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    Published on: October 27, 2009

    by Michael Sansolo

    Baseball legend Willie Keeler is widely remembered for a simple line of advice. “Keep your eye clear and hit ‘em where they ain’t,” he said. It’s as good a lesson for business as it is for baseball hitters.

    Hitting them where “they ain’t” in baseball produces singles. For business it opens markets that others are neglecting to serve for a host of reasons. The Wall Street Journal Asia edition (spend a week in Japan and you see all kinds of new things) had a great take on this last week in a profile of an emerging part of the Indian economy. Now, most of the news we get out of India is focused on the burgeoning market power of the world’s second most populous country and its explosive business growth. This article was about the other India.

    The other India is poor and simply looking to build a slightly better life. And in the spirit of true entrepreneurship, Indian business is finding a way to meet that need. As the article explained, engineers in India are finding ways to reinvent products by making them both simpler and more affordable to the poor. The products range from Tata Motors’ $2,200 car to a $43 water purification system or a $70 miniature refrigerator.

    Not surprisingly, the products sell.

    But hitting ‘em where they ain’t isn’t limited to the poor in a developing country; in fact, it’s a lesson in finding opportunity anywhere.

    On Monday MNB reported on Aldi’s incredible plans for opening stores around the US. That’s a news item that no retailer or supplier should take lightly for one second. Because in so many ways Aldi is just like that simplified and cheaper refrigerator in rural India: It delivers what’s needed to a market that is usually overlooked.

    For far too long the food industry has struggled with opening stores in low-income inner city neighborhoods, despite some extremely well-intentioned and well-publicized efforts to do so. The reasons for the struggles are very real and those who have overcome them deserve a huge amount of credit. But the bottom line is that there are far too many places in the US that remain underserved by food stores and those markets present a staggering opportunity.

    A number of years ago, Harvard Business School did a study on the buying power of poor neighborhoods noting that frequently those areas are competitive diamonds in the rough. In poor neighborhoods, population density is higher and since food is the first item purchased, the spending potential per square mile is actually extremely high, but the retail choices are low. That study was done well before the onset of our current economic conditions, in which the relationship between price and value has become more tightly linked than in decades.

    And that’s where Aldi comes in. One has to imagine that Aldi looks at these underserved areas and sees opportunity. Just like those engineers in India, Aldi has a simpler and more affordable offering that might fit the needs of a community very differently. Obviously, they’ll do it with a lot of private label.

    But the questions this raises are big. Will anyone in addition to Aldi (and perhaps before Aldi) target these shoppers with stores and products? Will anyone else consider this, like those engineers in India, and start addressing the problems of poor neighborhoods and the growing emphasis on frugality? Will anyone start looking for dramatic changes to the current offerings or will we merely see incremental shifts?

    And five years from now, will everyone be wondering how another “alternative format” managed to come in and seize such a large share of sales where no one else was looking?

    It’s not like this hasn’t happened before.

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

    Published on: October 27, 2009

    The Los Angeles Times reports on research done by the New York City Department of Health and Mental Hygiene suggesting that people actually are changing their eating habits based on the calorie counts being posted at the city’s fast food restaurants.

    According to the story, “The study found that the decreases were statistically significant at four of the chains: McDonald’s, KFC, Au Bon Pain and Starbucks. People purchased more at four other chains, but the study's authors said there was only one chain -- Subway -- where the increase was statistically significant.

    “A similar California law will make chain restaurants post calorie information on menus starting in 2011. Some restaurant chains in California are already printing the information on their menus.

    “An earlier study by New York University researchers that looked at consumers in low-income and minority neighborhoods found that calorie information on menus may increase awareness of calorie content but had less of an effect on the number of calories people purchase. They New York City study authors said they believed their result was different because their sample size was much larger and more representative of the city's entire population.”
    KC's View:
    If you provide complete information to consumers, allowing them to make their own decisions, you probably don’t need bans and fees and taxes. At some level, you have to let people make their own decisions whenever possible...and being completely transparent about what is in our foods (which means actually knowing what is in our foods) is a lot better than taxing soda or fat or other stuff.

    Published on: October 27, 2009

    USA Today has an interesting piece about continuing concerns in some quarters about the ability of online marketers to track the internet habits of consumers.

    “Tracking technology has advanced so much that everything from how long we linger over a product description to whether we are searching for sexual-dysfunction drugs can be collected and stored on individual profiles,” the paper writes. “Our profiles are numeric descriptions, not our real names, but in some cases, it's not hard to determine personal information behind the numbers. Privacy concerns abound, and several privacy and consumer groups are urging Congress to enact laws on what can and can't be collected and for how long.

    “But the tracking continues in earnest, in few places more avidly than among retailers. With the approach of a holiday season that even the most hopeful of industry analysts think will see only a 1% sales increase, retailers are increasingly turning to the Web for answers — and sales.”

    And here is the statistic that probably grabs a lot of e-tailers: “The e-commerce marketing company Coremetrics says consumers are 50% more likely to open and click through a targeted e-mail than a generic one. And targeted e-mails generate 50% more revenue than generic e mails, the company has found,” according to USA Today.

    However, that doesn’t necessarily mean that consumers support or even understand what is being done online. The story notes that a joint survey sponsored by the University of California - Berkeley and the University of Pennsylvania suggested that close to 70 percent of those questioned said they opposed giving online marketers the ability to track their behavior, and “even more were opposed after they were told how the tracking was done.”
    KC's View:
    The FTC has created voluntary guidelines for how and what marketers can track online. E-tailers would be wise to either adhere to these regulations or even exceed them...because if they don’t, they could be faced with stringent and mandatory rules. Better to get there first and preempt the regulators and legislators.

    Published on: October 27, 2009

    The Seattle Post-Intelligencer reports that has decided to abandon its efforts to sell wine online, noting that it was originally planning to be in the business a year ago, “but a bewildering thicket of alcohol regulations and the fragile nature of shipping wine apparently derailed the effort.”

    Amazon reportedly sent an email to companies with which it expected to partner in this effort, saying that it was a ”tough choice.” The company confirmed the decision to the PI in an email saying that “Amazon will not be getting into the wine business. We will not be providing any additional details."
    KC's View:
    This is too bad, and I’m personally disappointed...mostly because it would have been intriguing to see what the world’s best online retailer would have done in this segment. The wine clubs, the all would have been fascinating.

    Ah well...maybe sometime down the road.

    Published on: October 27, 2009

    USA Today reports on a study by Yale University’s Rudd Center for Food Policy and Obesity saying that “cereals marketed to kids have 85% more sugar, 65% less fiber and 60% more sodium than those aimed at adults.”

    Among the items reported in the study:

    “The least nutritious cereals are often the most heavily marketed to children. Among them: Reese's Puffs, Corn Pops, Lucky Charms, Cinnamon Toast Crunch and Cap'n Crunch.”

    “The major cereal companies have products that received good nutrition marks, but not many of those are advertised to children.”

    “Companies have dropped the average sugar content of kids' cereals, from 3½ teaspoons to 3 teaspoons of sugar a serving.”

    “The average preschooler sees 642 TV cereal ads a year; most are for types with the worst nutrition ratings. Cereal companies spend more than $156 million a year marketing to children.”

    “Some of the products with the poorest nutrition ratings have health claims on the boxes.”
    KC's View:
    These findings largely are why some manufacturers have gotten into trouble with nutrition types...because it seems as if they are targeting kids with less than wholesome options and cloaking what they are doing in false or misleading claims. They aren’t helping kids, and ultimately they may be hurting the long term credibility of their companies.

    Published on: October 27, 2009

    MNB has a transparency-first philosophy, which made this press release stand out:

    “Tallgrass Beef, a market leader in branded grass-fed beef production, will use DNA TraceBack from IdentiGEN to provide a reliable and accurate traceability system so that every cut of Tallgrass beef can be traced back to the family farm where the animals were raised. IdentiGEN's DNA TraceBack, which has earned the U.S. Department of Agriculture's certification as a ‘Process Verified Program’ (PVP), is a product verification system providing meat companies with a process to manage food safety and quality assurance. Tallgrass Beef packages at the retail meat case will carry IdentiGEN's DNA TraceBack seal, a guarantee to consumers that each cut came from Tallgrass' pasture-based, humane production and processing system.”
    KC's View:
    This strikes me as an approach that will be the bare minimum as we move down the road. Better to embrace it than deny it.

    Published on: October 27, 2009

    • Winn-Dixie reported a first quarter loss of $8.1 million, compared to a loss of $2.3 million during the same period a year ago. Q1 sales were down two percent to $1.64 billion, on same-store sales that were down 1.5 percent.
    KC's View:

    Published on: October 27, 2009

    • Weis Markets announced that Scott Frost, the company’s acting CFO and treasurer, no longer has the job on an interim basis and has been promoted to be vice president/CFO/treasurer of the company.
    KC's View:

    Published on: October 27, 2009

    On the discussion of plastic bag bans, fees and other proposed regulatory fixes, one MNB user wrote:

    KC, you are seriously inconsistent... it has been touted for some time now, that the San Francisco ban on plastic bags did not get them the litter reduction they were looking for and that the ban did not work. Just like the ban in Ireland does not work because there was and is a significant increase in plastic bag sales in the form of garbage bags which also end up in landfills and are not reusable in homes. Plastic Grocery sacks take the hit but for all the wrong reasons. The lies and myths promoted by the so-called Green Community continue and I am sorry to say, you seem to be a member. Ban on plastic anything does not accomplish anything green. It has been proven time and time again. This is a political football, used by the politicians in San Francisco, Ireland, and any other places where bans are enforced. The numbers are always fudged to get the information needed. But when checked independently, the truth comes out. In today’s world we are quick to judge and react without really looking at facts. Look at the successful recycling programs like in Austin TX. They paint a much better story.

    Recycling is the solution; Walmart proves that everyday especially when they recycle enough pounds to pay for their program along with funding money back to the stores as an incentive to do well. There is an ever growing post consumer market for this product which in itself creates jobs and opportunity like no other being developed today….including the so-called jobs market as the result of TARP money being promoted by the current administration. All the reports by the EPA, and other organization are out-dated and years old. But again, no one takes the time to drive an independent study to get to the truth.

    Plastic bags or bottles or any other packaging material made from plastic, are not clogging up our landfills. That is simply not true. The facts are that paper is our number one product clogging up landfills (which should not be banned either). The beaches are not covered in plastic; fish are not dying by the millions….chewing gum wrappers, and cigarette butts, are the top litter producers on our beaches.

    Reusable bags that you like so much are mostly made off-shore (85%) and are not recyclable, plus a study done in Canada points out there may be sanitation issues if they are not washed periodically, which again defeats the purpose of being “green”. You cannot take them to your nearest supermarket and drop them in the recycling bin. Studies show that 90% of plastic grocery bags are being reused throughout the household for a variety of applications…trash can liners, school lunches, dirty diapers, picking up after the animals, etc…and with today’s flu issues, one time use sterile bags are a good thing.

    Reduce, reuse, recycle, regenerate is the solution to our plastic issues. It will create new products that are sustainable, markets for new jobs and new opportunities. I am willing to bet, an article will be written years from now, stating either, we made a mistake about plastic bags, or applauding everyone for the results of a national recycling program that generated jobs and markets. I hope it’s the latter.

    Bottom line is the plastic industries are primary to the United States, employing thousands of Americans in all parts of the country from coast to coast. Hurting this industry hurts jobs and for no good reasons other than politics. This product is 100% recyclable and sustainable. It can be made into other products over and over again. This industry should be supported not condemned. Let’s get the facts right rather than react on emotional opinions. Taking plastic away does not help anything.

    You are certainly entitled to your opinion. And I suppose that if we lived in a world where plastic bags were guaranteed to be reused - as opposed to becoming litter - then regulation would not be proposed.

    It is an interesting question. People say that plastic bags should not be banned because they are simply replaced by garbage bags that must be bought and that end up in landfills. But I would guess that very few of those garbage bags end up as litter - they serve their designated use. That’s certainly not the case with plastic shopping bags. laud Walmart’s recycling efforts, but Walmart also is planning to test a program where it stops giving away free plastic bags. You talk about Ireland, but my recollection is that Feargal Quinn has said that while he opposed bag legislation, he is convinced now that it was a good idea. So maybe not everybody agrees with you.

    Another MNMB user wrote:

    Many of us have quite a few reusable bags, all from different stores, some of them competitors.  Can these retailers look beyond the logos on your bags or will they refuse to bag your groceries if they do not come from their stores? (As was the case in a Weis Markets just recently).

    I hope that was an anomaly. Any retailer that does not bag groceries in a reusable bag from a competitor is a fool.

    And Janice Parker Theiss, of PCC Natural Markets (a new favorite retailer of mine) writes:

    As of August 2009, nearly 65% of PCC’s customers are bringing in their bags, up from 25% in August 2007 just before we eliminated plastic bags in our stores.

    So apparently it can work. And does.
    KC's View:

    Published on: October 27, 2009

    In Monday Night Football action, the Philadelphia Eagles beat the Washington Redskins 27-17.
    KC's View: