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    Published on: September 29, 2009

    Jim Donald, the former CEO of Starbucks as well as president/CEO of Pathmark Stores, president of Safeway’s eastern division and vice president of food merchandising at Walmart, was named yesterday to be the new president/CEO of Haggen Inc., the 33-store Pacific Northwest supermarket chain that generates about $844 million a year in sales.

    Donald is scheduled to begin his new duties next week. He succeeds Dale C. Henley, who has been serving as president/CEO since 1996 and who announced his retirement earlier this year. Henley now becomes a non-executive chairman of the board of Haggen and will continue as president/CEO of Briar Development Co., a Haggen real estate affiliate.

    “Haggen has led the industry in innovation, quality and service and I am proud to join its 3,700 associates in continuing this trend,” Donald said in a prepared statement. “Joining Haggen brings me back to my roots in the supermarket industry, a business that I have always had a passion for.”

    Don Haggen, co-owner of the company with his brother Rick Haggen, released the following statement: “We are extremely pleased to attract an executive with Jim Donald’s skills and record of success to lead our Haggen Food & Pharmacy and TOP Food & Drug stores. He has the experience of leading large companies, but understands the importance of visiting stores and building strong relationships within the many communities we serve.”
    KC's View:
    I suspect that another possible matter on Jim Donald’s plate will be to get Haggen ready to eventually be sold, but that’s just a guess on my part. More and more people tell me that they suspect there will a lot of consolidation on the retail side of the food industry over the next few years, with companies like Haggen increasingly vulnerable because of competitive pressures; the smart ones will position themselves to get the best possible price through a canny mix of efficiency and effectiveness, while the less smart ones (how’s that for diplomatic language?) will ignore the economic and competitive realities until it is too late.

    Here’s the great thing for Haggen. The best way to get a company ready to be sold is to make it more effective for customers and a better place to work for employees – which happens to be two of the things that, from my experience, Jim Donald is best at. So whether the company is sold down the road, or this is just the next chapter in a decades-long history as an independent-minded regional chain, this is a smart strategy.

    I like this move a lot, from both points of view. Haggen gets a seasoned and dynamic retailer to run the company, someone who can see the world both from 30,000 feet and from ground level…and that’s a critical combination of insights. As for Jim Donald, he may be taking over a much smaller company than what he’s used to, but this move allows him to stay in the Seattle area, which he loves, and it allows him to flex some retailing muscles that may have gone unused in the two years or so since he was ousted from Starbucks.

    Almost nobody I know blames Donald for the problems that Starbucks has been experiencing – he was doing what Howard Schultz and the board wanted him to do, and he was just a convenient fall guy when Schultz wanted to retake control. And pretty much everybody I’ve talked to in Starbucks management loved working with him and thought it was a sad day when he left the company.

    Haggen is about to get very interesting…

    Published on: September 29, 2009

    Supervalu Inc. said yesterday that Duncan McNaughton, 47, its executive vice president of merchandising and marketing, has resigned from the company, effective immediately.

    While the initial press release did not give a reason for the resignation, in his letter to associates CEO Craig Herkert said that it was for “an opportunity with Walmart Canada.” The actual Walmart job was not specified.

    In his message to associates, Herkert said, “While Duncan has been an integral member of Supervalu’s leadership team, our success will ultimately be determined by the collective talents in the company. For that reason I remain as optimistic as ever about our future.” Until a successor is identified – both internal and external candidates reportedly will be considered – Herkert will oversee the company’s marketing and merchandising functions.

    In less than three months, Herkert has engineered the departures of president/COO Mike Jackson and the president of the company’s Midwest Retail Division, Kevin Tripp, both of whom are 55. In addition, Shaws’ president, Larry Wahlstrom, announced his retirement and was succeeded by Mike Witynski, who had been serving as group vice president of Our Own Brands, a Supervalu unit.
    KC's View:
    McNaughton may have resigned to take another job, but that doesn’t mean he wasn't nudged, that it wasn't made clear that it was time to go. (Sort of like how Michael Corleone tells Moe Greene that it is time to go in “The Godfather.” Unlike Moe, McNaughton listened. Maybe it was an offer he couldn’t refuse.)

    What this means is that Herkert is remaking the company on both the retail and wholesale sides, reshaping it in his own image…or at least, in the image that he believes will make it viable and more successful in the long run. (The question is, how many senior executives still there from the Jeff Noddle days have their resumes ready and in circulation, believing that their history with the company is their most vulnerable attribute?)

    If he’s successful, Herkert will be a hero. But if these machinations and manipulations don't work, one has to wonder what will be left of Supervalu’s tradition and history for his successor to revive.

    Published on: September 29, 2009

    by Michael Sansolo

    For a city kid like me, taking on whitewater rapids has a special thrill. After all, while I knew how to change subways in New York at a young age, my abilities in the great outdoors are anything but in-bred.

    So I was fascinated to learn that the key to running rapids was actually to stay faster than the current, because that’s the only way to keep me, not the river, in control of the boat. Seems like a perfect metaphor for today’s business world, doesn’t it?

    What got me thinking about that this week were reports on the exceptional sales growth of Pepto-Bismol in the midst of the tough economic climate. On the surface, that growth really shouldn’t be unexpected. I have to believe more than a few of us went fumbling for the antacids as we watched stocks begin their plunge a year ago and our 401ks sank to a fraction of their former selves. Yet Pepto’s performance remained strong.

    In the past year, the 108 year-old brand managed a 0.7 gain in share points for the liquid form; and tablets gained 2.5 points. And it managed that gain despite a 60% higher price than its private label competitors. Talk about bucking trends. Advertising Age went looking for an answer and seemed to come up with an idea: Pepto followed the rules of whitewater rafting: it paddled faster than the storm.

    Ad Age noted that Pepto did a number of key things to accelerate its growth. The brand launched new ads just as the recession was exploding full force. What’s more, those ads took an unusual tack for an OTC remedy, using humor at a time when everyone seemed to need it most.

    It would be wonderful to report that the gains were totally planned out, but the Ad Age article made it clear that even Pepto’s handlers at Proctor & Gamble were somewhat surprised by the success.

    Pepto, it seems, provides a terrific metaphor for business success in today’s challenging environment. It’s a product with a clear message on what it does and doesn’t do. It’s nothing new or nothing all that special, but its value proposition is pretty clear.

    On top of that, at a time when everything was getting cut back, Pepto had the good luck to be debuting a new ad campaign and one that grabbed the customer with a fun, easy to follow message. And while P&G wasn’t pouring extra funds into Pepto’s campaign, Ad Age points out the spending wasn’t cut either - a noteworthy decision in the current climate. So, by staying the course, P&G won.

    I’m thinking P&G deserves extra credit all the same. It would have been easy to avoid the risk of a new advertising campaign as times turned tough. And it would have been understandable if the company cut back on advertising like so many did. Only, P&G didn’t.

    In essence, P&G showed more than guts - they really did all the right things: identifying clear value, using creative selling and staying the course even as times got tough. It wouldn’t merit discussing if that action plan wasn’t simply so uncommon for the current times.

    There’s one other lesson I remember from my whitewater rafting experience. When the river got really tough, our instructor explained, start paddling really hard. That seems like another easy metaphor for a tough economic climate.

    Life still isn’t easy out there and it’s likely it won’t get easy anytime soon. But just soak in the lessons from pink antacids and whitewater. In short, keep paddling.

    Michael Sansolo can be reached via email at .
    KC's View:

    Published on: September 29, 2009

    Tim Chambers has a great piece in the Huffington Post that actually explores some of the same territory that Michael Sansolo does in his column above.

    He starts with the following phrase: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."

    That phrase was uttered by Steve Jobs, the CEO of Apple Computer…and he said it in 2001, as that particular recession was coming to an end. One of the innovations that Apple came up with during that recession was the iTunes Store – which has evolved into a business that resulted into the sale of 220 million iPods, 30 million iPhones, and 8.5 billion songs sold over the Internet. While Chambers doesn’t mention it, Apple has just noted another milestone in a business that essentially began early in this recession – the development of Apple’s App store, which has enabled the downloading of more than two million applications for the iPhone and iPod Touch in the last 18 months, and that makes more than 85,000 applications available to users.

    Chambers writes that this recession winds down, economists “agree that recovery will feel less like a weight lifted, and more like a slow march out of a deep and wide crater. So we've escaped the Abyss and the Recession from Hell, how do we navigate the Recovery from Hell?

    “The answer I suggest -- for the entire country -- is the same as it was in 2000 for a pre- iTunes and pre-iPod Apple Corporation: we innovate our way out.

    “America is a generative, innovative nation all the way down to our DNA. In the technology sector, but in all sectors(including governance) innovation will be our north star as we rebuild a 21st century new, new economy.”
    KC's View:
    When you think about it, this ties together a lot of our stories this morning. Innovating through the hard times is almost certainly what Jim Donald is going to be doing at Haggen, what Craig Herkert is trying to do at Supervalu, and what P&G did with Pepto-Bismol.

    If innovation is not the North Star, then you almost certainly end up lost. As Chambers suggests, you have to do what Apple suggested we do back at the beginning of the decade: Think Different.

    Published on: September 29, 2009

    The Los Angeles Times continues the criticism of the “Smart Choices” nutritional labeling program, noting that while “sponsors say the logo will help an overweight and overwhelmed public make better food choices in a way that reflects how people really shop,” there re critics who say that “Smart Choices won't help end confusion because its nutrition standards are far too lenient. They see the program as an attempt by food companies to bill less-than-stellar processed foods as nutritious. They are especially steamed by the breakfast cereal category because so many sugary cereals got a stamp of approval.”

    The criticisms, which started getting a highly visible airing a few weeks ago in a New York Times piece, apparently is starting to bear fruit.

    The LA Times reports this morning that “a congresswoman has asked the Food and Drug Administration to investigate whether products have been ‘misbranded’.”

    In addition, the Times writes, “the American Dietetic Assn., American Diabetes Assn. and Tufts University's school of nutrition, each of which has members on the Smart Choices board, have asked Smart Choices to remove the institutions' names from the Web page listing board members. Though the individuals are involved in the program, the institutions are not, said spokesmen for each. ”
    KC's View:
    The program may be about Smart Choices, but the sponsors may have overreached in their efforts…and engaged in some not-so-smart marketing. The program just looks too compromised…and the straw that broke the camel’s back seems to be Froot Loops, a sugary cereal carrying a Smart Choices logo that has singlehandedly irritated nutritionists to the point of public carping.

    There are ten manufacturers involved in Smart Choices and some 2,000 products carrying the label, a number expected to double fairly quickly. If I were those manufacturers, I’d start to look very carefully at all the products being put up for the Smart Choices label, and think about whether I’m doing the concept more harm than good.

    Published on: September 29, 2009

    Bloomberg reports on a National Retail Federation (NRF) study saying that shoppers plan to spend an average of $56.31 on Halloween candy and costumes this year, down from $66.54 a year ago. . Total spending will decline 18 percent to $4.8 billion from $5.8 billion last year, the NRF estimates.

    “The economy has caught up to Halloween this year,” said NRF president/CEO Tracy Mullin.
    KC's View:

    Published on: September 29, 2009

    After months of testing, Starbucks will unleash its Via instant coffee on the entire country this week, supported by an aggressive national advertising campaign (that included “Saturday Night Live”) and a “taste challenge” in its stores this weekend.

    In addition, “Via will be available in stores such as sporting-goods retailer REI and Office Depot Inc. On Tuesday, all customers on domestic United Airlines flights longer than two hours will get free packets of Via; starting Oct. 25, Via will be available for travelers to purchase on those flights.”

    It is not expected that Via will be sold into supermarkets until sometime next year.
    KC's View:

    Published on: September 29, 2009

    On the subject of reusable bags and proposed/implemented bans and fines for disposable bags in certain communities, one MNB use had an interesting idea:

    Perhaps the solution is to make the consumer "earn" the reusable bags by turning in their one time use plastic bags for recycling. For every so many bags turned in, the store will give the customer a free reusable bag. This would encourage people to recycle their plastic bags for a greener option. Sure, some people will still choose to get the one-time use plastic bags, but this would have to help cut down on the quantity of one-time use bags moved. The store could even develop this as a lead in to a fee related one-time bag use policy, which could possibly encourage more people to get involved in the program before it changes over.

    Another MNB user wrote:

    Isn’t it time for some common sense . Some of the most intelligent people seem to act like lemmings.

    It is strange that I have seen no discussion or press about the thin "fruit/vegetable" bags which probably outnumber the grocery bag 6 to 1 in volume when you consider an average grocery shopper is bagging 6 or 7 fruits and vegetables per visit. These are less likely to have a secondary use than the actual plastic grocery bags…

    In our house we use both the reusable polypropylene bags and the plastic grocery bags . But we always use the plastic grocery bags to pack our non-recyclable garbage. If a customer isn't using a plastic bag for his/her garbage than how is the garbage disposed of? I guess they buy brand new "garbage bags" and load them into landfills! What a business boom for "green" jumbo bags!

    … Do we forget how the plastic bag came to be many years ago? The Tree Huggers of North America correctly were concerned about excessive trees being cut down for paper bags……… and now in today's world Whole Foods is using only paper bags…

    For the record, I’ve actually been looking into the idea of picking up some reusable fruit and vegetable bags to carry with me into the supermarket.

    Regarding the debate about the role and efficacy of unions, which came to the fore yesterday when I was criticized for suggesting that union members in Colorado would be foolish to strike during a recessionary period when so many people are losing their jobs. (I wasn't suggesting that labor should knuckle under to all management demands…and there are lots of reasons that management should not want labor strife.)

    MNB user Rhett J. Beauchemin chimed in:

    Union, nonunion? The question is what is fair. Anyone that thinks that the only agenda that the union has is the welfare of its members is being unrealistic. The same can be said for “management.” Sharing the cost for health care and assuming some personal responsibility for choice, is going to happen. It is simply part of the new post meltdown landscape. Let’s get real here.

    MNB user Richard Evans wrote:

    Good for you for sticking to your guns. Anyone who has a job today should be glad to have it and be willing to take what they have until things improve.

    It is unbelievable to me that some people would even think of walking out in this situation.

    You were right on about this being about power. Plain and simple.

    MNB user Ken Wagar had some general thoughts:

    It’s fascinating to watch the reactions to your positions on things like flavored cigarettes, smoking in general, unions, reusable bags and any number of other issues in MNB.

    IMO our culture is splitting into two opposing camps on almost all of the issues of the day. If we have a continuum of opinion and belief on any issue today people are moving to both ends of the continuum and away from the middle ground. The issues become polarized and we stand on “principle”. “Our” side is correct or right and the other side is not only obviously wrong but the people on the side have no value because they are “wrong”. Middle ground and compromise is for weenies and those with no backbone.

    The problem is it leaves us with nowhere to go and no solutions to the challenges, it simply hardens peoples positions. When we deal in absolutes, when everything is black and white with no shades of grey progress stops and ultimately the majority rules by imposing their positions on the minority. It seems to me we have enough evidence in our pasts that we should be very worried about institutionalizing the positions of either extreme.

    The country was founded on freedom of choice. To maintain those freedoms for all there was necessity for reasonable rules and laws but we have even reached the point where the only reasonable solution is mine and yours is obviously completely unreasonable. It’s why the term common sense no longer resonates. There is a “common” sense on each end of the spectrum but never the twain shall meet.

    I grew up in a household of seven people where the exchange of ideas, debate and discussion were encouraged but today the exchange, the debate and the discussion too often become a shouting match, with both sides trying to out-shout the other and may the loudest voice or biggest pocketbook win. I have no solution to all of this but do find it both sad and problematic for us all.

    I appreciate what you try to do with MNB but none of us should be surprised at the responses some of your comments generate.

    You’re right that sometimes the language gets ugly…but I always think that the conversation is worth having. I’m not always successful (and some probably would suggest that I’m rarely successful), but I do try to bring a common sense component to the discussion.

    Sometimes the wingnuts on either side are self-indentifying through their own use of language. And I think that’s okay, too.

    Another MNB user wrote along the same lines:

    I just wanted to take a moment to say thanks. What I enjoy most about MNB is how you inject your view of the world, colored by your experience in the industry along with the insights that come from being on this planet a bit longer than I have, into the story via your commentary. I especially enjoy when your take a position that runs counter to mine. Leading an insular life by surrounding yourself with like-minded folk can be a dangerous thing – it can prevent you from seeing the big picture. It’s why I watch Fox News and listen to NPR, get my Morning Joe and finish with The Daily Show.

    I watched my dad lose his battle with cancer this year, saw my mom finally overcome the addiction to nicotine a decade ago, I’ve watched my brother try countless times to kick the habit and I welcomed my firstborn 4 months ago (hopefully I never see him take a drag). I’ve also watched as our representatives consistently take choices (read: decision-making, liberty and freedom) away from the people whom their sole purpose is to serve. I’m still not sure where I land with this particular issue. It’s great to think of a world without cigarettes – the impact on our healthcare industry, quality of life, etc could be great. It’s also easy to imagine what an unchecked government would look like and I’m not interested. We fought off invasive, tyrannical rule 250 years ago and I’d rather not self-impose an even more restrictive environment under the guise of protecting the populace (from itself).

    What I do know is that one of the most concerning things I’ve seen recently is the lack of public discourse regarding policy in our country. I’ll leave politics to the politicians, people that get paid for it and enjoy the games of enacting policy for political gains (power, re-election, party strength etc). That said, I think it’s critical that we have people concerned enough with issues that they are willing to have discourse (not just evangelizing or spewing their viewpoint) about the policies needed to make positive change. Hopefully the sharing of ideas and viewpoints can be done in a civil manner, but it’s understandable when people are passionate enough to speak out on an issue do so by calling others morons and idiots. Thanks for not only giving your perspective, but for continuing to encourage others to do the same. It can take courage (with a touch of idiocy) to take your forum and let others rail against you.

    Within the food industry there are clear issues that need to be discussed, from Environmental impacts (how we’re producing food, how we’re getting them to consumers and even how consumers get them home paper or plastic or maybe one of those great MNB bags – which is best?), to Health (how do we ensure our food is safe and customers have confidence in it? how is the food that we’re producing impacting the state of our country’s healthcare? How do the initiatives like sin taxes, product bans in Washington influence behavior, impact the industry and ultimately the consumer?). These aren’t simple topics with simple answers, but they’re important issues that need more than just advocacy groups and politicians.

    If you made it this far, my apologies for the long email – I took a simple thank you email and turned it into a chance to get a little self-important. I’ll now step down from my soapbox and get back to work. Have a great day and keep up the good work.


    Y’know, despite my positions in some issues, I’m sympathetic to concerns about personal freedoms that come up in these discussions. I am, after all, ultimately a member of the media…and freedom of speech is something that I do not take likely. However, I’m also cognizant that we live in a far more complicated world than when these freedoms were crafted…and I think it is at least worth considering at what point we need to balance them with a sense of responsibility.

    I always think that if businesspeople remembered while transacting commerce that they also are parents and children, and that they don't check those responsibilities at the door when they show up at work, then maybe the world would be a better place.

    Finally, MNB user Jason Tuffli wrote:

    So you mention the football scores but don’t mention the St. Louis Cardinals wrapping up the Central Division crown on Saturday night? First team to clinch!

    You’re right. I should have.

    But mentioning the Cardinals would have meant mentioning the NY Yankees clinching the American League East, which would have reminded me of the NY Mets’ disappointing season.

    More than I could deal with.
    KC's View:

    Published on: September 29, 2009

    In Monday Night Football action, the Dallas Cowboys defeated the Carolina Panthers 21-7.
    KC's View: