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    Published on: August 3, 2009

    Thoughts and stories to consider as the workweek begins…

    • There was an interesting piece in RichmondBizSense.com over the weekend that was addressed to Ukrops’ management and its handling of all the rumors that the company is up for sale.

    The piece notes that there were differing responses from the community to the sale speculation. On the one hand, longtime supporters of the company worried that a company strongly identified with the city of Richmond and a wide range of philanthropic programs might end up in less charitable hands; but there also is a segment of the city that apparently feels that Ukrop’s reflects the city’s white, upper-middle class traditions more than Richmond’s more diverse present and future.

    The site correctly writes that Ukrop’s CEO Bobby Ukrop dismissed speculation as “rumors, anonymous blog postings and industry chatter,” even though it was clear that the company had put itself up for sale.

    The site writes: “The Ukrops had an obligation to quickly explain the matter to the two main groups that supported it for 52 years – employees and customers. Instead, the company has declined comment to the media and been disingenuous with employees, whom they expect to continue to show up each day with a good attitude until they’re told not to.”

    • Intriguing note in the Puget Sound Business Journal, which reports that one of the side benefits for Amazon.com in its acquisition of Zappos.com might be a better customer service culture.

    Larry Pluimer, business development manager for Amazon’s outdoor recreation store, wrote a message to Zappos CEO Tony Hsieh on Twitter that said: “Dear Tony: Please teach Amazon about Twitter … And if you could help us get an 800 number on the home page that would be awesome.”

    The Journal writes, “The message went to the heart of Amazon’s $800 million-plus gamble on Zappos — the largest acquisition in its history. Seattle-based Amazon.com is getting not only a category leader in online shoe sales, but an innovative company known for its quirky culture, well-developed customer service, and heavy use of social-networking sites like Twitter and Facebook for marketing and brand development … Amazon plans to let Zappos continue to operate independently, but it’s also poised to draw some lessons from the Zappos model as it develops its e-commerce strategy going forward.
    KC's View:
    Over the years, to varying degrees and for different reasons, both Ukrop’s and Amazon have gotten a lot of attention for being progressive and effective retail engines. It is interesting to read these two stores, in part because they point out that every company has flaws. The real excellence of a company, it seems to me, is determined by an ongoing ability to learn, to grow, to challenge itself.

    That even goes for paragons of excellence like Ukrop’s and Amazon.

    Published on: August 3, 2009

    The New York Times had an eight-thousand-word piece in its Sunday Magazine by Michael Pollan in which he examined – exhaustively – America’s odd relationship with cooking.

    “How is it,” Pollan writes, “that we are so eager to watch other people browning beef cubes on screen but so much less eager to brown them ourselves? For the rise of Julia Child as a figure of cultural consequence — along with Alice Waters and Mario Batali and Martha Stewart and Emeril Lagasse and whoever is crowned the next Food Network star — has, paradoxically, coincided with the rise of fast food, home-meal replacements and the decline and fall of everyday home cooking.

    “That decline has several causes: women working outside the home; food companies persuading Americans to let them do the cooking; and advances in technology that made it easier for them to do so. Cooking is no longer obligatory, and for many people, women especially, that has been a blessing. But perhaps a mixed blessing, to judge by the culture’s continuing, if not deepening, fascination with the subject. It has been easier for us to give up cooking than it has been to give up talking about it — and watching it.

    “Today the average American spends a mere 27 minutes a day on food preparation (another four minutes cleaning up); that’s less than half the time that we spent cooking and cleaning up when Julia arrived on our television screens. It’s also less than half the time it takes to watch a single episode of ‘Top Chef’ or ‘Chopped’ or ‘The Next Food Network Star.’ What this suggests is that a great many Americans are spending considerably more time watching images of cooking on television than they are cooking themselves — an increasingly archaic activity they will tell you they no longer have the time for.

    “What is wrong with this picture?”

    Pollan goes on:

    “It’s generally assumed that the entrance of women into the work force is responsible for the collapse of home cooking, but that turns out to be only part of the story. Yes, women with jobs outside the home spend less time cooking — but so do women without jobs. The amount of time spent on food preparation in America has fallen at the same precipitous rate among women who don’t work outside the home as it has among women who do: in both cases, a decline of about 40 percent since 1965. (Though for married women who don’t have jobs, the amount of time spent cooking remains greater: 58 minutes a day, as compared with 36 for married women who do have jobs.)

    “In general, spending on restaurants or takeout food rises with income. Women with jobs have more money to pay corporations to do their cooking, yet all American women now allow corporations to cook for them when they can.

    “Those corporations have been trying to persuade Americans to let them do the cooking since long before large numbers of women entered the work force. After World War II, the food industry labored mightily to sell American women on all the processed-food wonders it had invented to feed the troops: canned meals, freeze-dried foods, dehydrated potatoes, powdered orange juice and coffee, instant everything. As Laura Shapiro recounts in ‘Something From the Oven: Reinventing Dinner in 1950s America,’ the food industry strived to ‘persuade millions of Americans to develop a lasting taste for meals that were a lot like field rations.’ The same process of peacetime conversion that industrialized our farming, giving us synthetic fertilizers made from munitions and new pesticides developed from nerve gas, also industrialized our eating.”

    If there is a deeper problem, Pollan suggests, it is that as we step away from cooking, it may actually make us less civilized:

    “Cooking gave us not just the meal but also the occasion: the practice of eating together at an appointed time and place. This was something new under the sun, for the forager of raw food would likely have fed himself on the go and alone, like the animals. (Or, come to think of it, like the industrial eaters we’ve become, grazing at gas stations and skipping meals.) But sitting down to common meals, making eye contact, sharing food, all served to civilize us…”

    And the implication is that perhaps trends such as “road rage” may have less to do with heavy traffic and more to do with the fact that people behave in a less civilized fashion when they eat cheap, non-nutritious meals on the run.
    KC's View:
    This is a fascinating article, and I encourage you to read the whole thing at: http://www.nytimes.com/2009/08/02/magazine/02cooking-t.html?_r=1&hpw

    (BTW…this story is pegged to the release next weekend of “Julie & Julia,” the Nora Ephron movie about Julia Child starring Meryl Streep. I can’t wait to see this…the previews look terrific!)

    I agree with Pollan that there is something inherently about cooking and eating together, and that both have a civilizing influence…we know from various studies that families that eat together tend to have children who are better students, have fewer drug/alcohol issues and are better adjusted. It isn’t hard to imagine that if they hang out together in the kitchen cooking together, they’ll also be better fed.

    This is the kind of initiative that food retailers ought to be embracing. There are limits to how far people will go in adapting Pollan’s suggestions…after all, there are cultural realities that are not going to be undone.

    Over meals, we can learn much. We can talk. We can listen. Take our next story, for example…

    Published on: August 3, 2009

    Last Friday, President Barack Obama hosted a lunch for four business CEOs – Mike Duke of Walmart, Howard Schultz of Starbucks, Ivan Seidenberg of Verizon, and Dan DiMicco of Nucor – at which they discussed issues such as the economy and healthcare reform.

    However, “hosted” may not be exactly the right word. While the lunch may have taken place in the White House, the executive shad to provide their credit card numbers so that they could be billed for the lunch. Politico reports that this has become standard operating procedure in the Obama White House, where they say that the policy is in place to avoid conflicts of interest or even the occurrence of such conflicts.

    Duke and Schultz are interesting choices to have in to chat about healthcare. Schultz made health care benefits a core value in Starbucks’ corporate culture, and offers coverage to people working as few as 20 hours a week. Walmart, on the other hand, has largely been demonized for its approach to health care benefits, though its image has improved and the company has endorsed the kind of health care reform being advocated by the Obama administration.
    KC's View:
    I think the lunch is a good idea…but the idea of taking credit card numbers seems a little extreme. As a taxpayer, I’m happy that the White House is talking to a lot of different people and looking to get a lot of different perspectives. And if it costs me a tuna fish sandwich every once in a while, that strikes me as a good investment.

    Just imagine how much territory they could have covered if they’d had an end-of-day beer…

    Published on: August 3, 2009

    The California Grocers Association (CGA) reports that the Second District Court of Appeal has upheld a trial court ruling that the City of Los Angeles Grocery Worker Retention Ordinance is unconstitutional.

    The ordinance, which was fought by CGA, is described as “the first attempt in the nation to require a certain class of supermarket retailers to retain workers when a store changed ownership.

    CGA president/CEO Ronald Fong said he was pleased and satisfied with the ruling. “We were confident our arguments against the ordinance were sound and the majority of the court agreed,” Fong said.

    KC's View:
    I’m not a lawyer, but this seemed like an absurd rule, forcing a company to keep employees when acquiring a supermarket chain…even if part of the reason the company was being sold was that labor costs got out of control. It would be like forcing a company to be obsolete and non-competitive and to ignore market realities.

    Sounds like the courts got this one right.

    Published on: August 3, 2009

    The Times of London reports that Tesco has gotten to the point in the UK where 100 percent of its waste is going elsewhere than into landfills.

    Tesco in the UK generates 531,000 tons of waste each year. About 385,000 tons is recycled, which leaves 146,000 tons that needs to be disposed of. But the company has been aggressive in finding alternative uses - unsold meat for example, is chilled and taken to a waste management company, where it is incinerated and turned into energy that drives generator turbines.

    But there is a broader, better story – that Tesco isn’t alone in its environmental initiatives. Walmart-owned Asda Group and Sainsbury have both made similar commitments, which is having a significant impact both on how waste is being disposed of as well as how environmental issues are being thought of.
    KC's View:
    More and more, companies are going to be judged not just by the products and prices they offer, but the values they represent – and these kind of environmental values are of critical importance.

    Like this next one…

    Published on: August 3, 2009

    Display & Design Ideas reports that Walmart is testing a new program that will use LED lighting in parking lots in an attempt to both save energy and maintenance costs as well as cut down on what is called “light pollution.”
    KC's View:

    Published on: August 3, 2009

    There was a lot of publicity given last week to a study suggesting that there essentially is no difference in the nutrition values of organic foods and traditional foods. In response, the Organic Trade Association (OTA) released a statement that read, in part:

    “’The broader question is about what is health and what is nutrition, and isn’t it more than just nutrient density,’ said Marion Nestle, Paulette Goddard Professor of Nutrition, Food Studies and Public Health at New York University, in reference to recent buzz about the article, 'Nutritional quality of organic foods: a systematic review.’ “Doesn’t a food system that avoids the use of pesticides, synthetic growth hormones and antibiotics while building healthy soil and protecting natural resources promote health and nutrition? I certainly think so.’

    “She added, ‘I’m surprised that investigators of this caliber would focus so narrowly on nutrient content. There is no reason to think that organic foods would have fewer nutrients than industrially produced foods, and there are many reasons to think that organic foods have greater benefits for the environment, for pesticide reduction, and for taste, all of which affect human health at least as much — or more — than minor differences in nutritional content. I buy organic products because I want foods to be produced more naturally, more humanely, and more sustainably. I see plenty of good reasons to buy organic foods, and this study does not even begin to address them.’”

    And, OTA’s Executive Director Christine Bushway added: “Any time a consumer buys an organic product, whether food or non-food, he or she is supporting a system of sustainable agricultural management that promotes soil health and fertility, fosters species diversity, helps combat climate change, prevents damage to valuable water resources, and protects farmers and farmers’ families from exposure to harmful chemicals. In turn, this benefits the health of our planet in general, and ultimately, those who live on that planet.”
    KC's View:
    Yeah. That's what I said.

    Published on: August 3, 2009

    The Boston Globe had a good piece over the weekend about butter entrepreneur Dan Patry, who make a brand called Kate’s Homemade Butter that won top honors last year at the World Dairy Expo.

    “Several times a week,” the Globe writes, “ Patry pumps fresh cream from local farms into a 1950s-era circular steel contraption he keeps in the garage under a modest raised ranch, and then churns it, slowly, methodically, in small batches. His unhurried care produces a sunshine-yellow butter that is velvety rich, with more than 80 percent fat and no artificial flavors or additives… Since bagging the big butter prize, Patry, 58, has been churning furiously to keep up with demand and fend off challenges from the industry’s major players, who are looking to put the squeeze on their cottage competitor … Kate’s success, however, comes with growing pains. In recent months, bigger rivals have slashed prices, forcing Kate’s to respond with lower prices, which has reduced its profit margin. At Hannaford Supermarkets, where competition has been particularly fierce, Kate’s lowered its price from $3.99 to $3.49 a pound, making it now only slightly more costly than others.”
    KC's View:
    I guess it is a function of the open marketplace that products judged inferior will use their money and power to try to squeeze a smaller, superior competitor out of business.

    That’s too bad…though it is heartening that Patry seems to committed to continued growth and being a robust competitor…and that he’s not going to reduce quality to get there.

    The Globe notes that “sales have soared 67 percent since 2007 to more than $2.5 million dollars. Kate’s is now the spread of choice at Finagle-A-Bagel, and supermarket chains like Shaw’s are adding shelf space for the product.”

    I, for one, am going to look for Kate’s Homemade Butter in my local store…and I’m going to buy some just because I like the way it was portrayed in the Globe. And I suspect that I won’t be alone.

    Published on: August 3, 2009

    • The Chicago Tribune reports that Walmart has been given a deadline by Compass Bank, the financial institution that is providing the money behind the South Side shopping center where the retailer wants to open its second Windy City supercenter – a move that is intensely opposed by organized labor interests.

    The bank has said that Walmart has until May 24, 2010, to get a deal with the city of Chicago or potentially lose funding for the project.
    KC's View:
    This may be a serious deadline, or it might not. After all, you'd think that Walmart could underwrite a project like this out of petty cash.

    Published on: August 3, 2009

    There’s a minor but entertaining controversy in Alabama, where the state’s Alcoholic Beverage Control Board has ruled that Cycles Gladiator wine, made by California’s Hahn Family Wines, cannot be sold because the label has a stylized drawing of a naked woman holding onto a flying bicycle.

    The board says that the label violated state regulations against any depiction of "a person posed in an immoral or sensuous manner."

    “We are surprised that the Alabama Beverage Control Board would ban our wine,” said Bill Leigon, Hahn’s president, adding ““To say that this wine label is pornographic is ridiculous. It’s a classic piece of art from the late 1800s and originals are sold for as much as $50,000 … It’s not a pornographic label, we are not going to change it, we are going to withdraw from the state and it’s a shame that the citizens of Alabama are going to lose the opportunity to enjoy our delicious wines.”

    The decision to pull the wines from Alabama probably won’t hurt much – the company only sells 500 cases a year there, and Hahn may actually benefit from the ruling by rolling out a “banned in Alabama” campaign that capitalizes – some would say exploits – the controversy.
    KC's View:
    This is one of those fun little disputes that is fun to write about, even if it doesn’t add up to much. I’ve seen the wine label, and it seems to me that the Alcoholic Beverage Control Board ought to be a little embarrassed by this sort of retrograde thinking. It isn’t pornographic by any stretch of the imagination.

    Published on: August 3, 2009

    In Minnesota, the Star Tribune had a profile over the weekend of Nash Finch, which has been growing despite the tough economy. According to the story, CEO Alec Covington “is looking for new acquisitions. And thanks to a new line of organic products launched in recent weeks, Nash Finch now imagines a day when it will sell food through supermarkets other than its own.”

    And, the paper writes, “Some pieces of the plan include the expansion of the company's food distribution business for the military, the introduction of everyday low pricing and the rollout of an organics label that, unlike a private or house label, would function more like a company within the company.

    Not everything worked as planned, however. Covington said the pricing program can't move fast enough, and that the famously thin margins of the supermarket business make this recession all the more precarious … Yet Nash Finch says it's ready to buy anything valuable that a competitor may cast off. A Supervalu property could be a target, as the much larger Eden Prairie wholesaler and retailer struggles with a heavy debt load brought on by its 2006 acquisition of Albertson's Inc.”
    KC's View:

    Published on: August 3, 2009

    • Yet another story reinforcing the growth of private brands, as the Connecticut Post reports on a new survey by Digital Research revealing “that about 40 percent of (consumers) are now buying less-expensive store-brand…items, while 55 percent said that they are using more coupons and promotions. The study also revealed that 47 percent of shoppers are spending less on groceries this year, with the average weekly bill at $108.”

    The impact, the Post writes, is being seen in a variety of places – in restaurants that are doing less business, in supermarkets that are reaping the rewards, and by companies such as Daymon Associates, which provides private brand items to retailers. "We're very much benefiting. People aren't eating at restaurants as much," Alex Miller, president of Daymon, tells the Post.

    • WakeUpWalMart.com and WalMart Watch announced last Friday that they will merge their operations, operating under the WakeUpWalMart.com, in an effort to consolidate
    their efforts to force the retailer to offer better pay and benefits.

    WakeUpWaltMart.com was supported by the United Food and Commercial Workers (UFCW), while WalMart Watch was backed by the Service Employees International Union (SEIU).
    KC's View:

    Published on: August 3, 2009

    • Rite Aid reported that its July sales fell 2.4 percent, to $1.93 billion from $1.98 billion during the same month a year ago. Same-store sales were down 0.6 percent.
    KC's View:

    Published on: August 3, 2009

    Advertising Age reports that Dave Burwick, CMO of North American Beverages for one year at PepsiCo, and will be succeeded by Jill Beraud, “who was brought on to lead PepsiCo's global marketing efforts in December.”
    KC's View:

    Published on: August 3, 2009

    Had a story last week about how farmers are getting into the home delivery business, actually bypassing the supermarket to bring fresh produce to local shoppers.

    One MNB user wrote:

    Search Urban farmer…CSA (community supported agriculture)…you will be amazed at what is happening…I get a basket of vegetables each month delivered by a local CSA…I paid a flat fee for the year…and I get whatever is growing and ripe throughout the year…I plan my meals based on what I get. I personally know the farmer, I even donate time during busy farming periods at the farm to see how things are done…its fresher and tastier than any farmers’ market…and I know it’s safe.

    All compelling reasons to patronize that local farmer.

    MNB user Simon Mark Haddad wrote:

    Isn't this milk delivery all over again? It used to be that local dairy producers ran their own routes or had deals with companies that did the delivery on their behalf.

    The benefits, of course, were local, freshness and convenience.


    The more things change…




    Got an interesting email about all our coverage of Starbucks experiment with a store in Seattle that won’t carry its name and will sell beer and wine…a marked departure for the company:

    Thanks to your newsletter, NPR, Oregon Public Broadcasting, numerous TV programs, countless newspaper articles, and millions of readers and listeners…the Starbucks brand is being kept front and center in the minds of consumers. Keep up the good work branding for Starbucks.

    I make no apologies for covering what I think is an interesting and ongoing story. Not writing about it would be irresponsible, I think, considering the broad goals we have here at MNB.

    It is like when people criticize MNB for writing too many Walmart stories. My reaction is that when Walmart stops doing interesting things, I’ll stop writing about Walmart.

    Same goes for Starbucks.




    Regarding Supervalu’s decision to sell 36 Utah stores, one MNB user wrote:

    WinCo is building a large distribution center in Boise, Idaho and will begin their charge into Utah later this year. They will eventually have several 90,000 sq. ft. WinCo's in Utah. Good time for Albertsons to exit that state.




    Responding to last week’s piece about what Jeff Bezos says he knows about business, MNB user Thad Stanley wrote:

    I enjoy your Web site. Thanks for calling attention to the video by Jeff Bezos. I liked it so much I typed up a summary and filed it with other bits of business wisdom I've come across over the years!




    We got lots of email about the choice of beers at last week’s White House meeting designed to reduce some of the racial tensions associated with the arrest of Harvard professor Henry Louis Gates Jr. by James Crowley, the Cambridge police sergeant. Most of the beers served were owned by non-American companies; the sole exception was Gates’ choice of Sam Adams. That upset some US brewers.

    One MNB user wrote:

    It is a global economy after all. Plus there are citizens employed that deliver, stock and sell the beers. Not to mention InBev does employ thousands here in the U.S.




    And here’s an email with a unique perspective:

    In "Your Views" today, you had some interesting feedback that mentioned "the diseases of modern civilization (heart disease, cancer, diabetes, strokes, Alzheimer’s)" which they discussed in their response were most likely due to something we eat, as the diseases didn't exist 10-13000 years ago in pre-agricultural times.

    Something else didn't exist back then: old age.


    Good point.
    KC's View: