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    Published on: September 22, 2009

    by Michael Sansolo

    Living as I do near Washington, DC, I’m aware that I do not live in a typical part of this country. Forget the incredibly entertaining presence of the federal government and just think about this: our area still does not have a single Walmart Supercenter.

    Beyond the retail issues, it’s easy to argue that my local newspaper, the Washington Post, doesn’t represent the mainstream either. And that’s why I was stunned recently to see an incredibly clear demonstration of the changing face of retail wars on the pages of the Post.

    A week ago Sunday I was stopped in my tracks in the Post’s news section by a bright red, two-page spread ad from Target. The message of the ad was simple: a few months earlier Target asked for suggestions to improve its stores and it wanted to report on the 627 responses it received. The questions were good and the answers complete, offering good explanation or responses to shopper ideas...

    Except once I turned the page, it became clear how badly Target had missed, well, the target. Because exactly one page later was a full page ad from Walmart touting “unbeatable prices every day” and featuring a $12 special on assorted small appliances.

    The difference could not have been more startling. Target talked about how they are going to improve the shopping experience; Walmart talked price and value.

    It almost seems like piling on to mention the props Walmart got for free later in the same edition, but the reference is too importance to miss. That same day the Post’s auto editor glowingly reviewed the Hyundai Sonata with the following terms: “Hyundai is the Walmart of car companies. It has turned ‘value’ into a word meaning substantially better than ‘cheap.’ It has given dignity to the concept of ‘bargain.’”

    Then later in the article the review wrote: “My hunch is the people at Hyundai studied the people at Walmart to learn how to consistently deliver a higher meaning of value - excellent products and excellent service at an excellent price.”

    It’s impossible to know how many people actually read the auto column, but those who did got a glowing review of value from Walmart.

    Obviously, Target couldn’t do anything about that and probably couldn’t prevent Walmart from getting the ad slot right behind them that day. However, the lesson of the two ads shouldn’t be lost on anyone. Think of the message each company got across and then think of the following.

    The late Mike O’Connor, the longtime president of Supermarket Institute (FMI’s predecessor) and someone who deserved the title industry expert, had one of the best philosophies for business that I have ever heard. Mike would say: "Less of how it came to be and more of what it means to me."

    In short, talk about what matters to the customer, not how hard it was to make it happen. It occurs to me that the Target/Walmart ad comparison played that beautifully. Target, one of the best companies around at building customer loyalty, this time talked about process in hoping to make a case; Walmart shouted them down with value. One talked about what it took to be; the other about what it means to me—the customer.

    I bet we know how this fight turns out. Think about your messages.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .
    KC's View:

    Published on: September 22, 2009

    Business Week has an interesting piece noting that “in the world of branding, trust is the most perishable of assets. Polling in recent months shows that increasing numbers of consumers distrust not just the obvious suspects - the banks - but business as a whole. In a phone survey conducted from May 26 to July 3 by public relations firm Edelman, only 44% of Americans said they trusted business, down from 58% in the fall of 2007,” a shift in attitudes that is compelling a number of companies “to tweak marketing and focus on rebuilding credibility.”

    One of the things that has happened according to the article, is that the rise of new media has allowed a wide range of companies – from conglomerates to independents – to compete in terms of “share of voice,” and major companies are finding that it makes sense to focus on trust – also known as brand equity - as a differential advantage that small concerns to not necessarily share. And the focus on trust is not just seen as a public relations initiative, but a quality that must be imbued in every level of a product’s development, manufacture and marketing.
    KC's View:
    While the companies cited most prominently in the Business Week article are a car company (Ford) and a financial services company (American Express) – two categories that have been particularly hard hit when it comes to trust and dependability – it seems to me that this ought to be a central concern for virtually every company, whether in retailing or manufacturing.

    Remember the old Latin proverb? “Trust, like the soul, never returns once it goes.”

    One other thing to remember… crisis management consultant Eric Dezenhall tells Business Week, "Trust-related marketing only works if there is a message that people want to believe in. You cannot spin an audience that doesn't want to be spun."

    Good point.

    Published on: September 22, 2009

    USA Today has an interview with Kraft Foods CEO Irene Rosenfeld, in which she offers an interesting assessment of the most important thing she has done since taking the reins of the company – empowering employees.

    “We redefined the higher purpose of the company and the core values,” Rosenfeld tells the paper. “A higher purpose was ‘making today delicious.’ Everything employees do, from product quality to social responsibility to marketing, is about what they can do to make today delicious. That's been a powerful rallying cry … Of our seven values, the one that has had the most profound impact is the one that encourages all employees to act like owners. Everyone understands what it means to own a business. You spend money like it is your own, you make sure you're getting a return on your investment, you treat people like you would like to be treated. Of all the changes we've made, that's the one I've gotten the most feedback on.”
    KC's View:
    It seems to me that so many of the problems that companies have with labor relations could be solved if management not just empowered employees, but worked to make sure that the people on the front line have skin in the game. People have to feel like owners, especially in a 21st century business environment that puts a premium on entrepreneurial moxie.

    If companies can tap into that, and create an environment that allows everybody to share in the value of what eventually is created, then it should solve a lot of problems.

    Published on: September 22, 2009

    Michigan-based Spartan Stores said yesterday that it has launched a new program called The Nutrition Guide through its West Michigan banners, D&W Fresh Markets and Family Fare Supermarkets. More than 16,000 products will be clearly identified with a color-coded labeling system, indicating:

    • Low fat (orange label)
    • Low sodium (tan)
    • High fiber (teal blue)
    • Gluten free (green)
    • Sugar free (purple)
    • Low calorie (yellow)

    Products that are low in fat, low in sodium, and high in fiber also will be identified with a heart label indicating they are “heart friendly.”

    Spartan says that the guide could soon be expanded to more Spartan stores, including Felpausch, Glen's Market and VG's Food.

    The Kalamazoo Gazette notes that the new program competes with the NuVal system that was adopted by Meijer earlier this year.
    KC's View:
    On the one hand, it can be argued that competing nutritional labeling systems simply create more confusion for consumers. But on the other, it can be argued that the systems clearly delineate the chains that have them and give them differential advantages.

    To be honest, I can make both arguments.

    Published on: September 22, 2009

    The Sacramento Bee reports that the Keep California Beautiful campaign has launched a new campaign to get supermarket shoppers to either recycle plastic grocery bags or bring non-disposable bags when they go the grocery store. And he’s the kicker – the plastic bag industry is helping to underwrite the effort, “hoping to show that more recycling and reuse can achieve the same litter-reduction goals as a ban.”

    The Bee puts the campaign in context, writing that “the new push to change consumers' bagging behavior marks the latest turn in the state's plastic-bag wars. In each of the last three years, the Legislature has debated – so far to no effect – a statewide 25-cent fee on bags at supermarkets and drugstores to discourage bag use. Meanwhile, city governments from Malibu to Oakland have enacted bag bans, justified mainly as litter-control measures.

    “Bag makers have fought back, suing three cities to overturn or limit the bans. They are now sponsoring legislation that would impose a fee on manufacturers to fund local litter control efforts, with the catch that the money would be available only to cities that haven't banned plastic bags.

    Save Mart is helping to jump-start the initiative, according to the story: “Staff at Save Mart stores – and potentially other local grocery chains as well – will wear ‘Got Your Bags?’ buttons. The message will be stenciled at the entrances to some stores and may be broadcast over grocery PA systems as well.”
    KC's View:
    I believe in reusable bags, and that is the system I have adopted. But if sincere and comprehensive recycling efforts get us to the same environmental place, I’m okay with that, too.

    Published on: September 22, 2009

    Seven members of an international research group have won a $1 million prize from Netflix, the online video rental company, for creating software that will more accurately predict what movies people will like based on previous shopping behavior.

    The contest was originally announced three years ago, and the new software is said to make recommendations that are twice as accurate as in the past.

    According to media coverage of the contest, the $1 million prize gives Netflix the ability to use the software without paying royalties, and the research group is able to license the software to other companies.

    The New York Times reports this morning that “Netflix was so pleased with the results of its first contest that it announced a second one on Monday. The new contest will present contestants with demographic and behavioral data, including renters’ ages, gender, ZIP codes, genre ratings and previously chosen movies — but not ratings. Contestants will then have to predict which movies those people will like.”
    KC's View:
    There is an interesting model here that, perhaps, for other businesses – finding ways to go outside the traditional box to create new solutions to existing problems.

    As the Times writes, “the Netflix contest was significant less for the prize money than as a test case for new ideas about how to efficiently foster innovation in the Internet era — notably, offering prizes as an incentive and encouraging online collaboration to tap minds worldwide. The lessons of the Netflix contest could extend well beyond improving movie picks. The researchers from around the world were grappling with a huge data set — 100 million movie ratings — and the challenges of large-scale modeling, which can be applied across the fields of science, commerce and politics.”

    Published on: September 22, 2009

    Consumers Union, publisher of Consumer Reports, said yesterday that it will oppose “a proposed national USDA Leafy Green Marketing Agreement” that it says “will fail to adequately improve the safety of raw spinach and other salad ingredients.”

    “We urgently need improvements in the safety of many kinds of food, from spinach and other leafy greens to peanut butter to imported fish,” says Elisa Odabashian, Director of Consumers Union’s west coast office. “But this USDA Marketing Agreement approach is the wrong way to go about it. It amounts to industry self-regulation, wrapped up in a USDA package, so consumers think the government is insuring that their food is safe. But all the safety standards will be developed by the big food processors and other members of the industry. There will be only one consumer member on their Administrative Committee, and that consumer member will be chosen by the food processors."
    KC's View:

    Published on: September 22, 2009

    MarketWatch reports on a new Citigroup research report saying that national brands may be making some advances at the expense of private label products.

    According to the story, “For the four-week period ended Sept. 5, branded food manufacturers gained 20 basis points of dollar market share from private-label brands over the same period last year -- marking the first time since late 2006 they have gained share, Citigroup said.

    “The share gains stemmed from food makers sticking to price increases in their branded food, despite lower ingredient and energy costs, as well as more stable volume shipments, the analysts said. Private-label prices have been falling.”

    • The Food Marketing Institute (FMI) and GS1 US announced yesterday the launch of Rapid Recall Exchange, an online service to enable prompt and accurate information exchange between retailers/wholesalers and suppliers about food and product recalls and withdrawals. It replaces an existing recall system, the Product Recall Portal, by improving ease of use and adding significant capabilities.

    “This will benefit the public It is a system designed by the industry and for the industry, which applies best practices and critical insight and expertise from industry partners and associations,” says Leslie G. Sarasin, FMI president/CEO.

    “It employs the same GS1 global standards that these companies already use to identify their products, stock their shelves, and accelerate checkouts,” says Bob Carpenter, CEO of GS1 US. “Its ease of use and extensive functionality can improve the speed and accuracy of recalls, which we all want.”
    KC's View:

    Published on: September 22, 2009

    • Rite Aid Corp. announced yesterday that Ernie Richardsen, a 17-year pharmacy industry veteran, has been promoted to Group Vice President, Pharmaceutical Purchasing and Clinical Services. Richardsen most recently served as Rite Aid Vice President, Pharmacy Programs and Clinical Services.
    KC's View:

    Published on: September 22, 2009

    MNB reported yesterday that “Mike McEvoy, the highly regarded founding manager of Washington State’s Organic Food program has been tapped to be director of the National Organic Program, leading the federal program that develops the rules for organic agriculture enforced by certification agencies around the country.”

    Which was accurate, except that Mike McEvoy’s first name actually is Miles.

    We apologize for the goof.
    KC's View:

    Published on: September 22, 2009

    Got the following email from Dave Heylen of the California Grocers Association (CGA), referring to a story we referenced yesterday:

    In the San Jose Mercury News article “Groceries Fall in line with Palo Alto’s plastic bag ban” it inaccurately implied that the grocery industry “sued the city, arguing the ban would hurt the environment by resulting in more paper bag use.” The suit was filed by companies within the plastics industry. The grocery industry was not a part of the lawsuit. CGA and its members in the South Bay Area have been working with several municipalities to develop a plan that not only promotes reusable bag use, but also encourages the recycling of paper and plastic bags for those consumers choosing to use them.




    Yesterday’s story about some retailers refusing to take personal checks, and my comment that this shift in policy won’t even be noticed by people younger than 30, got a lot of attention.

    MNB user Steven Ritchey wrote:

    For people under 30, check writing may be like the proverbial dinosaur, but there’s still a lot of us who don’t fit that profile, and while I seldom write checks anymore, a whole of those of a certain age still do. I know several people who are my age and maybe a bit older who don’t have a debit card and who don’t want to put their groceries on a credit card, they write checks. This may come under the heading of cutting off your nose to spite your face.

    MNB user Tim Heyman wrote:

    Being an independent owner of a supermarket for 8 years, I would have loved to stop taking paper checks at the registers. Not so much as for increasing speed of check out, but the costs associated.

    Lag of cash flow waiting for checks to clear, with today’s computers consumers making their own fraudulent checks on their home computers, cost of service such as Tel-a -check.

    I had the County District Attorney tell me that it would be beneficial to me to stop cashing payroll checks, again fraud on consumers being able to forge checks on home computers, businesses not being able to cover etc., that his time needs to be spent on more pressing matters. He stated for me to let the banks be banks and handle this. How could I argue? My time was just a pressed, it was not good for business for the store to stop cashing payroll checks but it did cut down on payroll and related costs.

    Even with cash you have the problem with counterfeiting, it’s not a large problem but it does happen. With credit cards there is the thief of the cards, but with bank debit cards…. once the pin is put in, it’s a legal transaction, never bill backs.


    I noted yesterday that this shift takes place at the same time as the Wall Street Journal reported about a New York restaurant that has stopped taking cash…which led MNB user Adrienne Kramer to write:

    You left out that American Airlines has gone “cash-less” on all of their flights. What is the world coming to?

    United, too. Just FYI.

    MNB user Michael Freese wrote:

    I, for one, hate people writing checks in front of me but the retailers should also be concerned about the people, mostly under 30's, that use debit cards to buy a pack of gum. This costs me as well as that retailer.




    We continue to get email about the story saying that United Airlines has started selling privileges formerly afforded to its best frequent fliers, and my contention that this undermines the whole definition of a frequent flier/shopper program.

    One MNB user wrote:

    I'm confused. What difference does it make if the special treatment is paid for or given without charge for being a valued customer. Is it you don't want anyone else to get the special treatment unless they've "earned" it? How would you know if a particular person bought or earned their perks. Maybe you'd like the airlines to hand out badges that say "I earned it". Sounds to me we've got some ego issues here.

    But I do know it, because United is selling it both online and in the terminals.

    This isn’t about ego. This is about rewarding people for loyalty, and creating an atmosphere that compels people to be more loyal to one company/vendor/airline.

    And, by the way, there is a tangible impact of this new policy. If people can buy the privileges, it means the express lines and best seats that used to be reserved for best fliers now will be more crowded and less available. And that isn’t smart.

    MNB user Ken Wagar wrote:

    I often take the time to write and challenge you when I think you have miss-spoken or are incorrect about something so I thought I should also let you know that I agree 100% with your comments regarding the United Airline changes. You are right on and I do believe there is a lesson involved for any business.

    Interesting email from another MNB user:

    A little off the subject, but the first airline to allow soldiers in uniform to board the plane first (regardless of seat selection) will strike an emotional advantage with its customers, frequent or otherwise.

    Agreed. Very good idea.
    KC's View:

    Published on: September 22, 2009

    In Monday Night Football action, the Indianapolis Colts turned less than 15 minutes on offense into a 27-23 win over the Miami Dolphins, who were inaugurating their newly re-christened Landshark Stadium.
    KC's View: