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: July 9, 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:

    http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las



    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. I’m reporting this morning from Lake Okoboji, Iowa, where Michael Sansolo and I are getting ready to give the first of two speeches to the Iowa Grocery Industry Association.

    I’m not sure what’s going on, but stories and studies about the relationship between branding and loyalty seem to be popping up everywhere…

    Yesterday, we had a story about a new study by the Natural Marketing Institute (NMI) suggesting that men are more likely than women to buy brand name products, particularly at the grocery store, and that boomer men seem to be less affected by recession anxieties than women. As I said yesterday, the first part doesn’t surprise me but the second part does…especially because there have been a ton of reports saying that a lot more men are losing their jobs than women in this economic downturn.

    Now, I see a piece in the New York Times saying that the Journal of Marketing reports that there are some key differences between male and female brand loyalty. Women, it seems, are more loyal to individual service providers, while men tend to be more institutionally loyal. My personal experience is not entirely in synch with these findings. I certainly am institutionally loyal to companies like Apple; my brother, who seems to have an instinctive distrust of what he views of the cult of Apple, says I would buy an iTurd if the company put one on the market. (I’m not sure he’s right about that, but I do know one thing – if Apple did make an iTurd, it would look better and smell better than any other turds on the market.)

    But I also think that this isn’t always the case. Call it laziness or call it being a creature of habit, but the same guy has been cutting my hair for 20 years, and if he were to change shops, I’m following him. (In fact, I’ve already decided that when he retires, I’m going to a crew cut, because I don't want to go through the process of breaking in a new barber.) I’ve also been going to the same doctor for more than two decades, and I’m following her wherever she goes. I don't think I feel the same way about my favorite bartenders, though it’s never been tested – the ones who qualify have all worked in the same places for years.

    I asked Michael Sansolo what his feeling was about this, and he agrees that it depends on the circumstance. He’s followed barbers from shop to shop, but he said that the greatest case of institutional loyalty that he could think of had to do with Tom Seaver and the New York Mets – he was an enormous Seaver fan growing up and when the Mets traded the pitcher, he was apoplectic…but he remained primarily a Mets fan, not a Seaver fan.

    I also saw another study the other day, this one conducted by Catalina Marketing, that said that brand loyalty is weakening in general – that “less than half of consumers that made 70 percent or more of their category purchases with a single brand in 2007 maintained a similar level of loyalty in 2008.”

    This makes sense, especially because the onslaught of the recession and the emergence of private label products has increased the likelihood that consumers will switch from one brand to another – depending, of course, on factors such as price and the specific item. For some families, I’d guess, brand loyalty will be more important in the soft drink category than the laundry detergent category…and for other families, the priorities will be at polar opposites.

    The common thread here, it seems to me, is that more than ever, shoppers are taking the notion of choice seriously, and they are making situational decisions in a wide variety of circumstances. It is there when they choose one store over another, or one product instead of another. They are establishing situational priorities when they choose organics in one category and traditional products in another. And they are invoking their primacy when they put institutions ahead of service providers or vice versa, and make choices about baseball teams, doctors, barbers and bartenders.

    In every case, the operational phrase is, “it depends.” It depends on a wide variety of factors, many of which retailers and manufacturers – or institutions and service providers – cannot control.

    But there are things that the consumer does not control, where we can assert ourselves. And that’s how good we are at our jobs…how we define and implement our differential advantages.

    You see, in a lot of ways that’s what’s missing from all these studies, valuable as they may be. They assume a level playing field…but a level playing field is the retailer’s and manufacturer’s worst nightmare, and the recession has made it even more so because it seems to have freed many consumers up from old habits and assumptions that drove their behavior. They’ve been liberated.

    We can either be victims or victors in this liberation. Personally, I’d rather be the latter. I think we all need to take advantage of the moment and declare our own liberation from old mindsets, habits, processes and priorities. We, also, can make choices … and the most important one we can make has to do with being so effective in our products and services, so clearly defined as offering specific shoppers specific differential advantage, that it provides a clear narrative for the way we do business and the way we are perceived.

    Let me make a suggestion for how to achieve this.

    While on vacation last week, I read a fascinating book entitled Not Quite What I Was Planning.” The impetus for the book was the fact that many years ago, Ernest Hemingway was asked if he could write a short story with a clear narrative in just six words. And he did. The six words were these:

    “Baby shoes for sale. Never used.”

    I’m still blown away by that use of language. It is heartbreaking in its clarity and simplicity. I write more than 3,000 words every day, and I don't even come close to that … but of course, that’s why he’s Hemmingway and I’m just the Content Guy.

    Anyway, the book I read is a compilation of six word stories and autobiographies created by a wide range of people, both famous and obscure. It is a fascinating exercise, and I recommend you either buy the book or download it to your Kindle, like I did. And then think about yourself and your business, and the qualities that define you…and see if you can come up with six words that provide a simple, clear and differentiated narrative.

    Then, all you have to do is live up to the promise and the premise.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    Oh, by the way…I have to admit here that I’ve spent a lot of time wracking my brain to come up with six words to define myself and my business. I still haven’t worked out the personal one yet, but oddly enough I actually found the six words to describe my business staring me in the face – they’ve been at the top of this website since the first day we posted: “News In Context, Analysis with Attitude.”

    They ain’t Hemingway, but they’re not bad.
    KC's View:

    Published on: July 9, 2009

    Supervalu CEO Craig Herkert, in the job for just two months, announced yesterday that two of the companies longtime executives – president/COO Mike Jackson and the president of the company’s Midwest Retail Division, Kevin Tripp – are retiring, effective August 14.

    Both Jackson and Tripp are 55. It has been broadly speculated that these departures could occur when Supervalu went outside the company to replace retiring CEO Jeff Noddle, hiring Herkert from Walmart.

    “While I have only had the opportunity to work with Mike and Kevin for a short period of time, I recognize that they are both very talented leaders who have each made many valuable contributions to Supervalu’s ongoing growth,” Herkert wrote. “Our company has benefited tremendously from their deep industry experience and their leadership, and they both will be missed.”

    At the same time, Herkert said, he will become president of the company in addition to being CEO. And, he said, Supervalu’s Save-A-Lot division now will report directly to him.

    In addition, Herkert announced a management realignment, combining all three of the company’s retail regions under Pete Van Helden, the executive vice president of the West Retail Division, who will become executive vice president, retail operations.

    Other than Save-A-Lot, the only exception is Bristol Farms, which will continue to report to Pamela Knous, executive vice president and chief financial officer.

    In his memo to the company, Herkert wrote: “As part of the upcoming transition, we will also create a new Health and Wellness function that will encompass pharmacy operations and health and beauty care merchandising. This new function will report to Duncan Mac Naughton, executive vice president of Merchandising and Marketing. Creating an integrated Health and Wellness organization will facilitate a stronger connection between our pharmacy operations and our health offering, helping to create a total health and wellness experience for our customers.”

    And, he wrote, “While it is always difficult to lose veteran leaders who have touched a lot of people and have had a significant impact on the company, I firmly believe that this new leadership structure will deliver benefits that will enable us to move faster and respond more effectively to our customers’ changing needs. Simplifying our retail structure will facilitate an increasingly efficient and effective implementation of SUPERfusion, better leveraging Supervalu’s national scale while maintaining our local relevance.”
    KC's View:
    As noted above, this isn’t an enormous surprise. Once the company went outside for a CEO, the writing was on the wall – even for executives who have served the company for three decades and who, at 55, remain relatively young.

    There’s a lot of expertise there. It’ll be interesting to see what they do next. It would be shame if retirement, in this case, actually means retirement.

    (BTW…Herkert is 49. Does that mean that in six years, he’ll be thinking about retirement? Just curious. Maybe it is because I’m almost there, but 55 just seems so young.)

    These moves speak volumes about Herkert’s retail orientation, and no doubt will raise some questions among the company’s independent wholesale customers. He will need to have answers.

    There also is some speculation that Save-A-Lot could be on the sales block as a way of retiring some of the debt that the company took on when it acquired much of the Albertsons chain.

    One thing is for sure. Supervalu continues to face some challenging times, and Herkert is moving quickly to put his own stamp on the company’s culture and operations. If it works, he’ll be a hero. If it doesn’t, it’ll keep the pundits and analysts in business for years.

    Published on: July 9, 2009

    Yesterday, MNB reported 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.

    It didn’t take long for Eduardo Castro-Wright, the retailer’s vice chairman, to debunk the rumor in a memo to the company’s senior executives, saying that it had reached the point where it was a distraction.

    Castro-Wright wrote, “I’ve already talked with some of you about the false rumor that John Fleming and Dottie Mattison are leaving the company. As far as we can tell, this rumor started as just a small buzz while John was on vacation last week. The buzz detected last week has now turned into a widespread rumor becoming somewhat of a distraction.
    “I want you to know that John and Dottie are both doing an excellent job and have my full support. I also want you to know that John and Dottie have no interest in leaving the business. To the contrary, they are both fully engaged in their respective roles and excited about the progress and opportunities that lie ahead.

    “Please use this information as you receive questions from your associates. In your discretion, you should feel free to forward this note to your direct reports or to any other associates in your area of responsibility.”
    One part of the rumor that Castro Wright did not address was speculation that plans are afoot to move Walmart’s New York apparel operations back to Bentonville.
    KC's View:
    Numerous sources tell MNB that Walmart remains unhappy with the New York apparel operation, and that a move back to Bentonville seems likely in the not too distant future. (“Fiasco” is a word that popped up more than once.)

    As for the rumored departure of Fleming and Mattison…it will be interesting to see the long-term impact of all the speculation. It is possible that their positions at Walmart will be stronger for all the rumors that they might depart…but it also is possible that the vote of confidence by Castro-Wright isn’t everything it is cracked up to be. (Votes of confidence often are anything but. Just ask Tom Eagleton, Yogi Berra and Billy Martin.)

    Published on: July 9, 2009

    BrandWeek reports on a new study by the NPD Group suggesting that “overall consumer preference for convenient food options will continue to grow in popularity over the next decade,” and that “sales of both healthy and sweet/savory snacks are expected to increase by 16 percent.” The study also suggests that “the number of diners who eat restaurant-bought meals at home will grow by 20 percent. Those purchasing restaurant appetizers to eat at home will also increase 16 percent.”

    In addition, according to BrandWeek, “Organic products had the highest forecasted growth at 41 percent. ‘Light’ or ‘low-calorie’ labels are expected to increase by 18 percent.”

    The broader message of the study, entitled “A Look Into The Future Of Eating,” is that time-constrained consumers will eat smaller, more fragmented and convenient meals – a broad change in consumption habits that NPD believes should push retailers to develop new approaches to the selling of food that will compete more effectively with restaurant options.
    KC's View:
    This is one of those cases where, while the conclusions seem to make a certain amount of sense, they don't seem to entirely fit with current trends and the notion that “the new frugality” will reshape consumption habits…moving people away from convenience foods and toward other, more economic options.

    However, I discount neither possibility. Indeed, there is no reason that both cannot take place. It will depend on the customer and the circumstance. Which creates both a harder moving target for retailers and manufacturers to hit, but also new opportunities if people can think and implement in new and innovative ways.

    Published on: July 9, 2009

    Reuters reports that Sen. Tom Harkin (D-Iowa) hopes that when the US Congress reauthorizes child nutrition programs later this year, it will give the US Department of Agriculture (USDA) the authority to regulate all food sold in the nation’s public schools, including in vending machines.

    This approach reportedly is endorsed by the Obama administration. However, the administration also concedes that there has been some push back from school districts that depend on revenue from vending machines and are afraid that this could go away if all the sell is healthy food.

    Harkin, who has long been an activist in the area of childhood obesity, introduced a bill earlier this year that would set nutritional standards for food sold out of school vending machines. He says that his goal is to make sure that efforts elsewhere to curb youth obesity levels in the US are not undermined by the selling of “junk food” in vending machines.
    KC's View:
    It seems to me that we may be getting to the point where even liberals are going to begin thinking that you just can't keep regulating everything from the federal level … that at some point, you have to allow districts some level of autonomy and trust them to do the right thing.

    On the other hand, concerns about push back suggest that a lot of districts are going to identify the maintaining of funding levels as the right thing, as opposed to sending a consistent message to kids about nutrition and health.

    The problem is that so many of these issues are considered in a vacuum. Schools may not be teaching kids in an entertaining and engaging way about food and health and nutrition, so it doesn’t matter what they sell in vending machines and cafeterias. Or, they tell kids that they ought to eat healthier, and they sell slop in cafeterias.

    It is all part of an educational system that seems to grow more and more dysfunctional. My son once suggested that the best teachers are the ones who teach the kids, as opposed to the ones who teach the subject. I’ve always thought that this is a rare insight into a system that focuses more on tests than teaching, that values grades more than actual learning.

    Published on: July 9, 2009

    The New York Times this morning reports that the US House of Representatives Energy and Commerce Committee is seeking information from 13 bottled water companies about the sources of their water and how it is tested.

    According to the story, while the US Food and Drug Administration (FDA) regulates the bottled water industry, two recent reports – one from the Government Accountability Office (GAO) and one from the nonprofit Environmental Working Group – have questioned the efficacy of current regulations.

    “Neither the public nor federal regulators know nearly enough about where bottled water comes from and what safeguards are in place to ensure its safety,” said Representative Bart Stupak (D- Michigan), chairman of the oversight committee, in announcing that the letters had been sent.

    But not everyone agrees.

    “With all of the life-threatening health priorities facing the FDA, this issue does to me seem a little secondary,” said Representative Greg Walden (R-Oregon). “I want to know it’s safe when I drink it,” Mr. Walden said. “I’m not sure I care what spring it came out of.”
    KC's View:
    I agree that it does seem secondary. But we are in an era where anything less than complete transparency simply is not acceptable. Bottled water companies can get ahead of the wave by simply making all this information available to consumers all the time.

    In the long term, resistance is futile.

    Published on: July 9, 2009

    The Wall Street Journal reports this morning that Johnson & Johnson is walking a fine line with its response to a recent report by a Food and Drug Administration (FDA) advisory panel that there ought to limits on the consumption of acetaminophen, which is the generic name for J&J’s Tylenol product, because of health risks associated with overdose.

    While the company has taken out full page ads in major newspapers saying that taken in proper dosages, Tylenol is the “safest brand of pain reliever you can choose,” the Journal suggests that J&J cannot protest too much, lest it be seen as too defensive, which could lead to tougher federal regulation.

    It is expected that the ads only are a first step for J&J, which is likely to take steps on packaging and on shelves to work to communicate a consistent message to consumers that in the proper dosage, Tylenol is safe. The FDA is expected to take three to six months to decide what federal policy should be in the matter and whether to adopt the advisory group’s proposals.
    KC's View:

    Published on: July 9, 2009

    • There are reports that Wendy’s has been testing a number of breakfast items, though the company says that it only hopes to roll out a breakfast menu “in a couple of years” and won’t go beyond that for competitive reasons.

    Crain’s Chicago Business reports that Burger King plans to offer a $1 double cheeseburger, hoping to compete more effectively with McDonald’s, which eliminated the double cheeseburger from its Dollar Menu last year.
    KC's View:
    This is such an old world way of doing things. McDonald’s took the double cheeseburger off its Dollar Menu late in 2008, and it takes Burger King until the second half of 2009 to respond.

    I wonder how many people even remember at this point that McDonald’s had a double cheeseburger on its Dollar Menu?

    You can't respond in this kind of time frame. It just is impractical and ineffective. Now, I know there are franchise agreements that may get in the way, but that doesn’t change the fact that six months is way too long to get in the competition’s face.

    Published on: July 9, 2009

    • Costco Wholesale reports that June sales were down four percent to $6.88 billion, compared to the same period a year ago. US same-store sales were down six percent, while international same-store sales were off three percent.
    KC's View:

    Published on: July 9, 2009

    …will return.
    KC's View: