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    Published on: August 6, 2009

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    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:

    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, available on iTunes and brought to you by Webstop, experts in the art of retail website design.

    Michael Sansolo wrote earlier this week about a tale of two videos, and how the ability of people and companies to communicate and network over the Internet creates both opportunities and challenges.

    One of the great opportunities it offers all of us, it seems to me, is the access to innovative thinking. For example, there was a terrific story that I read recently in the Chicago Sun Times about three students at Valparaiso University who developed an application for the iPhone called “Battery Go!” that allows you not only to know how much power you’ve got left, but also how much time you’ve got to use the phone, the Internet, listen to music or watch video. Now, it never even occurred to me that I needed that application…but now that I have it, I use it constantly.

    It isn’t just me, by the way. “Battery Go!” is hot in the US, Italy, Brazil and the Netherlands, among other places…and suddenly these three students, who were concerned because none of them could land an internship for the summer of 2009, and they expect to make at least tens of thousands of dollars from “Battery Go!” At the very least, that’s better than they would have done in an internship. And, they’re trying to figure out what the next “killer app” will be, because suddenly they are alive to the notion of possibility.

    Equally in touch with the social networking possibilities is Southwest Airlines. You may remember that recently there was an incident that involved a hole the size of a basketball opening up in the fuselage of a Southwest plane, which resulted in a lot of people on the flight and on the ground using Twitter and Facebook to document both the problem and the company’s reaction to it. But just as important, Southwest has an in-house Tweeter – or Twitterer, depending on what dialect you prefer – who used these social networking tools to advise the community at large how the airline was responding to the crisis and what it was doing to maintain and assure passenger safety. That was a story that only lasted a day or two, and I’m convinced that it’s at least partially because Southwest got out in front of it.

    Indeed, that’s pretty much the conclusion drawn by the Wall Street Journal, which earlier this week had a story about how companies are using these social networking sites to gauge consumer opinion, publicize their own opinions and positions, and avert PR nightmares before they can even start.

    And Fast Company made the following interesting observation this week:

    “Consider for a moment that the humble Amazon product review can nullify millions of dollars of ad spend, that a search for ‘best razor’ on Google can route around all of Gillette's best efforts to communicate the ‘best a man can get,’ and that a ‘hate Comcast’ group on Facebook has the power to drive a consumer straight into the arms of DirectTV.”

    These are all good reasons you have to engage: people are engaging all around you, and it is important to be part of the conversation, to help shape the narrative about your brand. While they never will have the total and domineering control that they had back in the day, this is a way to part of national, even global, conversation about our brands, our customers, and the expectations they bring to the marketplace of products, services and ideas.

    For MorningNewsBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: August 6, 2009

    There is a fascinating piece in Time magazine about a new study that examines the ability of luxury brands – such as BMW – to expand into new and even unrelated categories, bringing their upscale cachet with them.

    Unlike more functional brands, the article suggests, studies indicate that consumers are willing, even eager “to embrace luxury brand names over a wide range of product categories, including those with little logical connection to the brand's core item. The authors attribute this phenomenon to the ‘promise of pleasure’ - a brand like, say, Cartier evokes strong, positive emotional responses in consumers, and those good feelings can be easily transferred to stuff like furniture, cheese and even, yes, ketchup.

    And the “promise of pleasure,” Time notes, is a lot more important during a recessionary time when so many people can’t afford the real thing: “During a downturn, it's easier to pay $10 for a nice bottle of ketchup than $60,000 for a sedan (although the ketchup doesn't handle as well).”

    There are, however, two caveats. One is for such brand extensions to succeed, they have to be high-quality; one can only trade in on brand equity if it is consistent across the various categories. The second is that food may be the most difficult category into which a non-food luxury brand can expand, with Burt Flickinger III, managing director of Strategic Resources Group, pointing out that in the end, it is hard to carve out a luxury niche in what essentially is a commodity business.
    KC's View:
    This actually reinforces a point that we’ve been making for some months here on MNB…that while we may be in a recession, people have not lost the aspirations that they had while we seemed to be in prosperity. People may have adjusted their sights a bit, or moderated their approaches, and may even be better able or more willing to distinguish between “wants” and “needs” (which often seem like the same thing during boom times). But we all still aspire…and it is the retailers that can appeal to both aspirations and needs that, I believe, are best positioned to thrive in the long-term.

    Published on: August 6, 2009

    The San Francisco Chronicle reports on a new food traceability system called HarvestMark, which has been developed in anticipation of federal regulations that could require some sort of tracking system for the nation’s foods.

    In San Joaquin County, for example, workers put stickers on watermelons, with each melon having its own 16-figure code, which establishes when and where the melon was harvested. The Chronicle writes, “The new tracing system is one example of how the private sector has responded to recent food-safety scares, such as the 2006 E. coli outbreak involving spinach. In advance of any legal mandate, a few growers have started putting HarvestMark codes on products like plastic-packaged grapes and strawberries, as well as watermelons.”

    Not only is this information available to people within industry and government, but also to consumers, who can use the code to identify on the Internet where the fresh produce they are eating has been harvested.
    KC's View:
    So many people and companies try to find reasons and excuses that this kind of traceability cannot be achieved. It is good to see that some are taking the opposite approach – looking for solutions and trying to get ahead of the wave.

    This is similar to other approaches that have been pointed out here on MNB, which as the use of code numbers by Terra Creta to allow people to see everything they could possibly want to know about the olive oil they are using, including seeing the olive groves from which the product emanated.

    This is where things are going. If you don't get ahead of the wave, you risk getting drowned in the flood of companies that do achieve this level of transparency.

    Published on: August 6, 2009

    Earlier this week, MNB noted that Tesco was pointing with pride to a policy that has percent of its waste is going elsewhere than into landfills … including finding alternative uses for some byproducts. For example, Tesco said, unsold meat is chilled and taken to a waste management company, where it is incinerated and turned into energy that drives generator turbines.

    Well, according to the animal rights group Viva, this use of meat is “macabre,” and consumers ought to be informed if the energy they are using in their homes is being generated by out-of-date or excess meat.

    The Daily Mail in the UK quotes Justin Kerswell of Viva as saying, “'Whatever savings are made by turning this meat into energy is more than voided by the huge amount of greenhouse gases generated by the farming and production of the meat in the first place. Tesco should take a long hard look at its wasteful practices.”
    KC's View:
    I’m fairly sure that Tesco – like virtually every other major retailer – would prefer that there not be any waste…but it happens, and I would have thought it a good thing that the stuff isn’t just being thrown away.

    But that’s okay. If the folks at Viva want to turn off their lights and their computers and their television sets and any other electrical appliances because of how the energy is being generated, that’s okay with me. They’ll like candlelight and fireplace heat. Really they will.

    Published on: August 6, 2009

    The Detroit News has a nice little piece about a retailer named Mark Kassa, who has a store called Heartland Marketplace in Farmington Hills, Michigan, a former Farmer Jack store that offers a product mix that “includes Turkish coffee and amba, or pickled mangos, a popular food in the Chaldean community, kosher meats for the Jewish customers and an array of spices commonly used to make Indian cuisine.”

    The approach, the News writes, allows Heartland to be successful in a tough economic environment that can be tough on chain stores that cannot be as granular in their marketing efforts.

    "The nice thing about being an independent grocer is that you don't have to go through a chain of command," Kassa tells the paper. "Every culture likes particular items and we can get the items in two or three days."
    KC's View:
    You don't always see a lot of positive news stories coming out of Michigan these days, so this was a nice one to read.

    Published on: August 6, 2009

    The Arizona Republic reports that bankrupt Bashas’ is looking “to get out from under onerous real-estate leases that are costing the company millions of dollars a year … and is seeking to void leases at a Phoenix office building and at 14 shopping centers around the state.”

    The leases are said to be for locations that the company no longer occupies but on which it continues to pay rent.

    In addition, the Daily News-Sun reports that Bashas’ is offering a new Senior Discount Day that one day a month gives 10 percent off on transactions of more than $15 made by people older than 55 years of age. Prescription drugs, alcohol, tobacco and some other items are not eligible for the discount.
    KC's View:
    Which is ironic, when you think about it, since prescription drugs and alcohol are what people really need as they enter their dotage.

    Published on: August 6, 2009

    Bloomberg reports that the US Senate has approved by an 80-17 vote a $125 billion budget – an 11 percent increase - for the US Department of Agriculture (USDA) and Food and Drug Administration (FDA) that will, among other things, increase funding for food safety programs.

    The bill is similar but not identical to a version passed by the House of Representatives: “The Senate bill … cuts in half President Barack Obama’s request for $14.6 million to pay for a voluntary animal identification program designed to make livestock tracking faster when disease outbreaks occur,” Bloomberg writes. “Funding for the program was stripped from the House spending plan.”

    The two bills will have to reconciled by a joint committee before going back to the Senate and House vote on the final version, which would then go to President Obama’s desk to be signed into law.
    KC's View:

    Published on: August 6, 2009

    BrandWeek reports that the National Advertising Division of the Better Business Bureaus has recommended that General Mills discontinue comparative advertising for its Progresso Soup brand that "communicated inaccurate messages regarding Campbell Soup and MSG [monosodium glutamate] content.”
    KC's View:

    Published on: August 6, 2009

    • Delhaize said that its second quarter profit was up eight percent to the equivalent of $179.6 million (US), on sales that were up 14 percent to $7.3 billion (US).

    • Costco reported that its July sales were down five percent to $5.41 billion, on same-store sales that were off seven percent overall (down eight percent in the US and five percent in global stores).

    • 99 Cents Only Stores reported that its first quarter sales were up nine percent to $332.1 million, on same-store sales that were up 23.6 percent. Q1 profit was $9.5 million, up from a loss of $1.5 million during the same period a year ago.

    • Walmart de Mexico announced that its July sales were up 11 percent to the equivalent of $1.63 billion (US), on same-store sales that were up 4.6 percent.

    • Procter & Gamble said yesterday that its fourth quarter profit was down 18 percent to $2.5 billion, from $3 billion during the same period a year ago. Q4 sales were down 11 percent to $18.7 billion.

    • Unilever said that its second quarter net profit was the equivalent of $1.09 billion, down 17 percent from the same period a year ago, on sales that were up one percent to $15 billion (US).
    KC's View:

    Published on: August 6, 2009

    • Budd Schulberg, who wrote the screenplays for “On The Waterfront” and “A Face In The Crowd,” as well as the immortal novel “What Makes Sammy Run?”, died yesterday at age 95.

    Schulberg also was a boxing aficionado and chronicler of the sport; in 1947 he wrote a book called “The Harder They Fall,” a fictionalized expose, which was turned into a 1955 film that was Humphrey Bogart’s last movie.
    KC's View:

    Published on: August 6, 2009

    One MNB user had some thoughts about Whole Foods’ intended makeover, moving away from its gourmet image and back to its healthy living roots:

    As a weekly Whole Foods shopper, I offer two suggestions: (1) Reduce the amount of merchandise overlap with general grocers including Giant Eagle, and Kroger. By my crude and unscientific count, I can find roughly a third of package goods on the shelves at Whole Foods that I can find at Giant Eagle and Kroger. That's a problem for any retailer, but especially problematic for a retailer like Whole Foods that charges more for the same item. (2) Eliminate corn fed beef. Corn is bad for cows. If Whole Foods stocked grass fed beef that came from cows that were raised on a ranch instead of a feedlot or fattening pen, then the company would simultaneously return to its roots of offering healthy food and offer a product not found at Giant Eagle and Kroger.

    Interesting points. I don't shop Whole Foods – there isn’t one near me, and it is a little out of my price range (I have three tuitions to pay for) – and so I had no idea there was this kind of overlap.

    MNB user Bob Reynolds wrote:

    Back to Basics??? -- How is Mackey going to profitably fill 60,00 to 80,000 square foot current and committed stores with organic almond butter and granola. These stores were designed for fancy foods and as a place to eat lunch and dinner.

    Did you see that there are 19 "current leases tendered." Presumably, these are finished boxes on which Whole Foods is paying rent but that are not built out. Sounds like an albatross to me.

    Regarding the taste test of coffee sold by Starbucks, McDonald’s and Dunkin’ Donuts (the latter won), one MNB user wrote:

    I am an addict to coffee, and also work in a food lab. Part of my day is spent in the chem lab and the other part spent working on sensory testing.

    I like all three coffee, but to me it's all mood dependent. Starbucks is always my first morning coffee and to me the flavors are more intense, and refined. Is it a dark French roast, a smooth bold Columbian, or is it a chocolately Kona blend with smooth hints of astringency. They really appeal to a different crowd.

    Dunkin Donuts or McDonalds is my "in a pinch" ;either I'm out of Starbucks funds for the week or I'm just running late on the weekend but need my caffeine boost. I don't think of any of the Dunkin Donut Coffees are gourmet. They are not a fine bottle of wine if you will. I can't pick out a different flavor notes like I can when I purchase my Starbucks. Dunkin Donuts and McDonalds are both similar to me, they are the mutts of coffee. No distinct defined flavors, just a good ol' cup of coffee. There is nothing wrong with this, but to me it's comparing apples to oranges.

    Starbucks has defined flavors dependant on what's brewing, and I appreciate the refinement of it all.

    This should be positioning that Starbucks is pleased with, I would think.

    We noted yesterday that the National Football League (NFL) has struck a deal with Procter & Gamble that will make the consumer packaged goods giant an official league sponsor, with some of its items soon to be labeled as “official locker room products of the NFL.”

    I commented:

    Seems to me that there recently was a story making the rounds about how P&G really wanted to improve its men’s product business, so this sort of tie-in really makes sense.

    Though one has to wonder if there will be a culture clash between P&G and the league that gave us Michael Vick, Pacman Jones and Plaxico Burress. (Did you know that there have been more than 450 NFL player arrests or citations since 2000?)

    MNB user Jason Williams responded:

    Relating to your KC’s View on the P&G story. 450 NFL arrests since 2000. I agree that stories like Plaxico Burress and Michael Vick have dominated some headlines and tainted the view of the NFL for some. However, I would be interested in seeing the true statistics compared to other leagues. The NFL has 60 men per roster compared to around 15 for the NBA. What is the total percentage of players being arrested when comparing the 2 leagues?

    Another MNB user wrote:

    We need to keep in mind what the total number of players in the NFL since 2000. I believe there is a 55-man rooster for every team so you can do the math! A LOT of players/young players with lots of $$$$$ and very young players with lots of $$$$$. Sometimes lots of $$$ result in very stupid stuff!

    My point is the NFL & P&G is a good fit for some of the P&G products they will be advertise!

    Maybe we should look at the good that the NFL brings and let's not spend time on what a few have done to give the NFL a bad name!

    I didn’t say it was a bad deal. Just that there is a bit of a potential culture clash.

    That said, there were more than 450 arrests and citations in the last decade…and I don't care what the comparisons to other leagues reveal. That’s way too many by any standard.

    And another MNB user wrote:

    What's old is new again.

    Some of your younger readers might not remember a cross-dressing NFL star (Joe Namath) hawking Noxzema shaving cream on TV (with a then-unknown model named Farrah Fawcett). Remember the jingle? Remember the controversial panty hose spots?

    Actually, aging being what it is, many of your older readers might not remember either...

    KC's View: