retail news in context, analysis with attitude

Published on: July 23, 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 morning by Webstop, experts in the art of retail website design.

It has been a tough season to be a New York Mets fan. Coming after two successive years in which the team collapsed in the final days of the season and did not make the playoffs, this spring and summer the team has been beset by numerous injuries to many of its starting players. It has gotten to the point where the team on the field is almost unrecognizable, and the players are the backups to the backups.

Perhaps even more annoying – or upsetting, depending on the day and the game and your point of view – has been the fact that Mets have not been playing good fundamental baseball. If you’re going to have a team made up of Triple A-level ball players, the only chance you have of winning is to execute the basics. Remember the line from “Bull Durham,” which, as you all know, is only the best sports movie ever made: “This is a very simple game. You throw the ball, you catch the ball, you hit the ball. Sometimes you win, sometimes you lose, sometimes it rains.” For the Mets this season, things haven't been so simple, and there haven't been nearly enough rainouts.

I could turn this into a column about how the fundamentals – whether in retailing or baseball – are critically important to success. But I want to draw another lesson from the Mets’ current travails.

Just this week, the Mets ownership apparently told general manager Omar Minaya and manager Jerry Manuel that it understood that this has been a tough season, and that their jobs are safe for next year.

Now, I was surprised by this. To begin with, the injuries may not be the fault of manager and general manager, but I find the lack of some basic baseball smarts and skills to be a little off-putting. Have these guys been badly chosen, or badly coached? I’m not sure, but assuring Minaya and Manuel their jobs for the 2010 baseball season seemed a little ridiculous, especially because we’re only halfway through this season. The message actually ought to be, “At the end of the season, we evaluate everything. You’ll come back if your performance, within the context of some tough breaks, merits it.” How can you guarantee their jobs without knowing how things will look at the end of the season? What if Bobby Cox or Lou Piniella happen to available?

Now, I asked my son – as ardent a Met fan as you will find – about whether this decision made sense, and he replied, “It doesn’t really matter. Last year they gave Willie Randolph a vote of confidence, and they forced him two weeks later.”

Which is true. And that’s the lesson I want to refer to here.

Words matter.

They really do. There’s no such thing as “just words.” Actions don't always speak louder than words. It is through our words that we signal our intentions, that we establish our goals, that we move people to believe and follow us. And when the words ring hollow, people lose faith, and leadership is doomed.

We’ve all sat in meetings where one of the top executives in the company gets up and delivers a speech that is so uninspiring, so lacking in credibility, that the first thing we do when we get back to desks is make sure our resumes are up to date and call a favorite executive search firm. (Trust me, I could tell you stories…)

I would argue that the Wilpon family, which owns the Mets, does not show good management or leadership by making a public declaration that there is a fifty-fifty shot they’ll probably have to contradict at some point.

Words matter. We all need to consider them carefully, and try to say what we mean and mean what we say.

For MorningNewsBeat Radio, I’m Kevin Coupe.

Published on: July 23, 2009

Haggen Inc. announced that it is extending its TOP Connection customer relationship program to all 18 of the TOP Food and Drug stores that it operates in the Pacific Northwest.

TOP Connection, launched in September 2008 at four stores, is designed to improve customer retention and profitability by offering shoppers unique benefits that include 1) a 7–day low price guarantee, automatically crediting the guest’s in-store account if a purchased item goes on sale within seven days; 2) automatic recall notification based on purchase history; and 3) personalized offers.

“We’ve had an incredible response from our guests because they see the value and benefits we offer are not available anywhere else in the grocery industry,” says Becky Skaggs, Haggen’s vice president of Strategy & Consumer Insights. “This program has made it easier for guests to shop in our stores and for us to build relationships not based on discounts. It has made a difference to our business.”

Published on: July 23, 2009

The Los Angeles Times reports that the nonprofit Cancer Project, a vegan advocacy group, has filed a suit in New Jersey asking that the courts force three hot dog manufacturers to put cancer warning labels on their frankfurters.

The label would say: "Warning: Consuming hot dogs and other processed meats increases the risk of cancer."

"Just as tobacco causes lung cancer, processed meats are linked to colon cancer," Neal Barnard, president of the Cancer Project and an adjunct professor at the George Washington University medical school, tells the paper. "Companies that sell hot dogs are well aware of the danger, and their customers deserve the same information."

Not everyone in the nutrition community agrees.

"If one were to call for a 'black label' on frankfurters, where should the warning label end? If we were to evaluate each food for its naturally occurring toxins and eliminate that food, then our food plate would be empty," Roger Clemens, a nutrition expert at USC's pharmacy school, tells the Times.

Published on: July 23, 2009

A company called Recall InfoLink has launched a state-of-the-art recall management system to improve product safety throughout the supply chain and protect the safety of consumers. The company’s patent-pending web-based product recall management platform is designed to provide standardized messages, automated communications, inventory tracking, and reports that help with compliance efforts.

The release highlights the increased pressure on the food industry to better handle product recalls at a time when food safety has become of greater concern to consumers. According to federal regulatory agencies, including the US Food and Drug Administration (FDA) and US Dept. of Agriculture (USDA), there were more than 700 product recalls in 2008, calling for improvement in the coordination of the recall process.

Published on: July 23, 2009

Amazon.com said yesterday that it has come to an agreement to acquire Zappos.com, the online shoe retailer, for $807 million in stock and $40 million in cash and stock for its employees.

"We will continue to build the Zappos brand and culture in our own unique way, and we believe Amazon is the best partner to help us do this over the long term," Tony Hsieh, CEO of Zappos, said in a written statement.

The deal is expected to close this autumn.

Published on: July 23, 2009

Interesting piece in the Wall Street Journal about Federal Trade Commission (FTC) consideration of new rules that would regulate how these mommy bloggers are endorsing products on their sites. At issue is whether the women are being compensated for their endorsements, and how transparent those payments should be to readers.

The heightened scrutiny comes as more and more companies – both retailers and manufacturers – have realized that the blogs can be an effective marketing tool and have trained their considerable marketing resources on the women who write them. The general consensus seems to be that the mommy bloggers ought to regulate themselves and understand how not to cross the line into crass commercialism…and that if they don't, people probably will stop reading them.

Published on: July 23, 2009

The Puget Sound Business Journal reports that Walmart has agreed to write a $35 million check that will be split among 88,000 employees in Washington State who charged that the company denied them rest and meal breaks and forced them to work off the clock.

In addition to the $35 million, Walmart also has to write a $10.5 million check to cover the plaintiffs’ attorneys’ fees.

The class action suit is eight years old, and the settlement requires the company to prevent such violations in the future.

Published on: July 23, 2009

In Milwaukee, the Journal-Sentinel reports that Walmart, which has launched a national promotion of nine-dollar back-to-school specials, won’t be able to offer those specials in Wisconsin, Alabama, Hawaii and Oklahoma – the four states in the union that prohibit selling anything below cost.

Such legislation, the paper writes, is designed to prevent a giant retailer such as Walmart from entering a market and dominating it with prices that local retailers cannot match.

Published on: July 23, 2009

• The Sacramento Bee reports that “Safeway Inc. has launched a broad discounting campaign in Northern California, another sign that the bad economy is driving mainstream grocers to emphasize price in addition to their usual focus on quality, service and style … The Safeway campaign, launched last week, promises long-term price reductions – as opposed to weekly specials – on thousands of items throughout the store. The company wouldn't disclose the exact number of items the promotion covers, or the depth of the average discount.”

• Three industry veterans - John Motley, former senior vice president of government affairs for the Food Marketing Institute and prior to that, the National Retail Federation and the National Federation of Independent Business; Barry Scher, Giant Food's former long-time vice president of public affairs; and Jay Truitt, former vice president of government affairs for the National Cattlemen's Beef Association – announced this week that they have launched a new government and public affairs lobbying firm. The three principals say that Policy Solutions LLC will have “farm to fork” food issues experience, and also will focus on health care, energy, taxes, trade and agriculture.

• Muhtar Kent, CEO of the Coca-Cola Co., said yesterday that any tax of sugary beverages would be a mistake, and that “the consumer in this environment is not ready for a tax on a basic staple like non-alcoholic beverages,” according to a story this morning in the Financial Times. Kent noted that a proposed soda tax had not been written into the House of Representatives health care bill, and he hoped that “the same logic will prevail in the Senate.”

• The Boston Globe reports this morning that “despite racking up nearly $200,000 in state fines over the past two years, BJ’s Wholesale Club Inc. continues to ignore consumer pricing laws, according to state officials.” At issue is the state’s item pricing law, which requires retailers “ to mark prices on individual items in their stores or take alternative steps to let consumers check prices,” the Globe writes, noting that BJ’s responds to the charges by saying that “it takes steps that include posting oversized item-price signs, providing scanners that allow people to check prices, and making store associates available to answer questions.”

• Brand Week reports that a new study from design and strategy firm Miller Zell suggests that conventional wisdom saying that high-income shoppers are driving demand for so-called “green” products is actually wrong, and that “low-income shoppers are most willing to pay a premium for products marketed as green. Women are also more likely than men to pay more for such items.”

• The New York Times reports this morning that “General Mills is embarking on a multimillion-dollar effort to put more muscle in the Wheaties brand. On Thursday, the company is announcing that it will introduce a second variety, Wheaties Fuel. All the marketing will be aimed at men — a first, by all accounts, in the cereal aisle … Nutritionally, the cereal will differ from traditional Wheaties by leaving out folic acid, which the company maintains is more important for women than men, while adding vitamin E, thought to be more lacking in men’s diets.”

The new version of Wheaties actually won’t be in cereal aisles until early next year, according to reports; between now and then, it will only be available online.

• Local press reports say that Little Rock, Arkansas-based Affiliated Foods Southwest, once one of the largest food cooperative sin the southwest US, has laid off all its employees, sold all its inventory, and is looking to convert its Chapter 11 bankruptcy reorganization filing into a Chapter 7 liquidation.

Published on: July 23, 2009

• France-based Carrefour, the world’s second biggest retailer, said yesterday that its second quarter sales were down 1.2 percent to the equivalent of $33.3 billion (US).

• McDonalds’s said this morning that its Q2 profit was down eight percent to $1.09 billion compared to the same period a year ago, on sales that were down seven percent to $5.65 billion. Q2 same-store sales were up 4.8 percent globally and up 3.5 percent in the US.

Published on: July 23, 2009

MNB noted the other day a story in Forbes that was designed to puncture myths about the advantages of the locavore movement.

Which led MNB user Margaret Mittelstadt to write:

Kevin, I haven't read the entire Forbes article, so take this for what it's worth. A number of things come to my mind reading the excerpts provided:

1. The reporter doesn't take into account how economies of scale may be affecting local rural markets. Factory farmed food has nearly killed rural economies. But, well, local farmers aren't publicly traded on the S & P 500.

2. The reporter doesn't take into account apples picked a few miles away vs. a thousand miles away will most likely be more ripe and more nutrient dense. Perhaps not an issue for the Forbes reader.

3. Small farms continue to disappear at an alarming rate. No farms, no food.

4. Are farmers in sub-Saharan Sudan really growing fruits and vegetables for export, or are they growing commodity crops for processing on the US or world market? I mean when was the last time you ate an apple grown in the Sudan? Start an Eat Local movement in the Sudan! Put more money in farmer's pockets and more fresh food on the plates of Sudanese people. They might be a little bit hungry.

To me it's a very one-sided response aimed at shareholders to a complex issue and it sounds like back door support for agribiz to me. Even a half percent loss in the global market means millions, if not billions of dollars lost to the Big Boys. "Local" and consumer pressure is threatening. Look what happened to rBGH. The organic movement went through the same kind of public scrutiny, and continues to. There are many complex issues regarding where food comes from. People are going to have to come to their own conclusions….

Wait a minute. You’re suggesting that Forbes might have a bias in favor of big agribusiness, as opposed to local farmers.

I’m shocked. Shocked, I say.




We continue to get reaction to the piece we had the other day about an Ad Age story saying how Walmart is pressing its suppliers to allocate a greater percentage of both their consumer ad budgets and trade promotion dollars to the retailer, and is “using a simultaneous push to clear underperforming brands off its shelves as extra leverage.” Walmart is looking for suppliers to fund co-branded advertisements and commercials as well as banner ads on its website and in-store television sponsorships.

One MNB user wrote:

It was always the vendors who stated traditional grocery stores added cost to their bottom line by charging advertising dollars. Now that Wal-Mart is doing it, will it raise their cost of goods? Lets see how this plays out.

The general tenor of the emails that we’ve gotten here at MNB seems to be a feeling that Walmart has crossed the line in this new program and somehow is engaged in behavior that could erode its core band equity in the long run. And, of course, there is some outrage at Walmart’s audacity.

I’m not entirely sure that this is true. It may in fact be just wishful thinking. There’s no question that Walmart is engaged in a broad market share play…and there is likely to be some push-back from manufacturers on this one, simply because it raises so many issues about their relationship with other, competitive retailers.

But Walmart is doing what it always has done. Outrage seems to me to be misplaced, as is any sense that this could be the beginning of the end for the Bentonville Behemoth.