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    Published on: July 13, 2009

    The Arizona Republic reports that Bashas’ Supermarkets plans to close 10 stores and lay off about 1,000 people later this month, following a five-store closure earlier this year. The company also reportedly plans to make “a major announcement” about its future later today, though there have been no indications what the details of that announcement might be.

    According to the story, “The Chandler-based string of about 158 Bashas', Food City and AJ's Fine Foods markets, all but two in Arizona, will be reduced to 148. Seven of the 10 stores to be closed are in the Valley: two Bashas' stores in Chandler, one in Gilbert and one in Phoenix; and three Food City stores: two in Phoenix and one in Glendale.

    “The other Bashas' stores to be closed are in Green Valley, Page and Prescott.

    “Employees will learn more details today in company meetings. Each store employs about 75 to 150 people depending on its size. Earlier this year, Bashas' closed five underperforming stores. Through the store closures, attrition and about 300 layoffs at its corporate headquarters, the grocer already has trimmed about 1,700 people from its payroll in the past year.”

    The story also notes that “Bashas' locally owned status, and its customers' loyalty to the locally owned grocer, have long been among the company's strengths. But because it operates almost completely in Arizona, the company's fortunes are directly tied to the state's economic trends. And since Arizona has been harder hit by foreclosures, job losses and a downturn in consumer spending, its local status has proven to be a weakness in this recession.” In addition, there has been heightened competition from various Walmart formats, which now have close to a third of the market share in the region.
    KC's View:
    “Major announcement” sounds grim. I hate to see this kind of stuff happen to a company like Bashas’ … but sometimes reality catches up even with longtime success stories. The question that will need to be asked and answered is whether Bashas’ could have done more, or done things differently, to cope with the economic downturn and increased competition. And everybody will have an opinion.

    Published on: July 13, 2009

    The Wall Street Journal this morning reports that the National Retail Federation (NRF) plans to launch an aggressive attack on Walmart – which is not a member of the group – because of the retailer’s support of an employer health care mandate, which is one of the proposals currently being considered by the US Congress as it wrestles with the Obama administration’s call for significant health care reform.

    According to the story, Tracy Mullin, NRF’s CEO, is sending a letter to membership calling on them to fight Walmart on the issue: “We could stand idly by and allow Wal-Mart to tip the scales on the health care debate, cower and release an innocuous statement...or stand up for all retailers and come out swinging.”

    Earlier this month, Walmart CEO Mike Duke co-authored a letter to President Barack Obama supporting a federal mandate, an initiative that analysts say could give the company a big advantage over smaller rivals. In addition, critics say that Walmart believes that current proposals could be a lot worse, and it would rather support proposals that it can live with rather than deal with programs that it would find to be onerous.

    Mullin tells the Journal that “companies ranging from multi-billion-dollar chains to small stores have been complaining about the giant discounter's political gambit. ‘They really don't want Wal-Mart to define the health-care debate’,” she tells the paper.
    KC's View:
    The Journal doesn’t get into this, but it is interesting to note that it was just a month or so ago that NRF and the Retail Industry Leaders Association (RILA) called off their merger…and that Walmart is a member of RILA.

    Perhaps the chasm separating the two sides is in evidence here – the priorities are just too different.

    Maybe it is just a case where there is Walmart, and then there is everybody else.

    Everybody is entitled to their opinion, and I can understand why a lot of retailers may not want to support programs that they believe give their biggest and baddest competitor an advantage.

    As it is, the proposals being circulated in Congress are a scramble of priorities and preferences and approaches…and who knows at this point whether any of them will be in a final bill, or if a final bill will even make it to the White House. It’s way beyond my ability to prognosticate.

    Published on: July 13, 2009

    The Chicago Tribune has a nice interview this morning with Mary Beth West, Kraft Foods’ chief marketing officer, who describes herself as “three-quarters black and one-quarter Polish, light-skinned, with white brothers and white sisters,” and who says that this makeup “makes me sensitive to people who look and act different. It gives me a perspective on diversity and the power diversity can bring to the workplace, to innovation and, ultimately, to grow businesses. The more different perspectives in the room, the better endpoint you'll get to -- richer, deeper, more compelling."
    KC's View:
    This ability to look beyond one’s own prejudices and perspectives is incredibly important and is, I think, and enormous asset for West and Kraft.

    We’ve long said around here that liberals should spend at least a few minutes each day listening to Rush Limbaugh or Sean Hannity, and that conservatives should try to watch a little bit of Keith Olbermann or Rachel Maddow. Either may make you want to drive your car into a bridge abutment, but it is worth doing…if only because it gives you exposure to the other side.

    That’s also why business needs to listen more to the younger generation of workers, because they will reflect more accurately the attitudes of the younger generation of shoppers, who may have priorities that only slightly resemble those of their elders.

    Published on: July 13, 2009

    The Wall Street Journal reports that “a June beef recall by JBS Swift & Co. for deadly E. coli contamination could have been prevented if a plan devised during the Bush administration to build new barriers between the bacteria and the public had been enacted.

    “The proposed safety measures would have had U.S. Department of Agriculture inspectors testing more beef, a move the meat industry argued was unnecessary. Inspectors now routinely test ground beef for the E. coli bacteria and any meat that is designated to be turned into ground beef -- usually the part of the carcass called ‘trim,’ but nothing else.”

    The USDA says that it is still considering the plan revisions.
    KC's View:
    Now, the Journal devotes a lot of space and words to this story, and explaining the difference between primals and trims and various kinds of cuts … but it seems to me that, at least to consumers, this is just a lot of noise.

    The bottom line is that we want our beef to be as safe as possible. One hundred percent safety probably isn’t possible…but there ought to be as many inspections as feasible in order to assure consumers that they have little to worry about. And this change ought to be made ASAP.

    Right now, consumer confidence is being eroded, slowly but surely. If this isn’t reversed, the damage to confidence in the food supply will be incalculable and, perhaps, permanent.

    Published on: July 13, 2009

    The Los Angeles Times reports on the continuing battle over “organic” vs. “natural” foods.

    The impetus for the most recent flare-up: Dean Foods’ announcement that it will introduce a line of “natural” milks and yogurts.

    According to the story, organic food advocates are concerned that so-called “natural” foods are not regulated by the government, unlike “organic” foods … and that “the burgeoning market for less-expensive ‘natural’ foods reaps billions from consumers while guaranteeing little or nothing in exchange.” In addition, they believe that since “natural” foods tend to be cheaper than “organics,” they will begin to supplant the latter category.

    Making the issue even more confusing, critics say, is the fact that Dean’s Horizon Organic will be launching the natural lines, and will use the company’s spotted cow logo on the label…which they believe will mislead consumers.
    KC's View:
    Hate to say it, because the government would seem to have enough on its plate these days, but it does sort of seem like there ought to be an official standard for what “natural” means. Some say that the phrase “minimally processed” ought to be the benchmark, but even that phrase is open to interpretation if the standards aren’t extremely specific.

    Though it needs to be pointed out that even some organic standards seem open to interpretation, with degrees of organic-ness debated by purveyors.

    Published on: July 13, 2009

    Ad Week reports that The NPD Group is out with a new study, "Private Label Perceptions, Usage Patterns and Intentions," which says that “24 percent of all food and beverages served in American homes last year were store brands, up from 18 percent in 1999. Today, 97 percent of all households consume private label foods on a regular basis.”

    The story notes that it isn’t just supermarkets that are benefitting from the trend, as convenience stores – many of which are expanding their efforts to compete with mainstream supermarkets – also embrace the effort: “This wave of acceptance supported 7-Eleven Inc.'s expansion of its private label line in recent months. Now with more than 200 private label products, the chain is working to add nearly 100 more items to its 7-Eleven and 7-Select brand lineup by the end of the year.”

    According to the piece, “7-Eleven currently offers a broad spectrum of items, from lunch and sandwich bags to coffee filters and olive oil. One huge success for the chain is single-serve kettle chips. The chain introduced nine varieties, and seven are now in the retailer's top 10 selling SKUs in the category.”
    KC's View:
    There also is a report from Information Resources Inc. (IRI), Ad Week writes, suggesting that the right balance is necessary and that “46 percent of shoppers have increased private label purchasing activity in response to economic hardship.”

    When economic hardships end, the question is whether private brand enthusiasms will persist. I suspect that it will depend on the category, it will depend on the market, and it will depend on whether the private brand products have transcended the notion that their chief advantage is the price tag.

    Published on: July 13, 2009

    Acme Markets and its unionized workers in Southeastern Pennsylvania said yesterday that they would continue negotiating through at least Monday, temporarily averting a work stoppage at 41 stores staffed by 4,500 employees.

    Acme has said that it has made its last, best offer, but the United Food and Commercial Workers (UFCW) local has said that the offer isn’t good enough because it would leave thousands of employees without health insurance.

    It is reported that if no agreement is reached by Wednesday, union members will be asked to consider a work stoppage – which is legally distinct from a strike since employees will maintain that they have been locked out by Acme because it has taken a take-it-or-leave-it position.
    KC's View:

    Published on: July 13, 2009

    The New York Times reports on the continued expansion and success of Redbox, which rents DVDs from in-store kiosks for $1 per night. “In 2005, Redboxes were in 600 locations and rented 24,000 movies a week,” the Times writes. “Today, they’re in more than 15,600 locations, renting 7.5 million movies weekly, Redbox says, not far below the 10 million-plus weekly rentals claimed by Netflix.” Redbox is in 3,000 US McDonald’s locations, as well as in selected stores run by Walmart, Walgreens, Albertsons and Circle-K.

    The suggestion is that Redbox is successfully taking advantage of an economic that favors low price rentals, and that many customers still are willing to go out to rent movies, as opposed to download them onto their computers.
    KC's View:
    I still think that Redbox is a retail concept with an expiration date. We don't know what it is yet, and in fact it could be more than a decade off…and these could be very profitable years for the company. But it is inevitable that downloading eventually could take over.

    Published on: July 13, 2009

    • U.S. District Judge William R. Wilson Jr. has approved a $17.5 million settlement in a discrimination suit that charged Walmart with not hiring African-American truck drivers. The settlement includes provisions that the drivers who sued will be hired by Walmart, that the retailer will do more to recruit minorities, and that there is no concession that Walmart did anything illegal.
    KC's View:

    Published on: July 13, 2009

    • The Natural Products Association has given Whole Foods its "2009 Socially Responsible Retailer Award" for “excellence in integrating social responsibility into multiple aspects of business.”

    "This award recognizes that our retailers are valued and integral parts of their communities, and that they provide much more than simply a place to purchase natural products," said Natural Product Association President Debra Short. "All the award recipients are serious about being a source of support for their employees and their communities in environmental, social and educational efforts, and the work that Whole Foods Market and its Foundation do are excellent examples of how dedication to local and global action can generate positive results."

    Chain Leader has a good piece about a new retail concept bowing in Chicago – Protein Bar, which features meal-replacement shakes that are high in protein and made with milks and fruit. It is designed to look like an upscale hotel bar, and to provide time-constrained patrons with a speedy and healthy low-fat meal option.
    KC's View:

    Published on: July 13, 2009

    • PriceSmart, which operates membership warehouse clubs in the Caribbean and Latin America, reports that its third quarter sales increased 7.8 percent to $299.6 million from $278.0 million in the third quarter of fiscal year 2008. Total revenue for the third quarter was $306.5 million compared to $283.7 million in the prior year.

    Q3 net income was $8.7 million, compared to $10.6 million a year ago.
    KC's View:

    Published on: July 13, 2009

    • Walgreen Co. announced that Wade D. Miquelon, its senior vice president and chief financial officer, has been promoted to be executive vice president and chief financial officer.

    In addition, John W. Spina, Walgreens’ vice president and treasurer, has been promoted to be corporate vice president of retail integration and new format development.
    KC's View:

    Published on: July 13, 2009

    Regarding the opening of Tim Hortons’ doughnut and coffee shops in NYC, which poses a new challenge to Dunkin’ Donuts, MNB user Ruth Stern wrote:

    Better donuts, better coffee, better service and VERY, VERY Clean!

    An incredibly well run company! Congratulations NYC !





    MNB took note of a New York Times report saying that a new study of rhesus monkeys suggests that a restricted calorie diet – a 30 percent cut - could help people extend their lives for a considerable period of time. The Times notes that since few people could actually cut back their caloric intake by 30 percent, scientists are looking for some sort of compound that might mimic the impact of a calorie-cutting regimen. One of the early candidates: resveratrol.

    The good news, I thought: resveratrol is the compound that is found in red wine!

    To which one MNB user responded:

    Do you think we can lay claim to a new diet?

    A nice Chateau Montelena cab three times day? We would not want to overdo it…


    Of course not. If you drank that much while on this new diet, you'd probably slip on the ice while walking to work…




    We had a story last week about Earthbound Farm and PepsiCo's Naked Juice division are individually adopting new eco-packaging for their products.

    One MNB user wrote:

    This is good news from a green perspective but since this is food packaging and we use a lot of it. There is a concern for food safety of the recycled materials and how well they will conform to current production equipment and practices. As an example, BPA is getting a lot of press lately but I’m sure there will be other food safety concerns and debates that are not foreseen at this time. Thanks for the good news.



    Regarding McDonald’s aggressive sampling program for its new coffee products, one MNB user observed:

    Are they playing hardball OR are they having trouble selling it ? The McDonald's owner here in town says the money they had to spend to put in these coffee bars are not paying off. That they still sell the same amount of regular coffee (morning only) as they did before the change. PLUS they do not like this free stuff AT ALL…




    Finally, I got a ton of email from the MNB community about my first round of golf, which I played last week at the Iowa Grocery Industry Association conference, and which I reported on last Friday. One of my suggestions, by the way, was that placing RFID chips in golf balls was a business idea waiting to happen…

    One MNB user wrote:

    Someone already beat you to it. This is the greatest driving range ever.

    http://www.topgolf.com/

    Think of electronic darts with golf balls. They have a game called Top Pressure which is a Darts/Cricket game only with a sand wedge. I hated the driving range before this place and now I'm there once a week.


    MNB user Donna Sires wrote:

    I love this idea. I have said for years that someone should come up with small, sticky RFID chips that you can attach to items you always lose around the house like keys, wallets, the cat (on the inside of the collar), cell phones, etc. Then when you can’t find the item you can go to your computer and locate it within your house. I’d buy it.

    MNB user Tim Heyman wrote:

    My dad gave me one with a RFID chip in one a few years back. I asked dad where he got it and he stated he found it in near hole #3.

    Ba-da-bing.

    MNB user Robert White wrote:

    I’m sending an e-mail in response to your RFID golf balls. It is a great business idea. I believe you would immediately get bought out by a bigger company. Lost golf balls are the key driver to the golf ball industry. I am also new at golf and lose a lot of balls. If I never lost a ball they would last for a long time and I would purchase 50% less golf balls. If your idea expanded the larger companies would be forced to hurt their own sales to compete. This could be an industry changer.

    MNB user Patricia Berry wrote:

    I have to say, I enjoyed your first experience at golf and agree RFID would be a great idea on golf balls. On the other hand not sure I want to pay $100 for a sleeve of balls to be able to find one in an alligator's mouth or anything like that. I enjoy playing the game so I had to giggle about your experience. Good luck!

    Another MNB user wrote:

    I loved everything this morning, very, very funny!-you should go on vacation more often. And yes, being a 53 year old, and no golf, but surrounded by all golfers - I don’t miss it, but love all the stories. I went 1 time and couldn’t walk right for 3 days!

    More vacation? Sounds like a good idea…

    And finally, MNB user Duane Eaton wrote:

    Just to keep you out of PC quicksand as you begin your golf venture - there are no “women’s” or “ladies” tees. The correct terms are “front,” “forward,” “senior,” “beginner’s” or “high handicap” tees. Many women golfers play from back tees and many men play from the front. However, there are many senior high handicapper men like myself who insist on playing from somewhere in the middle because our egos just won’t let us move forward, no matter how many snowmen show up on our scorecards.

    Snowmen on scorecards? I knew about birdies and bogeys, but snowmen?

    Now I’m totally confused.
    KC's View: