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    Published on: September 9, 2009

    by Michael Sansolo

    There was a wonderful scene on the old “The West Wing” television series in which the US president, played by Martin Sheen, looks to his old parish priest, played by Karl Malden, for guidance. Malden tells Sheen the following story:

    One day a man heard radio and television reports that his town was in imminent danger of flooding. Soon after, a policeman came by to warn him. Then when the waters started rising, the rescuers came by boat and then by helicopter. Each time the man rejected the offers saying the Lord would save him. Sadly, he died.

    Once in heaven, the man demanded to see the Lord to find out what happened. The response was simple: I sent you the radio and TV messages, the policeman, the boat and the helicopter.

    What more did you want?

    Sometimes, you have to be open to signs. Last week, I saw two for our industry.

    First, Roger Cohen, a columnist in the New York Times, contrasted eating and cooking styles in France and the US, writing: “The American healthcare debate is skewed. It should be devoting more time to changing U.S. culinary and eating habits in ways that cut the need for expensive care by reducing rampant obesity, to which anxiety, haste and disconnectedness contribute.”

    Maybe you consider the Times too biased toward anything French. In that case, consider this line, from Self magazine (hardly a seat of politically motivated discussion): “Your ideal body starts in your kitchen. Having nutritious, tasty food on hand is key to conquering cravings, feeling energized, defeating disease and dropping pounds permanently.”

    I’m sensing a sign.

    The US is embroiled in a debate about health care right now. We’ve already seen how complex this issue can be for a retailer, thanks to John Mackey at Whole Foods. Let’s avoid the complexities for a second and focus on where there is no debate:

    America has a health problem and much of it is traced to our burgeoning national waistlines. Much of that problem is linked to the foods we eat, how we cook and our lack of physical activity.

    The problem exists and we have the traffic, the customer connections, the food and the information to turn this into an opportunity. We don’t need to take political stands; we need to engage the shopper with what they want and need. That is, dependable information that helps them make good choices. As we’ve seen from some recent flack thrown at product health claims, the information must be solid.

    I got a reminder of this while talking with my friends at Aisle 7, the makers of Healthnotes. (Full disclosure, I do a good amount of work with Aisle 7 and I try to keep those kinds of connections out of columns in hopes of being as non-biased as possible. Except sometimes that does you, the reader, a disservice.)

    You see, I think Aisle 7 is onto a solution. With an array of products from kiosks to web information to even multiple daily postings on Twitter, Aisle 7 pushes the connection the shopper needs by providing information to help them make better choices on products and meals. It’s simple, straightforward and exactly the kind of step shoppers need. (I actually saw an incredible example of how great this could work at The Wedge natural food co-op in Minneapolis. There, the staff uses the kiosk to help guide shoppers through decisions making both the store and staff seem instantly more engaged and knowledgeable.)

    Now, Aisle 7 isn’t alone. There is a tidal wave of information offered to shoppers in the store today through virtually every means possible. It’s just that too often that this wave leaves the shopper drowning like the man in the beginning of this column. We need to help them rather then deluge them.

    This isn’t meant to be an ad for Aisle 7 and it’s not. There are competing services and you should consider them all. But consider something. Consider the signs, consider the needs and consider the opportunity that faces your store, your products and your people today. Don’t let this moment pass.

    Michael Sansolo can be reached via email at .
    KC's View:
    FYI…Because of the shortened week and the large number of stories we had yesterday, Michael’s usual Tuesday column is running today. Kate’s BlogBeat will return next Wednesday.

    Published on: September 9, 2009

    The Richmond Times Dispatch reports that Union Bankshares Corp. is betting that Ukrop’s, the iconic Virginia supermarket chain, is going to be sold.

    According to the story, Union Bankshares is trying to acquire First Market Bank, which is currently majority owned by the Ukrop family. When it structured the offer for the bank, the company said, it factored in the likelihood that the retailer would be sold and rebranded and that such a sale would have an adverse effect on First Market Bank’s earnings and viability.

    A possible sale of Ukrop’s has been much speculated about for the past month, though the company has been avoiding specific comments on the possibility.
    KC's View:
    There aren’t many people that I talk to who believe that this deal won’t eventually happen. It is all a matter of negotiation at this point.

    Published on: September 9, 2009

    The Chicago Sun Times reports that online grocer Peapod is celebrating its 20th anniversary, having grown from an enterprise started with $25,000 in capital raised from friends and family to one that is owned by Ahold, operated out of Skokie, Illinois, and currently serves 360,000 households in 22 markets and has delivered more than 14 million orders in the past 20 years.

    According to the story, Thomas Parkinson, one of the founders and Peapod’s chief technology officer, “recalls checking customers' 1200- and 2400-baud modems while he delivered groceries in those early days.” Today, Peapod “is preparing to launch a text-messaging system to alert customers within 10 minutes of the pea-green delivery trucks' arrivals.”
    KC's View:
    I can vividly remember in those early days how some folks said that online grocery businesses would never work. (It was the same folks who said that Amazon would shortly go out of business.)

    Credit Peapod not just for perseverance, but for having imagination and vision.

    Published on: September 9, 2009

    The Wall Street Journal reports that the US Food and Drug Administration (FDA) has launched a new electronic food registry that requires and enables food companies to report any contamination issues within 24 hours – not just issues that already have gotten people sick.

    “Under the new program, companies would report a problem if, for example, they suspect bacterial contamination such as salmonella,” the Journal writes. “The FDA will be able to ask companies for more information about the potential contamination and may ask them to conduct an internal investigation.

    “Companies that don't report potential food-borne outbreaks within 24 hours may face an injunction, fines or other punishment. Prior to the launch, many companies submitted reports of potential outbreaks to the FDA voluntarily.”
    KC's View:
    It sounds like this is a strong step in continuing efforts to strengthen the nation’s food safety system. Hopefully, it will go a long way to stabilizing decline sin consumer confidence.

    Published on: September 9, 2009

    The Edmonton Sun reports that Safeway Canada has gotten injunctive relief to prevent locked-out workers there from blockading a food warehouse and ice cream plant while the retailer hires replacement workers.

    Some 350 employees have been working without a contract since last December; reportedly objecting the company’s desire to have them work a 40-hour week (rather than the current 37 hours), not to mention the pay and benefits packaged offered by management.
    KC's View:
    It is hard to imagine, in these economic and competitive times, that anyone would have the temerity to object to a 40-hour workweek. Maybe the Edmonton employees haven’t noticed, but pretty much everyone is having to work harder and longer just to maintain their positions. It is time to join the 21st century, where employees in some countries would work a 40-hour work day if they could.

    Published on: September 9, 2009

    Time magazine has a piece this week about Walmart’s Project Impact initiative, which it defines as having three objectives: “One goal of Project Impact is cleaner, less cluttered stores that will improve the shopping experience. Another is friendlier customer service. A third: home in on categories where the competition can be killed.”

    And here’s how the always-reliable and perceptive Burt Flickinger III, managing director for Strategic Resources Group, assesses the company’s results so far: "They've got Kmart ready to take a standing eight-count next year. Same with Rite Aid. They've knocked out four of the top five toy retailers, and are now going after the last one standing, Toys "R" Us. Project Impact will be the catalyst to wipe out a second round of national and regional retailers."

    “It's clear that, under Project Impact, Walmart will make major plays in winnable categories,” Time writes. “The pharmacy, for example, has been pulled into the middle of the store, and its $4-prescriptions program has generated healthy buzz. With Circuit City out of business, the electronics section has been beefed up. Walmart is also expanding its presence in crafts. Sales at Michael's Stores, the country's largest specialty arts-and-crafts retailers, have sagged, and Walmart sees an opportunity. Stores are chock-full of scrapbooking material, baskets and yarns. "Look, they're selling the stuff that accounts for 80% of Michael's business, at 20% of the space," says Flickinger. "It's very hard for any company to compete with that."
    KC's View:
    This isn’t new news, but it is noteworthy that magazines like Time are covering it – spreading the word to more Americans about Walmart’s “save more, live better” gospel. Which doesn’t do a hell of lot for the competition, either.

    Published on: September 9, 2009

    The Cincinnati Enquirer reports on how two of that city’s most prominent businesses – Kroger and Procter & Gamble – are experiencing very different recessions.

    “As shoppers have become tougher and smarter about saving money, P&G has watched sales of its products, many of them carrying premium prices like Iams, fall,” the Enquirer writes. “P&G sold 3 percent fewer products in its 2009 fiscal year than it did the year before, and its prices, which it raised across all segments of its global business, were in part blamed. To battle back, P&G management has promised to cut prices where it sees the need, increase couponing and offer consumers inexpensive ways to try its products … Meanwhile, Kroger's private-label brands, such as Private Selection, now account for 35 percent of all items sold in its stores, up from 31 percent in 2003. Kroger is promising to keep pushing its store brands and is even treating them more like name brands, improving the appearance of packaging and pumping up advertising.”
    KC's View:

    Published on: September 9, 2009

    The Bradenton Herald reports that Manasota-88, an environmental watchdog group, is pushing for the elimination of plastic grocery bags by retailers in Florida’s Manatee County, saying that the bags foul streets, beaches, sewer systems and marine environments.

    However, local governments and businesses are objecting to the proposal. A Publix spokesperson tells the paper that while the company opposes a ban, it does believe in giving shoppers a choice of paper, plastic and reusable bags. And a government spokesman says that at a time when the county is trying to become more business-friendly, a ban would send the wrong message.
    KC's View:
    I’m not sure that a ban on plastic bags is necessarily anti-business, since it has been proven in some chains that when reusable bags take hold, the savings on all those paper and plastic bags actually go right to the bottom line.

    That said, I pretty much agree with Publix – especially because Publix does such a good job of providing those choices. I have a couple of their reusable bags, and they are in the regular rotation…and I like to think I’m saving my local retailers money every time I use them.

    Published on: September 9, 2009

    • Safeway reportedly has decided to discontinue its PowerPump fuel rewards program under threat of a patent infringement lawsuit by Excentus, which provides the FuelPerks reward program to retailers in the US. According to reports, Safeway is saying that customers must redeem their rewards by this Saturday, the day on which Safeway’s program will end.

    Bloomberg reports that a study by software manufacturer Kronos suggests that hiring by supermarket chains, discounters and restaurant chains may be on the increase….slightly. According to the story, “Kronos analyzed the 8.9 million job applications received by 68 retailers in the first seven months of the year. In July, 2.99 of every 100 applications resulted in a hire, compared with 2.75 in January, a three-year low.”
    KC's View:

    Published on: September 9, 2009

    • PriceSmart, the membership club chain, said that its August net sales increased 3.5 percent to $102.5 million from $99.00 million in August a year earlier. For the twelve months ended August 31, 2009, net sales increased 11.6 percent to $1,224.3 million from $1,097.5 million for the twelve months ended August 31, 2008.

    August same-store sales were up 0.6 percent, while annual same-store sales were up 8.7 percent.

    • Smithfield Foods said that its first quarter revenue declined nearly 14 percent to $2.72 billion from $3.14 billion a year ago, and said that it had a Q1 loss of $107.7 million, compared with a loss of $13.2 million in the same period last year.
    KC's View:

    Published on: September 9, 2009

    • Coinstar announced yesterday that its CFO, John Harvey, has resigned from the company, reportedly because the commute between his home in Illinois and company headquarters in Washington State got too onerous. A search for a replacement has been commenced.
    KC's View:

    Published on: September 9, 2009

    This is an old debate here on MNB, but one of my favorites…so, once more into the breach, dear friends.

    MNB reported yesterday on a Brand Week report that Burger King’s deal with ConAgra will bring the fast feeder’s French fries to retail stores later this month, which large-sized versions – dubbed King Kolossalz, and King Wedgez – expected to follow shortly.

    The microwaveable fries will retail for approximately $1.49 per box.

    My comment: I would argue that supermarkets ought to consider whether carrying Burger King-branded French fries is a good competitive move, considering that Burger King’s core mission is to get people to eat out rather than at home. Why do anything to bolster the competition?

    There will be folks who will argue that I am being too absolutist in this position, but let’s be clear. My goal is not to be absolutist, but rather to suggest that everybody in the food business is in a battle for share of stomach, and therefore everybody ought to be playing hardball. That’s what BK is doing…using supermarkets to bolster its own brand credibility and bottom line. Why be complicit?

    One MNB user responded:

    I’m sorry but I simply think you are wrong here and that you risk encouraging supermarket retailers to focus on the wrong thing.

    First off, BK says their mission is “"We will prepare and sell quick service food to fulfill our guest's needs more accurately, quickly, courteously, and in a cleaner environment than our competitors.

    Second, if BK is using supermarkets to bolster its own brand credibility and bottom line why shouldn’t a supermarket use BK to bolster its offering and build its bottom line assuming the product will sell well and return an acceptable margin?

    Finally I would point to Wegmans who in my opinion have been very successful by presenting the absolute best alternative for supermarket shoppers in their markets. In spite of their remarkable prepared food offerings I believe their success has been the result of being the best supermarket they can be not from a focus on taking customers away from Burger King.

    I think BK’s growth and share of stomach is much more tied to our love and use of automobiles and our busy lifestyles than some choice we make between I am going to prepare and eat at home or I am going to go out for dinner. If I weren’t already out and pressed for time I would likely be eating at home or in a sit down restaurant rather than at BK or the Mac.

    I certainly hope I’m not encouraging retailers to focus on the wrong thing.

    I would respond that I’m not entirely sure that Burger King’s fries bolster a supermarket’s image. But more importantly, your use of Wegmans as an example is a good one – because Wegmans has such strong brand equity that carrying competing brands doesn’t hurt it. How many retailers have such a strong image, and deliver on its value promise with such consistency?

    MNB user Steven Barry wrote:

    I think this is a good move for BK. You need the cross promotional and branding opportunities when you’re up against the likes or McDonalds…. Even though everyone knows who they are, the extra ad space in the consumers’ freezer door does not hurt the cause. It’s much like the way Pepsi and Coke spend a whole lot of resources and dollars advertising during a super bowl. People are going to eat out anyway as they are also going to eat in as well. Those are a couple of facts that are far beyond BK’s control but what will not hurt, is that the one of the last images the consumer has just after looking in the icebox and subsequently deciding to eat out, was a Burger King logo on the french fry box. They now have a leg up in the decision process. I do hope they have the sense to leave that crazy looking plastic faced King out of the marketing plan though as it tends to scare the kids…and me as well I must divulge.

    I’d be a lot more scared by the notion of providing equity, space and sales to a company that competes with me for share of stomach.

    MNB user Mike Sommers wrote:

    Is this not a win-win for both BK and supermarkets? Supermarkets are going to make profit by selling French fries whether the brand is Ore-Ida or BK French Fries. Burger King is making a very smart move because they realize with the down economy people are eating out less and eating at home more, so it makes sense for them to try and sell their brand where the customers are, which is the grocery store. Supermarkets wouldn’t agree to putting this new brand on their shelves if they weren’t going to make money on it…so what does the name of the brand matter?

    Could this not be a case where it would be an intelligent loss of business?

    Again, while I am arguing the absolutist position, I’m not really so absolutist on this issue. I’m just endeavoring to get retailers to think in hardball terms about the notion of share of stomach.

    Another MNB user wrote:

    Setting aside for a moment your 'share of stomach' argument (which is quite valid, especially as people are now eating out less in order to save money), the real thing that bothers me about the BK French Fries story is that they're not that good. Certainly not nearly as tasty as McDonald's or Wendy's.

    If, at some time in the future, they put their onion rings in your local store's freezer case - then you'll have something to worry about! 😉

    We had a piece yesterday about a New York Times story about a controversy surrounding the Smart Choices program, which uses a green checkmark on CPG products to denote “smarter food and beverage choices.” At issue are the standards used by Smart Choices to define these smarter options …and the fact that “sugar-laden cereals like Cocoa Krispies and Froot Loops” have made the list.

    My comments, in part: This is a debate that ultimately doesn’t do any of the nutritional labeling programs any good, because it creates doubts about legitimacy and consumer value. I’m sure the Smart Choices folks are doing their best to offer viable and actionable guidance, but I’m not sure they are doing themselves any favors by saying that “sugar-laden” cereals are good for you, and falling back on the “well, they are better for you than some other things” defense. In the end, as many of these companies actually spent a lot of time and money trying to develop healthier options, they may undermine those efforts by lumping them in with less healthy products…

    There will, I suspect, be some folks who will say that this is why there needs to be a national nutritional labeling system, but I also think there is a good argument for why a multitude of programs may better serve shoppers…if for no other reason than it allows people to choose which programs best serve their needs. For example, if I think that the Guiding Stars program is the one that best suits my buying patterns and nutritional priorities, then I can choose the local store that offers it. If I feel that way about the Nuval system, then I can choose the store that uses that system.

    Sure, there is the possibility that this could all get confusing for consumers, and it is up to retailers to a) explain the way their chosen systems work, b) explain the differential advantages of their system. This puts a greater burden on retailers, but since this is something they ought to be doing anyway – being a resource for information as well as a source of product – it ought to fit into a broader strategic imperative.

    One MNB user responded:

    You are pandering on this multiple choice system issue, Kevin. While choice is a nice concept, history is shown abuse and confusion is too easy. Your choice mantra is a net circle to where we are today, confused, overweight and sickly. Fruit Loops - I rest my case.

    MNB user Bob Anderson wrote:

    A few of us in the Private Label industry three years ago meet with the FDA at their offices and address this very issue. We asked the US Government to come up with the standards as well as logos so we wouldn't have a bunch of marketing folks coming up with their version of what it should be. The FDA was shocked to hear that retailers want them to do this..(we were told that the big branded companies sure didn't). They told us that they would look into it. This is the best way not only to create credibility with the customer but to legitimize the program. Believe it or not more people do read the labels and to have everyone "doing their thing" only turns more folks off then on.

    Still another MNB user wrote:

    KC, the purpose of these programs is to give people adequate information where they can make an informed choice as what is best for themselves and their children. It is not the responsibility of the government or anyone, to tell us what we can and cannot eat, as some people believe. If someone wants to eat sugary cereal then be my guest. All we can do is inform the consumer the good/bad health benefits of what they are choosing to eat. We should believe in good health but not in lose of freedom....which seems to be the direction some politicians want us to go. Labeling should be just that...labeling.

    Listen, even if you accept the notion that a single government standard is the best approach to nutritional labeling, does anyone really think that in the current political climate – where hysteria and hyperbole seem to rule, and where highly paid lobbyists seem to outnumber the people’s representatives – that we actually could come up with one?

    I have my doubts.
    KC's View: