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    Published on: June 26, 2009

    The Kroger Co. announced that Rodney McMullen, the company’s vice chairman, has been named president of the company, succeeding Don McGeorge, who is retiring.

    The election took place at Kroger’s annual meeting yesterday.

    McMullen began working at Kroger in 1978 as a part-time clerk; he became vice chairman in 2003.

    McGeorge reportedly will remain at Kroger through the end of the year as special advisor to the CEO, and also will remain on the board of directors.
    KC's View:
    It is interesting that three of the nation’s top four food retailers – Walmart, Supervalu and now Kroger – have had major changes at the top in the last year. (At Walmart, CEO Lee Scott was succeeded by Mike Duke; at Supervalu, Jeff Noddle is being succeeded by Craig Herkert.)

    It’s also interesting that at Kroger and Walmart, the changes took advantage of personnel already in-house; at Supervalu, they shopped at Walmart to find Herkert.

    What this means, at the very least, is that Supervalu is a company in transition to a far greater extent than either Kroger or Walmart, which seem to be companies at which existing strategies are working.

    Published on: June 26, 2009

    The National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) have called off the merger that they originally announced two months ago.

    "NRF and RILA will devote all resources to continuing the work they are each doing to address the serious issues that America's consumers and retailers are facing in today's economic environment," the groups said in a joint statement.

    In a letter to NRF’s members, CEO Tracy Mullin wrote that “NRF will continue to serve as the association that represents the entire retail industry—from the largest retailers in the world to the smallest, and of course all of the thousands of companies in between.” While no specific reason for the decision was disclosed, industry observers suggest that RILA’s constituency of major retail brands conflicted with NRF’s broader constituency.

    Mullin also noted that her planned retirement, originally scheduled for December, is now on hold.
    KC's View:
    It seems to me that the perceived conflict of interest between the two constituencies is a completely logical reason to abandon the merger. It is hard for any single organization to represent both a single store independent and the biggest chains – there are too many competing interests.

    As we say in so many cases here on MNB, there is a difference between effectiveness and efficiency. One should never choose the latter and in doing so, sacrifice the former.

    Published on: June 26, 2009

    In Minnesota, the Pioneer Press reports that shareholders attending Supervalu’s annual meeting yesterday voted to approve a “say on pay” resolution that gives stockholders an advisory vote – but not a veto - on executive compensation packages.

    The company’s board of directors had recommended that the resolution be defeated, and outgoing CEO Jeff Noddle said that it was “"unnecessary and would put the company at a competitive disadvantage."

    According to the story, “The proposal was introduced by a small Colorado shareholder, Gerald Armstrong, who in a proxy complained about Supervalu's use of ‘golden parachutes, golden coffins, financial consulting and tax planning benefits, use of corporate aircraft and stock options’.” But Noddle, who got $4.1 million in total compensation in the last year but did not get a bonus because the company did not meet agreed-upon performance metrics, said that the compensation committee has been “very diligent over the years.”
    KC's View:

    Published on: June 26, 2009

    The Chicago Tribune reports that supercenter pioneer Meijer is developing a new, smaller store format that it plans to debut in Illinois next year.

    Of course, “smaller” is relative. Meijer normally operates supercenters that are 200,000 square feet, and this new format will be about half that.

    If the format, which is designed to fit into locations that Meijer might ordinarily not fit into, is successful, the company says it will consider it for other markets.
    KC's View:

    Published on: June 26, 2009

    The Seattle Times reports that Starbucks has developed a new store design program that emphasizes local materials and a less cookie-cutter appearance that will fit better into local communities.

    "Ultimately, we hope customers will feel an enhanced sense of community, a deeper connection to our coffee heritage and a greater level of commitment to environmental consciousness," Starbucks' president of global development, Arthur Rubinfeld, said in a prepared statement.

    The first of the new stores was opened across from Seattle’s Pike Place Market earlier this year. Other stores emphasizing local themes have been opened in Paris and in Seattle’s University Village.
    KC's View:
    I’ve been in the new Pike Place store, and it is very nice. But I’m not sure that focusing on this kind of design issue will get Starbucks’ profitability back to where it needs to be – just my cursory look at the store made me think that it has a higher than average nut to crack before it starts making money.

    But I admire the impulse…especially because I think in the current environment Starbucks isn’t just vulnerable to attacks by McDonald’s and Dunkin’ Donuts, but also to inroads made by aggressive independents.

    Published on: June 26, 2009

    Two cultural icons died yesterday: Michael Jackson, who died of cardiac arrest at age 50, and Farrah Fawcett, who died at age 62 after a long battle with cancer.
    KC's View:
    While the prime of Farrah Fawcett’s career was three decades ago, it is a mark of her enduring appeal as a cultural icon that people still were interested in her. I’m mostly aware of that because 32 years ago, I spent a brief time working on her security detail during the filming of her first post-“Charlie’s Angels” movie, entitled “Somebody Killed Her Husband.” (It was a terrible little movie, despite the fact that her co-star was a very young Jeff Bridges.) My friend Jim Donald likes to say that everybody should have a “fish story,” or some distinctive characteristic that people remember you by; I’ve always included my work as Farrah’s bodyguard in my bio as a kind of “fish story,” and inevitably it is the one thing that most people wanted to know about. Even 30 years later.

    The fact is that I didn’t get to know her at all during my work; mostly, my impression was of someone who was delicate and a little shy and overwhelmed by the fact that she was such an enormous celebrity; most of our job was protecting her from the crush of fans and fanatics who had her poster hanging on their walls and thought they deserved to touch her and be touched by her.

    I actually have Farrah to thank, in part, for getting my first newspaper job. Nobody wanted to hire me because I had no experience, until I walked into the office of Bill Chanin, editor of the Rockland Journal News, and saw the famous Farrah poster hanging there. (Something no editor would or could do today, but this was 1978 and a very different time.) My work for Farrah gave me a leg up on the competition, and my journalism career began. Thanks, Farrah.

    I also can tell you this. She was pretty light. I know this because late one evening after shooting I was responsible for taking her to the limousine, and there was an enormous snow drift between us and the car. So she climbed on my back and I carried her across the snow…

    I think that qualifies as a “fish story.”


    Published on: June 26, 2009

    Responding to yesterday’s MNB Radio piece about smart phones, MNB user Frederic Arnal wrote:

    To reinforce your point… I just received an e-mail from American Airlines announcing that we can now check-in on-line, have our boarding pass sent to our smart phone and then scan the phone at the gate. No more paper!

    Just the next logical step.

    MNB took note yesterday of a new study by Miller Zell suggesting that concerns about the impact of the recession on in-store consumer decisions may be overstated. In my commentary, I didn’t dispute the findings…though I noted that it all depends on how you define “in-store decisions.” And I pointed out that Miller Zell is in the in-store signage business…which just puts the study in context.

    Miller Zell CEO Sandy Miller thought I did his company a disservice:

    Your final line…missed the mark on what we do for many of the top retailers and their suppliers.

    Our business is developing retail strategies and turnkey execution programs from total store design to promotional programs focusing on what the shopper sees and reacts to while in stores. Our sole goal is developing programs for our clients, which measurably increase their sales, margins and ROI on a sustained and growing basis.

    Respectfully this is far more than “…in the in-store signage business.”

    That said, we read, consider and discuss the excellent ideas MNB presents daily: Well done.

    Well, I didn’t say in-store signage was all you did.

    But point taken.

    We also reported yesterday about a new and upscale Walmart Neighborhood Market that was opened in Rogers, Arkansas. In my commentary, I noted that when I was in Bentonville a few weeks ago, I saw an exceptional Walmart Supercenter and Sam’s Club…and wrote:

    It hardly is unusual for companies (not just Walmart) to have their nicest stores somewhere near headquarters. After all, that’s where the corporate chieftains are and often where they (or their spouses or household help) shop. So people want the stores to look great.

    In a lot of ways, though, it ought to be up to those same executives to identify stores that are the farthest from headquarters, and make sure that they are as good as the ones nearby. Maybe it is through frequent visits, or swapping personnel, or some other technique.

    An MNB user who happens to be from Walmart wrote:

    Well I just can’t let this one go without a comment … or three:

    1. One of the reasons the nearby stores get the ‘new’ remodel packages early on is that they are close enough for all of us who helped design them to see what the end product is up close and personal & correct errors soon enough in the roll-out process to be helpful. Nothing ever gets built the way it’s drawn. There is of course the fact that they are close to the Home Office and the execs like to show visitors the best we have going.

    2. The Rogers Supercenter was remodeled just last fall to the cleaner-brighter-more colorful concept, and that look has been rolling out into the current remodels across the country. Remodels & updates are based on the age of the store and the market; there are tiers of intensity, i.e. how much of the whole package the store gets, based on several factors. All stores usually get remodeled every seven years. The store across from the HO is currently being updated, and we are experimenting with some new ideas there as well.

    3. The Pinnacle Neighborhood Market was designed to be unique, but is also a test store for new concepts, from food offerings to the look & feel of the store. Many of these things will be incorporated in NHMs in the future, although not all and not everywhere …

    Always enjoy your column, especially when I can answer back!

    Thanks. I hope you don't think I was insulting your stores…far from it. I was impressed. And continue to be.

    And, on the subject of the growth of private label, MNB user Craig Espelien wrote:

    The real key to what will happen to private brands as the economy improves is based on a variety of things – I have been through three or four economic downturns during my private label experience and they are all about the same. The largest factor is quality (as you correctly pointed out) – whether retailers continue to offer quality products or if they choose to squeeze a few more cents out of the cost and sacrifice quality for a few more pennies of profit. In the past, economic downturns have helped private brands achieve a new plateau of sales. When the economy improves, there is a period of flattening where the plateau is maintained (with minor movements up or down) for a period of time to see if both the economy and the quality are sustainable.

    The retailers that are able to leverage the shift in consumer awareness are those that think a bit more outside of the box – by eliminating unproductive brands (and pushing those sales into both private brands and more value added brands that exist in the category or sector) and by working in tandem with strategic private brand suppliers to develop innovative items that fit a future consumer need or deliver superior performance against the competition.

    Too often this opportunity is passed up in a “me too” approach to brand building – the thought process that everyone wants change as long as it is exactly the same as something that already exists (I can not even count the times when superior products were presented to retailers and their response was inevitably – “what is the national brand equivalent item?”). Where in other parts of the world key retailers and private brands lead the development process, very few retailers in the US are willing to do that (Wegmans, Trader Joe’s and a few others are the exceptions that sort of prove the rule).

    Hopefully, this downturn will trigger additional foresight amongst retailers to eliminate unproductive brands that add no incremental value for the consumer and move to more product development of things the consumer is not yet aware they want or need (sort of like Swiffer).

    Keep up the good work – love the columns and discourse.

    Our pleasure.
    KC's View:

    Published on: June 26, 2009

    Just when I thought I was out... they pull me back in.

    Okay, okay…I know I said I was going on vacation.

    But the thing about this job is that a story comes across the Internet, and I instantly want to write about it.

    That was the case yesterday when the Kroger news and the Farrah story popped up on my laptop. And then the Michael Jackson story (though as you can see, I have almost nothing to say on that one). And then there were a couple of other stories, and then a few emails that I thought worth sharing.

    So I sat down at the laptop and knocked off another MNB.

    There’s another line, this one from “The Godfather, Part II”:

    This is the business we have chosen.

    My little holiday is going to start tomorrow (really!), and I’ll be back on Monday, July 6.

    Have a great weekend…a great week…Sláinte!!
    KC's View:

    Published on: June 26, 2009

    One of the features of the recent CIES World Food Business Summit was a series of video segments, sponsored by JohnsonDiversey and produced by MNB “Content Guy” Kevin Coupe, that gave the global delegates a taste of some of the various food retailing experiences available to US shoppers, with a theme of “ingredients for success.”

    There is a limited supply of videos available exclusively to the MNB community…and so if you’d like one, email Kevin Coupe at: , make sure you put the word “Video” in the subject line and include your name, title, company and street address … and he will pass it along to JohnsonDiversey so they can send you a copy while supplies last
    KC's View: