retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: October 7, 2009

    Ruminations & reflections by the Content Guy

    CHICAGO - The LEAD Marketing Conference, taking place this week at the Westin O’Hare, is by its very existence an act of optimism. For one thing, it is a new conference during a recessionary time when even established conferences can have trouble gaining traction. For another, it was well attended by people from all sides of the industry aisle, retailers and manufacturers as well as service providers. And finally, while focused on technology solutions, it was rooted in the art/science of marketing, and using technology as a tool to connect with shoppers.

    So give them points for optimism.

    Before I go any farther, I should offer two bits of full disclosure. Not only was the LEAD Conference a MorningNewsBeat sponsor for the past few months, but I also delivered the Tuesday morning keynote. So I have a rooting interest in the conference being successful.

    There were a couple of statements by speakers at LEAD (which stands for Loyalty, Engagement, Analytics, Digital) that caught my attention and made me ponder future possibilities…mostly in the form of questions.

    For example, Stephen Vowles, senior vice president of marketing for Ahold-owned Stop & Shop and Giant of Landover, noted that in stores using the company’s “Scan It” initiative – which allows customers to use hand-held scanners as they shop the store, making the checkout process significantly more efficient – five percent of customers are using the devices…and that 10 percent of sales are being generated by the system. In addition, he said, “Scan It” transactions are on average $7 higher than those not using the system.

    Now, those strike me as pretty good numbers. But it also made me think about Ahold’s Peapod online grocery service, and wonder to what extent there is overlap between the customers ordering online and those using this in-store technology. You'd think that there must be some, since a consumer willingness to experiment with such tools would seem to be something that they would have in common. But to this point, Vowles told me, the data is not being pooled, so there really is no sense of how much overlap there may be. (Though he said that he was convinced that Peapod offers the company a myriad of opportunities to apply lessons learned online to the in-store experience.)

    And then something else occurred to me. Stop & Shop hasn’t really studied to what extent use of the “Scan It” system may effect how people shop the store, though at some level you'd think it would. After all, if I’m essentially bagging my own groceries as I walk through the store, my impulse would be to buy the heavy things first (like gallons of milk) and the light and fragile things last (eggs, for example). But since eggs and milk generally are close to each other, does that mean that I have to walk the store twice to make sure stuff doesn’t get crushed? Does it require a different sort of shopping cart that takes the self-scanning process into account? Or does the store layout need to be rethought?

    Now, when only five percent of customers and ten percent of transactions are going through the system, major changes probably aren’t necessary. But what if, at some point, “Scan It” accounts for 25 percent of customers and 40 percent of sales? What exactly is the tipping point? And does it make sense to start preparing for that moment now, rather than wait until the tipping point is within view?

    This is both a challenge and opportunity, and they will be faced by Ahold and, in all likelihood, a number of its competitors and brethren. And I think it is fair to say that the retailers that meet the challenge and embrace it – as opposed to doing business as usual – will be the ones that will have a strategic advantage in the future.

    In other words, the ones that will lead.
    KC's View:

    Published on: October 7, 2009

    by Kate McMahon

    Content Guy’s Note: Kate’s BlogBeat is a new ingredient in the MorningNewsBeat stew – a regular look at what people are talking about on the Internet, and how it impacts the conduct of business by retailers and manufacturers.


    Dear Reader:

    I’m so excited to recommend this amazing culinary find … it’s delicious, nutritional and well priced. My husband thinks I’m the new Julia Child (but with a better hair style). Even my picky teenage daughters love the taste (but still hate my hair style). You’ve got to try it!

    Kate

    P.S.: Does it matter to you that the manufacturer sent it to me for free? It matters to the Federal Trade Commission, and as of Dec. 1st, I need to fess up about my fridge full of freebies or face an $11,000 fine.


    That postscript, dear reader, is the crux of the spirited cyber-conversation percolating on the web since Monday’s FTC ruling requiring bloggers who review or endorse a product to disclose their relationship with the advertiser or sponsor who provided it.

    Or, as one Twitter post summed it up: “FTC Cracks Down on Payola.”

    Whether its payola or granola, all bloggers and celebrity endorsers need to play by the same rules. And that’s a good thing.

    The new regulations, and the reaction to them, reinforce two recurring themes here at MNB :

    • Social media is here to stay, and its role in the marketplace is evolving and expanding in a variety of platforms, from blogs to Facebook to Twitter.

    • Transparency isn’t just a recommendation, but rather a requirement, for companies to succeed in today’s business environment, whether you are a “blogger mom” or a retailer, marketer, manufacturer or provider of services.

    The FTC had not revised its regulations since 1980, and the agency’s Richard Cleland noted that “seeing the significance of social media marketing in the 21st century” it was time to apply the “principles of transparency and truth in advertising” to digital media.

    The cyber-response hit literally minutes after the FTC emailed its new release. Not surprisingly, bloggers who have long disclosed that they received a product for free or were paid for their review welcomed the FTC guidelines, while others fretted about how precisely to word their disclosure.

    The unhappy posts, as always, packed more of a punch:

    ”What the hell is wrong with all you people rolling over and asking how to comply or just hoping it won't intrude on your web design? Do you not treasure your heritage of liberty? Do you have no pride or testosterone or sense of justice? Do you care that your mom might get hit by an $11,000 fine 'cause she neglects to mention the sample of Tide that came in the mail when she says it's her favorite laundry detergent on her Facebook page?”

    Others complained the fear of being fined would simply force “honest bloggers to stop discussing products entirely – or they’ll stop blogging.”

    I doubt that. The much-publicized “blogger moms” take their roles very seriously. And while some may be in business for the free diapers, cereal and occasional HP laptop, I’ve read these blogs and the majority are committed to providing honest reviews for members of their “community.”

    And just as people learn to trust a newspaper’s food critic or magazine’s movie reviewer based on personal taste and experience, blog readers must come to their own conclusions about the blogger’s opinion or review. These new guidelines add even more legitimacy to blog reviews, because where there is transparency there is also accountability.

    This column will follow the on-line dialogue about this ruling in the coming months. My favorite tweet back to the complainers was this one:

    “Clarity is a good thing. Digital needs transparency. Stop whining.”

    Spoken like a true blogger mom.

    You can reach Kate McMahon via email at kate@morningnewsbeat.com .
    KC's View:

    Published on: October 7, 2009

    The Denver Post reports this morning that unionized workers at Safeway and King Soopers have voted to reject the latest – and supposedly final - contract offers made by the two chains, and asked that the two sides return to the bargaining table. At the same time, Safeway employees re-authorized a strike against the supermarket chain, though no date or deadline has yet been set.

    Negotiations have been ongoing for six months.

    According to the story, “United Food and Commercial Workers Local 7 officials said Safeway workers are asking for livable wages and secure pensions while King Soopers workers are asking parent company Kroger for a contract that doesn't include cuts to wages, pension and health care.”

    The two chains are said to be reviewing their options – one of which, presumably, would be a lockout and the hiring of replacement workers pending some sort of settlement.
    KC's View:
    While I want to be clear about the fact that I am not taking sides in this debate, I also want to reiterate that it is hard to imagine employees going out on strike in the current economic environment. I would hope that the two sides can avoid that kind of fractiousness, and continue talking in good faith, because one thing is for sure. Finding replacement workers won’t be difficult in a state where the unemployment rate is about 7.3 percent (not as bad as the national stats, but not good) and where more than 100,000 jobs have been lost in the past year.

    Besides, in a separate story this week, the Denver Post reported that anecdotal evidence suggests that if faced with a strike, many consumers would cross picket lines rather than inconvenience themselves.

    Published on: October 7, 2009

    The New York Times reports that one result of the economic downturn is that CPG brands with long traditions are being given advertising boosts by their corporate masters, who seem to believe that their history of connections with shoppers will allow them to gain market share and sales.

    According to the story, “Readers of this week’s People magazine could be excused for believing they were leafing through a Look magazine from 1959. Of the 44 full-page ads in the issue, half are for brands like Campbell’s, Jell-O, Kraft cheese, Lipton tea and Post cereal.

    “Familiar packaged foods that were once dismissed as dowdy or out of date are regaining their puissance as Americans spend less and eat at home more. While marketers in fields like automobiles, financial services and luxury goods are slashing ad budgets … advertising is being maintained, and in some cases increased, for prosaic mealtime products like Heinz ketchup (up 967.1 percent in the first half of this year, according to TNS Media Intelligence), Hellmann’s mayonnaise (up 165.6 percent) and Jif peanut butter (up 39.8 percent).”

    Among the other brands getting ad pushes, the Times writes, are Hormel, Oscar Mayer, Kellogg’s, Birds Eye, Bumble Bee, Betty Crocker, Del Monte, Hunt’s, Mott’s, Spam and Velveeta.

    “This new consumer will shop the rest of her life differently,” Thom Blischok, president for consulting and innovation at Information Resources Inc. (IRI), tells the Times. “Behavior has been modified as a result of this recession.”
    KC's View:
    The Times links the resurgence of these traditional brands to the decision by Conde Nast to shut down its Gourmet magazine this week. I think this connection should not be overstated, because the fate of Gourmet probably is as tied to the general problems being experienced by almost all print media properties as it is to any decline in the foodie population.

    While I agree with Thom Blischok that consumer behavior is being modified, I continue to believe that the aspirations that so many people had before the recession hit have not been completely abandoned – they’re trying to figure out how to fulfill them in different ways and with lesser means.

    Value and values go hand in hand.

    Published on: October 7, 2009

    The Los Angeles Times reports this morning that Tesco, which reported its financial results this week, has put the projected losses for its US Fresh & Easy Neighborhood Markets division at $259 million – or about $2 million for each of its 130 stores.

    In addressing the losses, Tesco CEO Terry Leahy is said by the Times to have put a “chipper spin” on the numbers, saying that “we have been making good progress in developing the Fresh & Easy business, despite the prolonged weakness in the California, Nevada and Arizona economies.” Leahy also said that the company is tweaking its approach in response to customer feedback.
    KC's View:
    I agree with what industry analyst Bill Bishop tells the Times - that despite the missteps, Tesco has deep enough pockets to keep investing in getting Fresh & Easy right…and that it will be deemed a smart move if, a few years from now, it has 2,000 stores in the US and dominates the small-store grocery business.

    That’s not to say that this necessarily will happen. But Tesco has the money and marketing intelligence to ride out the tough times…which isn’t easy when most of its stores are in a state, California, that seems to get more bad economic news every day.

    I’m not ready to write off Fresh & Easy yet.

    Published on: October 7, 2009

    Two interesting stories with relevance to the debate about what the best regulatory approach to the obesity crisis should be…

    The Los Angeles Times reports that a Rand Corp. study suggests that if the city were to ban the development of any new fast food restaurants in the South Los Angeles area – a move that has been considered because of what is generally conceded to be the lousy eating habits and poor health of neighborhood residents – it would be unlikely to have any impact on obesity rates.

    While the study says that inner city residents ought to have greater access to healthier food options, the Times writes that the report maintains that “policy choices such as forcing restaurants to print calorie and nutrition information on their menus and reducing the availability of snack food and sodas is likely to be more effective in combating obesity than restricting the areas where fast-food establishments can open.”

    Except…

    The New York Times reports that a study of New York City’s law requiring precisely this kind of calorie posting on fast food chain menu boards has not been effective. The study, according to the paper, “found that about half the customers noticed the calorie counts, which were prominently posted on menu boards. About 28 percent of those who noticed them said the information had influenced their ordering, and 9 out of 10 of those said they had made healthier choices as a result.

    “But when the researchers checked receipts afterward, they found that people had, in fact, ordered slightly more calories than the typical customer had before the labeling law went into effect, in July 2008.”
    KC's View:
    Personally, I’ve found the menu board calorie counts to be useful – I’ve avoided certain items because they’ve reminded me of precisely how bad they are for me.

    I think clarity, transparency and full disclosure are industry’s responsibility. If people then want to eat ad behave in ways that are not in their own best interests, as is their right, then there is little that regulation and legislation can do about it. Of course…that may mean they have to pay higher insurance premiums, which also seems fair to me.

    Personal responsibility and accountability is as important as industry responsibility and accountability.

    Published on: October 7, 2009

    • The Boston Globe this morning reports that the Massachusetts State Supreme Judicial Court restored a verdict against Walmart in a case that charged the retail giant with firing Cynthia Haddad, a female pharmacist who complained about not being paid as much as male colleagues.

    Haddad will get $700,000 in future wages lost and $1 million in punitive damages. After Walmart lost the original jury trial, a judge threw out half the punitive damages award and Walmart appealed the jury finding.

    “Wal-Mart has strong equal employment policies and we foster female leadership,’’ said Wal-Mart spokeswoman Michelle Bradford tells the Globe. “We’re disappointed by the ruling.’’
    KC's View:

    Published on: October 7, 2009

    US News & World Report has a story about what it describes as the “better run firms” that seem to be not just surviving the recession, but actually thriving in tough times. Part of the reason is that they have done things right, but it also is because weaker companies have made mistakes by expanding too fast, taking on too much debt, or not having a diversified enough offering.

    Among the companies that are identified as toughing out the recession with better results, according to the magazine, are:

    • Amazon: “This premier online retailer is gaining from the pain at the mall,” US News writes. “While overall retail spending has fallen, online sales have kept growing, as thrifty consumers search for the lowest price on the Web and even try to save gas money by shopping from home. In its quest to become an online megastore, Amazon has expanded way beyond books and music and acquired other online retailers. The competition is tough, but by most measures Amazon is poised to become the Walmart of the Web (even more, perhaps, than walmart.com).”

    • Dollar Tree: “A share of stock in this discount chain might make a much better present than a gift certificate to the store: The share price has risen an astounding 108 percent since the recession began. A poor economy is obviously a boon for stores that sell really cheap stuff, and most ‘dollar’ stores have been thriving. Dollar Tree, with more than 3,400 stores, isn't the biggest discount variety chain, but it has tried to offset its bargain-basement image with an upbeat ambience and frozen foods in some locations. Even if the economy recovers, analysts figure that the coming surge in baby-boomer retirements, with many living on fixed incomes, will mean a rich future for Dollar Tree.”

    • Staples: “Just about every company can get by with fewer paper clips, which makes it tough to sell office supplies when companies are slashing costs,” US News writes. “Profits are down, but the world's biggest office-products company has been growing by adding new stores and expanding popular services like printing and copying. The 2008 acquisition of Corporate Express helps expand Staples' presence in Europe and Canada. Staples also has one of the busiest websites in the world, which helps offset weak retail sales.”
    KC's View:
    In all these cases, it seems to me, the companies have been focused on just on shoring up the present tactics but also thinking strategically for the long-term. That’s smart.

    Published on: October 7, 2009

    • The Atlanta Journal-Constitution reports that “Coca-Cola Co. will introduce 90-calorie slim cans of Coke in 2010 as part of a broader effort to adjust to the demands of consumers trying to make better decisions about their health. The new cans will be smaller than a 12-ounce can, which has 140 calories.”

    • Is it just 12 weeks until Christmas?

    Must be, since Dollar General has launched a “12 Weeks Of Christmas” promotion, looking to make gift-giving affordable in a number of categories.

    “We want to help our customers stretch their dollar even further this holiday season,” says Rick Dreiling, Dollar General’s chairman/CEO. “By offering holiday merchandise and great deals earlier in the season, we hope to make it easier for customers to plan ahead and manage their holiday budget.”
    KC's View:

    Published on: October 7, 2009

    • Costco Wholesale Corp. says that its fourth quarter profit was down six percent to $374 million, from $398 million during the same period a year ago. Q4 sales were down 3.1 percent to $21.9 billion.
    KC's View:

    Published on: October 7, 2009

    • PepsiCo announced yesterday that it has named Eric J. Foss, head of its biggest independent bottler, to be president of its new North American bottling unit, which is being created through the already announced acquisition of the shares it didn’t already own of Pepsi Bottling Group Inc. and PepsiAmericas Inc.
    KC's View:

    Published on: October 7, 2009

    MNB reported yesterday that Belgium-based Delhaize Group and its Food Lion subsidiary announced yesterday that they have signed a non-binding letter of intent to acquire “a substantial majority” of the assets owned by bankrupt Bi-Lo LLC, for $425 million. However, Bi-Lo’s assets remain up for bid, and another company could move in and top Delhaize’s offer. Bi-Lo is currently owned by Lone Star Funds, a private equity group; it filed for bankruptcy last March.

    Differing reactions to this story came from the MNB community…

    One MNB user wrote:

    I used to work for Bi-Lo and Food Lion was always our competitor. It is a sad day when you fall to your “enemy”. Additionally, everyone at headquarters will lose their job and this will be a blow to the local economy. I am not thrilled about Food Lion buying Bi-Lo for those reasons. I have no skin in the game as I now sell to both Bi-Lo and Food Lion. C&S has a bid in as well, but are not publically traded and do not have to announce that they have an intent to purchase. If C&S purchases Bi-Lo, life will go on as before for most of Bi-Lo’s employees.

    Another MNB user wrote:

    You expressed surprise at reports that some at Bi-Lo weren't happy with the proposed Delhaize purchase. According to the story (10/6) in the Greenville (SC) News, Delhaize "said in the filing it didn't anticipate offering jobs to any of Bi-Lo's corporate employees." Don't you imagine that several hundred people in Bi-Lo's offices would prefer a solution that would allow them to keep their jobs?

    For the record…not all the dismay came from headquarters. Presumably Food Lion would keep a lot of the store personnel.

    MNB user Ron Lunde wrote:

    The Bi-Lo team is very fortunate that Rick Anicetti and his team are interested in acquiring them. They know the market and they know retailing. Should make for a very formidable market presence.




    MNB took note yesterday of a Crain’s Chicago Business report on how discount grocer Aldi is “mounting an aggressive expansion in Chicago,” posing a threat to Supervalu-owned Jewel. One of the things noted in the story was how Jewel says that it has slashed prices up to 20 percent this year in order to remain competitive.

    I commented:

    This made me think about an email that I posted last week here on MNB, from a supplier to Supervalu-owned Albertsons in Southern California, who wrote, “The most recent edict to Albertsons-SoCal from the corporate headquarters at Supervalu is 75% pass through of all promotional allowances, no exceptions. Prices wall to wall jumped up while advertising ‘1000’s of prices reduced!’ from banners hanging across the store fronts.” So I guess the question that needs to be asked – and while I don't know what the answer is, I suspect somewhere out there does – is whether Jewel has really cut prices…or if it is just saying so.

    One MNB user, who described himself as a longtime Jewel employee (I’m not using his name or position for reasons that will be evident), wrote:

    Yes they have cut prices to get customers in the stores and that's a good thing, the only problem is they also cut the staff in the entire store. You would think they would have the staff on hand to make sure the customers never wait. Unfortunately, that is not the case.

    So even if the customers shop at Jewel there is no one to wait on them. So I am agreeing with the price cuts but If you have to stand in long lines to buy something either at the service shops or the checkouts, why not go to Aldi's or some other discount store where the prices are even cheaper to make it worth your while for the inconvenience? If you have to shop and wait choose the best prices. The only thing Jewel had going for it is customer service. We will do anything for our customers. That is, if they wait for us to wait on them.

    Me personally? There is nothing Jewel sells that's worth my time to stand in line for more than 10 minutes to buy a pound of bologna. and another 10 min or more to check out.


    Hope they’re paying attention at HQ.




    And finally, responding to the closure of the print version of Gourmet, one MNB user wrote:

    I consider myself a “foodie” and as such subscribe to way too many food magazines. I used to subscribe to Gourmet, but I found their focus to wander from the kitchen to the restaurant and travel. Food and Wine and Bon Apetit continue to meet my thirst for new flavors and cooking recipes, so I just dropped Gourmet. It became irrelevant to me. Conde Nast can keep it on-line for the recipes. The Gourmet cookbook that came out several years ago remains a favorite of mine. It is a compilation of the magazine’s recipes and is a great resource for anyone who wants to learn to cook better. But it is still easier to go to the web and search for recipes and information. For us older guys, you can zoom the text to the size you need on the PC whereas a cookbook is still nestled with fine print that require reading glasses.

    “Us older guys?”

    Oy.
    KC's View:

    Published on: October 7, 2009

    In a thrilling one-game playoff that went 12 innings last night, the Minnesota Twins outlasted the Detroit Tigers 6-5 to win the American League Central Division title.
    KC's View: