the paper. “At a time when ethics in this country are at an all-time low, enough is enough. It’s unethical, uncalled for, and they should pay a penalty for it.”

    Late last month, it was announced that Pennsylvania-based Weis Markets announced late last week that it will acquire the 12 stores owned by Giant Markets, which is not related to the Giant stores owned by Ahold USA.

    KC's View:

    Published on: June 8, 2009

    Food Lion has launched a new promotional program that allows shoppers to earn up to $10 in free groceries when they buy the retailer’s private brands.

    According to the company, customers get $1 in coupons for the first four Food Lion Private Brand products they purchase and 25 cents back for each additional Food Lion brand product they buy – up to $10 – during the promotion; the coupons are redeemable on customers’ next grocery bill. The promotion runs through June 23.

    “In today’s economy, we are focused on providing the best quality and value for our customers, and purchasing private brand products is one solution,” says Shavonne Clark, Food Lion’s director of Private Brands for Delhaize Group – U.S.

    KC's View:

    Published on: June 8, 2009

    In this month’s edition of Facts, Figures & The Future, Anne-Marie Roerink, director of research at the Food Marketing Institute (FMI), writes about the impact of the economy on shopping behavior, noting that in recent FMI research, “The economy leads the list of worries by a large margin and registered the highest-ever score at 8.7 on the 10-point scale. Shoppers are incredibly price and value focused and their implementation of money-saving measures pre-trip and in the store play out in eating out choices, cooking frequency, product selection, coupon use and channel preferences. Supercenters continue to gain market share and retailers now name them as the number one format impacting their companies. While emphasizing high-quality perishables remains an important strategy to stand out from the competition, retailers are increasingly focusing on price differentiation, private-brand strategies, loyalty programs and streamlining their assortment. All these tactics address shoppers' growing interest in low prices and the highest value proposition.

    No less than 96 percent of retailers feel that private brands will play a more important role in 2009. In 2008, the average growth rate of private brands far exceeded that of national brand items at 13.8 percent versus 4.2 percent, respectively.”

    Meanwhile, Roerink writes, “Retailers are divided over the impact of the economy on health and wellness and sustainability. While some have scaled back their efforts in these areas in lieu of value-based strategies, others are allocating additional resources. In health and wellness, 30.1 percent of retailers are planning on rolling out some form of nutritional labeling program in the next two years and many more retailers are implementing sustainability initiatives throughout their companies. The chief benefits of such initiatives are reducing cost and increasing customer satisfaction and engagement.”

    Also in F3, Todd Hale, senior vice president of consumer and shopper insights at Nielsen Homescan & Spectra, expands on the recession analysis:

    “As the recession intensified in the U.S., value retail channels (i.e., dollar stores, warehouse clubs and supercenters) continue to win shopping trips—particularly from more affluent shoppers. During the second half of last year and through the first (4-week) periods of 2009, these three retail channels drove stronger year-over-year trip growth than the grocery, drug and mass-merchandiser retail channels.

    “More affluent households (incomes of more than $70K) were shopping the grocery channel more often and account for the largest share (42%) of total basket ring dollars versus middle-income ($30 to $69.9K) and low-income households (less than $29K). For the past 11 periods, affluent households posted trip growth in every period, while grocery trips by middle-income households were about flat and grocery trips among low-income households were off in all but two periods.”

    Hale also focuses on four companies that he feels have excelled in marketing efforts organized around recession needs: Nestlé, Kraft, Tyson, and Wegmans.

    And, Phil Lempert analyzes a demographic change taking place among America’s food shoppers – it is becoming increasingly male, as the recession puts more men out of work than women, which is causing a shift in who undertakes specific home-related responsibilities … and therefore should affect how retailers and manufacturers exercise their marketing muscles.

    And, there’s much more.

    To get your copy of F3, go to:

    http://www.factsfiguresfuture.com/

    F3 is a joint production of the Food Marketing Institute (FMI), ACNielsen, and Phil Lempert.
    KC's View:

    Published on: June 8, 2009

    • The Great Atlantic & Pacific Tea Company, Inc. (A&P) has been recognized for its “noteworthy contributions to the growth of store brand products in the retail marketplace” and named “2009 Store Brand Retailer of the Year” by Private Label Magazine.

    In 2009, A&P expanded its private label program with 10 premium, specialty and national equivalent brands, growing private brands to more than 2,500 SKUs.

    • The Seattle Times reports that Starbucks, having promised to sell only bakery items that do not have high fructose corn syrup (HFCS) and make its baked items healthier overall, is being sued by one of its longtime bakery suppliers. Crestone Group in San Diego says that Starbucks owes it more than $2 million for “breaching supplier agreements.”

    KC's View:

    Published on: June 8, 2009

    • PriceSmart, which operates membership club stores in Latin America and the Caribbean, says that its May sales increased 7.5 percent to $102.0 million from $94.9 million during the same period a year ago. Same-store sales were up 3.9 percent.
    KC's View:

    Published on: June 8, 2009

    Email continues to come in about the “prize patrol” programs used by Daymon and Brookshire’s to encourage private label product usage by their employees.

    One MNB user wrote:

    Continuing the lively debate over the private label Prize Patrol program: the righteous, Big Brotheresque indignation expressed by quite a few readers, despite the completely voluntary nature of the program, strikes me as just the next example in a long line of examples of Americans manifesting the view "I want it all, and I want to complain about it, too." Why are we so like that now? More and more, the public persona of America, it seems to me, is becoming ever-more fragmented, ever-more frantic, ever-more desperate. The kinds of things people choose to make a big deal out these days -- like this Prize Patrol program -- seem sometimes to be increasingly small potatoes in the grand scheme of things. I heard a comment about university professors many years ago that said, in their collective minds, "no issue is so small that it can't be made a big deal of." Here, with this Prize Patrol program, we hear this cacophony of outrage from people fearing such a program just leads us one step closer to, what, a totalitarian society? 1984?

    I have this pet hypothesis about "the American psyche" that kind of says a lot of what we see in terms of public outrage, outlandish personal behavior, etc. is at some level, a manifestation of people feeling increasingly marginalized as the seeming pace of life speeds up, arguably "at an increasing rate." In such an environment, I could well imagine many people who, on some ethereal level, feel the need to "validate their continued relevance", but how? Maybe they think whatever they represented to the world in the past no longer matters, no longer is valued, so where can they turn? How can they demonstrate to the world that yes, in fact, it's still worth their continuing to get up every morning, worth their while to not simply just cut the cord and die?

    To any such people, maybe the frustrating perception is that yes, in fact, they ARE being increasingly and unstoppably marginalized by society at large, are being unendingly stamped "no longer relevant" by the world they face, and so they strike out any which way -- albeit, perhaps, in increasingly scatterbrained ways -- that randomly occurs to them. Like seizing on this Prize Patrol program. Maybe faced with the weight -- real or perceived -- that the world writes their very existence off more and more each passing day, they grab onto something like this private label program, hoping against hope that this is a place they can still leave a mark; a topic where whatever they may have to say on the subject may yet still matter to someone; anyone. "Is anyone even listening to me?", maybe they're wondering. "Does anyone even care if I jump off this bridge or not? Helloooooooo...."

    Again, just my pet theory on this; personally, I don't have much of a view one way or the other about the Prize Patrol program. Ain't gonna change my life, no matter whether it stays or goes. But to whatever segment of the American population that may be subject to this "increasing irrelevance perception", maybe in fact, there IS no issue so small that it can't be made a big deal of. Who knows?


    MNB user Lori LeMay wrote:

    As a Brookshire’s employee, I am shocked and a little offended by all the negative feedback surrounding the private label promotion my company has implemented. Brookshire’s is a respectable company that treats its employees as they should be treated, as assets. Most of the employees here have lengthy tenure with many corporate employees and executives starting as sackers and cashiers. I can assure you this program is nothing more than a promotion supporting private label. Food Club is a new private label for us and there have been many promotions going on to promote the fact that our private label has changed and is better quality. This is just one of those promotions, plain and simple.

    One of the original emails that objected to the terms of the private label promotion suggested that it must have been developed by someone named “Hitler, Castro or Obama.” Equating Brookshire’s and Daymon with Hitler offended some people, but the MNB user who made those original comments wrote back to defend his position:

    While I am sure my comments were offensive to Brookshire management, I apologize for the harshness of them, but not for the directness intended in them.

    I tried to find out all the details about this program, but failed and only relied on your original article, which did not spell out all the facts, such as if the program was really voluntary etc.

    If anything I hope this makes companies and people look harder at programs they introduce and all of the possible ramifications of programs and public perceptive.

    From the letters printed in MNB it certainly appeared to me that the majority had my same view, just maybe not as harsh and offensive. Sometimes harshness wakes people up.

    Maybe harshness would help eliminate some of the voter apathy throughout this country.


    First of all, I checked the original MNB story and the word “voluntary” was not used. So maybe some of this is my fault. However, the fact that the program was voluntary seemed incredibly obvious to me, and to a lot of other MNB users who wrote in …

    As for harshness being a way to eliminate apathy … well, there’s sharp commentary, and there’s offensive commentary. (I’m perfectly capable of both, I concede.)

    Brookshire’s Rick Ellis makes an excellent point about all the emails that MNB posted on this subject:

    Shocked that no one even said a word about our president being equated with Castro and Hitler. Amazing!

    I noticed that, too…and was curious if anyone else would pick up on it.

    But it doesn’t hugely surprise me. I’m almost never surprised by some of the things that are said by wingnuts on either end of the political spectrum. (Does calling come people “wingnuts” qualify as ”harsh” commentary?)

    There are actually websites out that created by people who believe that Obama is either Satan or the spawn of Satan. (People who no doubt thought that “The Omen” was a documentary.) So when you think about it in those terms, being equated with Hitler isn’t so bad.

    The problem is that some of these people used to be holed up in small cabins located in distant woodlands, and they scrawled their manifestos on legal pads that never saw the light of day. Now, there’s the Internet…and technology combined with freedom of speech means that their opinions get air time.

    I tell myself that it is good that even the ugliest of sentiments are seen and heard, since I’ve always believed the light is the best disinfectant.

    But sometimes I wonder…




    Also got a number of emails about Friday’s coverage of the Walmart annual meetings…

    One MNB user wrote:

    Thanks for the commentary on your day Thursday. As a WMT supplier, I always like to hear other people's observations on what they see and experience. What I found interesting was the empty shelves in the DC. At the store level, there is a "Clean Backroom" initiative where all inventory should be on the sales floor - the truck comes in, inventory gets checked in and then goes straight to the floor instead of being stored in back. From what I've seen, most stores are still trying to figure it out. Apparently there are several Supercenters in the midwest that have been able to figure it out. So far, the "Clean Backroom" also means outages as the DC and replenishment system have not yet meshed with POS and buying trends.

    I have been hearing from several outside merchandisers that the stores are no longer allowing vendors to use shopping carts. They have to go in back and get a rocking cart. Apparently WMT has figured out that each shopping cart equals $50 in sales (I've been in stores mid day in the middle of the week and every shopping cart is being used by customers, with people waiting for carts).

    Interesting times for Wal-Mart.


    And MNB user Theresa Ruppert wrote:

    Thank you so much for the coverage of day 1 of your trip to Bentonville. When you told us you were going to Northwest Arkansas, I was really hoping for something different in your coverage. You definitely did not disappoint. Your immediate reactions to what you were witnessing were awesome. The only bummer for me is that I did not happen to be in Bentonville at the time. Bonefish Grill is great, but more importantly you made yourself available to your readers. Not too many people are doing that these days. They are missing an opportunity.

    I loved getting together with MNB users in Bentonville last week at the Bonefish Grill … and I’m going to make a real effort to do more of it as I travel around the country.
    KC's View:

    Published on: June 8, 2009

    Roger Federer won a straight set French Open championship match against Robin Sederling, tying the record of 14 major singles titled held by Pete Sampras.

    The French Open was the only one of the Grand Slam titles that had not been won by Federer, and experts say that the win goes a long way toward cementing his reputation as perhaps the greatest tennis player in history.

    KC's View: