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    Published on: July 8, 2009

    MNB has learned that the hot rumor at Walmart headquarters these days is that John Fleming, the company’s chief merchandising officer/executive vice president since 2007, plans to leave the company to take a very senior position at Gap Inc., and that he may be joined by Dottie Mattison, who runs Walmart’s apparel division in New York…and who used to work for Gap’s Old Navy division.

    If these departures take place, it is anticipated that Walmart’s New York apparel operations could be moved back to Bentonville.

    Fleming joined Walmart in 2000 as chief merchant for Walmart.com and subsequently served as president/CEO of the online division; he also served as executive vice president/chief marketing officer for Walmart Stores. Previously, he spent 17 years at Target Corp.
    KC's View:

    Published on: July 8, 2009

    The Wall Street Journal reports that the Obama administration has proposed a toughening of the nation’s food safety standards, announcing “a series of steps aimed at reducing outbreaks of salmonella, E. coli and other pathogens … The panel's recommendations represent a shift in food regulation to prevention from reacting to outbreaks of food-borne illnesses … By the end of this year, the government will also develop new standards to reduce salmonella contamination in turkey and chicken.”

    In addition, the Journal writes, “the Food and Drug Administration later this month will issue draft guidance on how to reduce E. coli contamination in leafy greens, tomatoes and melons. The guidance eventually will become mandatory measures the industry must follow. In addition, the agency will develop guidelines on how the food industry can help the government track contaminated products.”

    Both the Food Marketing Institute (FMI) and the United Fresh Produce Association said that they supported the efforts by the White House.

    “Today’s White House announcement demonstrates how the government and the food industry can work together to make meaningful and practical food safety improvements,” said Tom Stenzel, United’s president/CEO at United.

    “We are pleased that the White House will focus on prevention, rapid response and increased and improved communications as this is what will be the essential factors for ensuring food safety,” said Leslie Sarasin, president/CEO of FMI. “We look forward to working with FDA and USDA to implement the forthcoming White House standards for a national traceback system.”
    KC's View:
    It is about time. There are, of course, no guarantees that any of this will work. But it strikes me as the right direction for the government to take as it tries to get the nation’s burgeoning food safety issues under control.

    Published on: July 8, 2009

    The Dallas Morning News reports that “7-Eleven Inc. is using its 6,300 U.S. stores to send a message to Washington and the credit card industry.

    “Starting this week, the Dallas-based convenience store operator hopes to solicit 1 million signatures on petitions calling for Congress to change what the chain says are unfair and excessive credit card transaction fees. … 7-Eleven, which alone paid $160 million to credit card companies last year, is leading the lobbying effort, working with the (National Association of Convenience Stores), which represents 146,000 stores nationwide. The efforts come as the sweeping credit card rules that Congress passed go into effect in February prohibiting certain fees on consumers.”

    "The card companies merely pick a rate and then they charge away – no notice, no discussion. In fact, we rarely know before we start paying higher fees that the card companies have new rates," Keith Jones, a 7-Eleven lobbyist, tells the paper.
    KC's View:
    Good for 7-Eleven. I’ve never understood why more retailers didn’t take the battle directly to the credit card companies, marshalling consumer opposition to what I firmly believe is an untenable position.

    Other chains should take up the strategy, and the various trade associations ought to be offering advice and counsel on how to best do so.

    Published on: July 8, 2009

    A curious survey has been put out by the Natural Marketing Institute (NMI), suggesting that “with more than $1 trillion in spending power, men are … more likely than women to buy brand name products, particularly at the grocery store. NMI found that about half of men are willing to purchase national brands over store brands as opposed to one-quarter of women. While shopping was once considered a woman’s domain, men are increasingly playing a role or even becoming the primary shopper for their family. Less than a decade ago, men accounted for only twenty percent of primary grocery shoppers, but today one-third are doing the majority of their household grocery shopping.”

    As part of the release, NMI managing partner Steve French observed, “Boomer men are less affected by the recession than women. In fact, forty percent of men do not feel the amount of stress in their lives has increased due to the current economy while less than 30% of women feel that their stress level has not increased. Men are also more likely to spend versus saving and make impulse purchases. They represent tremendous targeting opportunities across a range of industries.”

    The study is part of NMI’s newest white paper entitled, “Back in The High Life Again: Soaring Opportunities to Market to Baby Boomer Men.”
    KC's View:
    This is sort of interesting, since most of the reports I’ve seen indicate that men – not women – seem to be bearing the brunt of the current recession, at least when it comes to employment. In fact, they say that it won’t be long before there are more women in the US workforce than men…a clear result of the present economic downturn.

    I’m not surprised that men are more brand conscious than women, nor that we are doing more shopping. (In fact, I’ve been arguing on MNB for years that food stores ought to target men as potential customers rather than simply accept that they do less shopping.) But I’m a little amazed that if this research is correct, we also seem to be profoundly dumb – we may be losing our jobs and facing enormous economic pressures, but we’re still buying brands, dammit, because we’re men, manly men.

    Maybe not dumb. Maybe just insensitive. Which actually wouldn’t come as a surprise to many of the women I know.

    Published on: July 8, 2009

    Interesting interview in Smart Money with Kraft Foods CEO Irene Rosenfeld. Excerpts:

    The recession: “This economic environment is as difficult for Kraft as it is for most other companies, but people have to eat. Food is a staple. As consumers are starting to eat at home more, we are finding that it benefits our business disproportionately, because when they come home, they come home to Kraft … In the current economic environment, we will see private labels continue to grow. Our focus is to ensure that it's not growing at our expense. Last year's results and this year's so far show we're holding our own.”

    Food safety regulation: “We've been helping the agencies to decide what the appropriate regulatory position ought to be, and we will continue to be an important partner to any of the government agencies … There's no question that we are suffering from the fact that the FDA was particularly hard hit over the last few years. I'm delighted that President Obama has made it a clear priority of his administration.”

    The role of quality: “We had significant share losses in salad dressing for almost a decade. Then we reformulated the dressings with natural ingredients, took out the preservatives, made the packaging more contemporary, improved the advertising. Last year for the first time, we began to see that share performance turn around … When I came back in 2006, only about 44 percent of our products were preferred to the competition. Now that's up to 65 percent.”
    KC's View:
    One of the more telling components of the interview is the fact that Kraft, in an effort to reduce costs, at one point reduced the amount of cheese in Kraft’s flagship Macaroni and Cheese product. When Rosenfeld returned to the company, one of the first things she apparently did was return the product to its original formulation. This strikes me as the classic case of focusing on efficiency rather than effectiveness…and is a great example of a misstep that companies should avoid.

    Published on: July 8, 2009

    Brand Week reports that Doritos is using the Internet as a way of generating sales for its Late Night special edition chips. According to the story, consumers who buy a bag of chips get a code that allows them to access a web site featuring “exclusive blink-182 and Big Boi concert footage.”
    KC's View:
    This sounds like a smart marketing scheme to me. Of course, I also feel completely out of it since I have absolutely no idea who or what blink-182 and Big Boi are.

    Published on: July 8, 2009

    The New Mexico Business Weekly reports that Whole Foods has decided to test all of its private label products for GMOs, and will certify these items’ lack of GMOs on its shelves.

    According to the story, Whole Foods is working with “with the Non-GMO Project, a nonprofit collaborative of manufacturers, retailers, processors, distributors, farmers and others. The product verification program is the reportedly the nation's first system designed to scientifically test whether a product has met a set of defined standards for the presence of genetically engineered or modified organisms.”
    KC's View:

    Published on: July 8, 2009

    Dow Jones reports that Walmart’s Asda Group in the UK “will start e-mailing customers images and details of products from the store's buyers in the Far East, asking whether they want to see them in stores. The program is believed to be one of the first of its type in the world for a retailer … The program is planned as a pilot that will begin this fall for non-food items and encompass all 363 Asda stores in the U.K.”

    There currently are no plans to expand the program to the US. At least, none that Walmart is talking about.
    KC's View:

    Published on: July 8, 2009

    • The Los Angeles Times reports this morning that concerns about minors buying alcohol at self-serve checkouts has resulted in the California State Senate considering a bill that would require stores to have live checkout personnel process all alcohol sales. The bill already has been passed by the state Assembly, and has garnered significant community support.

    According to the story, “If approved, the legislation would also would have an outsize effect on Fresh & Easy Neighborhood Market stores. That chain, which uses self-service checkout exclusively, would have to adjust its model or give up lucrative alcohol sales.”

    • The Seattle Times reports that the city of Bellevue, Washington, is considering “an ordinance that would fine stores that don't collect carts, make taking a cart more than 100 feet from store property a civil infraction, and require signs to educate people about the law.” However, the story concedes that herding carts is roughly akin to herding cats … but the legislation is seen as necessary to resolve a problem that is perceived as having gotten out of control.

    “In Portland,” the Times writes, “grocers came together and started a cart collection service that sweeps the metropolitan area six days a week, 10 hours a day, and picks up 3,000 carts a month, said Joe Gilliam, the Northwest Grocery Association's president. If nongrocers with shopping carts joined the service, he estimates the number would grow to 6,000 a month.”

    • Hawaii-based QSI Inc., the parent company of Times Supermarkets, which operates a dozen stores on Oahu, will acquire seven Star Markets - four on Oahu, two on Maui, and one on Kauai. Terms of the deal have not been disclosed.
    KC's View:

    Published on: July 8, 2009

    • PriceSmart, which operates club stores in the Caribbean and Latin America, said that its June sales were up four percent to $95.7 million, on same-store sales that were up 1.4 percent.
    KC's View:

    Published on: July 8, 2009

    • Oscar G. Mayer, the retired chairman of Oscar Mayer Foods – and the third Oscar Mayer in the family that founded the famous meat company – died Monday at age 95. Mayer retired from the company as chairman in 1977; the company was later sold to General Foods and now is part of Kraft Foods.
    KC's View:

    Published on: July 8, 2009

    Yesterday, MNB had a piece about how, according to one study, frugality seems to be cool … though I continue to have some reservations:

    While I believe that this is how people feel today, I remain unconvinced that this is necessarily a permanent attitudinal shift that will pervade how people think and feel in all circumstances. I just don't think it is that simple. When they can, people will spend money on indulgences…for example, large flat screen TV sales are up, probably because people want a better TV/movie viewing experience while on their “staycations.” There are no absolutes – ever - and marketers who believe there are run the risk of making a big mistake.

    MNB user Paul Higham responded:

    When I was CMO at Wal-Mart (for 13 years) I operated through a number of recessions. While trying to understand how people were feeling about the current tough times years ago we asked for comments from a group of our customers. One lady got right to the point. I will never forget what she said. She pulled out her check book with great flourish. She slammed it down on the table and said: "This is the economy. When there's money in it the economy is good, when it's empty the economy is awful!"

    Amazing how we are aware of the overall national and world-wide economic state but we always see it through our own present circumstances which drives our behavior.


    Agreed.




    Responding to Michael Sansolo’s column yesterday about Zappos.com, one MNB user wrote:

    Enjoyed your piece on Zappos - - having lost a step to my kids as well I may need to try it out also. It seems that the 2nd lesson here is that what is projected externally is a natural extension of how they conduct business internally - - treating their employees fairly, transparently, a boss who doesn't seem to take himself too seriously, resulting in an engaged part of a unique culture that is focused on the customer. Lots of interesting articles and blog posts following their being named one of Fortune magazine's 'Best 100 Places to Work' in January. Result is what appears to be an energized and committed work force, even though not all of them are necessarily getting rich in the process.




    We had a piece yesterday about an Australian who owns a fishing fleet that managed to almost deplete the oceans of bluefin tuna…but who has now turned around and figured out a way to breed the species in captivity, which will essentially repopulate the oceans with a species that is perfect for sushi and very expensive.

    One MNB user wrote:

    Though what he has done is great it also sounds like he is responsible, or at least partly so for the mess in first place. I'm not sure I can really give him a pat on the back. How about fishing within sustainability?

    I’m an enormous believer in redemption. Let’s hope this fellow has learned a lesson that he can apply to other segments of his business.




    On another, and familiar subject, one MNB user wrote:

    As a frequent shopper I now have a plethora of all types, colors and sizes of reusable bags, which I just as frequently forget to bring into the store when I shop and only remember when it is time to pay, prompting me to buy even more bags. What’s interesting, though, is that most retailers did not design their bags to fit into the bag holders the cashier’s use. I have watched many cashiers struggle with the r-bags because there is no place to put them where they can easily be filled. Why didn’t they make them the same design as the plastic ones? I have even seen cashiers so frustrated that they put the scanned products into plastic bags and then put the plastic bags into the reusable bags!!

    I haven't had that problem. But then again, I carry mostly the clearly superior MorningNewsBeat shopping bags created by EcoBags. (You should check out their site…just click on the tile ad on the right hand side of the page. How’s that for a plug?)
    KC's View: