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    Published on: November 2, 2009

    Raley’s president/CEO William Coyne announced on Friday his resignation from the California chain, effective immediately.

    In a written communication to employees, Coyne said, “"I want to assure you that this is a personal decision that I feel is right for me and my family. I'll be monitoring your success from the sidelines, and cheering you on every step of the way."

    There was no other explanation from the company, and according to the Sacramento Bee, Coyne was not available for further comment.

    By way of context, the notes in its story that Coyne, a lawyer by trade, “was the first person with relatively little grocery industry experience to lead the 74-year-old, family-owned company, which is based in West Sacramento. After joining the firm in 1997, he rose to executive vice president of business development in 2001 and became chief operating officer and president in 2002. He became the company's third CEO in December 2003.

    “Coyne took the helm of the region's dominant grocery chain during a time of acquisition and divestment that produced varied results. In 1998, the company bought Nob Hill Foods, gaining 27 stores in the Bay Area ... Under Coyne's stewardship, the store moved into an online shopping service and opened Aisle 1, the store's full-service gasoline stations.”

    Raley’s said that Coyne’s responsibilities will be taken over on an interim basis by COO Dave Clark, described as “a grocery industry veteran with more than 30 years of experience, including chains in other states.” The company’s board of directors will determine the parameters of a search this week, according to the Bee story.
    KC's View:
    The timing is interesting - it was just within the last two weeks that A&P dismissed its CEO, Eric Claus. While Raley’s and A&P are very different companies, they both are essentially family-controlled regional supermarket chains. And one has to wonder about how, in the current economic environment, pressures are being ratcheted up on CEOs by impatient ownerships to deliver what may be unreasonable results at this point in time.

    I do know this about Bill Coyne - almost four years ago, at the Food Marketing Institute (FMI) Midwinter Executive Conference in Arizona, he delivered one of the best speeches that I’ve ever heard at that forum. Here’s how I reported it at the time:

    “Why does a company like Raley’s matter?” he asked, noting that his is a far smaller company than many of those represented at the conference. “What value do we bring? What opportunities do we offer?” To his mind, value and opportunity have little to do with size, and much to do with attitude and heart.

    The reason that Raley’s matters – and why other companies, regional and private and often without the financial resources of the national chains, matter – is because they take advantage of their size to create what Coyne called “compelling connections” with customers, employees and communities. “The result can be magical,” he said.

    At this point in history, Coyne suggested, customers want to know that the companies with which they do business “are trustworthy, even noble.” Privately held companies with intense personal commitments to the business can accomplish that in unique and relevant ways, he said. And he pointed to the iPod as an example of a compelling connection – it may not be the most advanced technology, nor the cheapest price, but it has been engineered in a way that has created a dedicated and loyal customer.

    To be fair, I don’t really know Bill Coyne; we chatted a number of times and he always was friendly and charming. (Not something that I could say about every retailer executive, by the way.) But he struck me - and this has been reiterated by people who know him well - as someone with a good heart and a good mind.

    We wish him well.

    Published on: November 2, 2009

    The New York Times reported over the weekend about how “store owners in Cleveland, New York, Louisville and elsewhere are being approached by public health organizations and economic development agencies with offers of new equipment, marketing expertise or neighborhood promotions to encourage them to stock more fresh produce, whole wheat bread and other healthy offerings.”

    One example is in Newark, New Jersey, where a corner grocery store recently acquired scanners and new refrigeration equipment “that will be installed near the front of the store. Those new refrigerators, to be filled with fresh fruits and vegetables, are part of a new effort by Newark — with variations in other cities across the country — to improve the diets of low income residents.”

    In other cases, “The Cleveland Corner Store Project encourages small groceries to sell fruit near the check-out — prime locations where candy and chips are usually found — and promotes these stores with sidewalk signs and posters and at neighborhood health events. New York’s ‘Healthy Bodegas’ initiative has reached out to 1,000 stores in a variety of ways, including helping owners secure zoning permits to allow fruit and vegetable displays on the sidewalk. In Louisville, two small groceries were awarded $20,000 this year to expand their offerings of fresh produce.”

    As the Times writes, “The movement is driven, in part, by a decades-old problem: the paucity of food shopping options in poor neighborhoods. In Newark, with three supermarkets for a population of 279,000, the city says nearly 40 percent of the money spent on food by residents is spent outside the city.

    “Campaigns to entice supermarkets, with their expansive produce departments, not to mention scores of local jobs, have met with mixed results. In Philadelphia, a ShopRite opened last year in a low-income neighborhood with help from a Pennsylvania program that provided a $1 million grant and $7 million in federal tax credits. New York is considering a similar plan that would include tax and zoning incentives, but few other cities have such a program in place.”
    KC's View:
    The good news is that at least in some cases, these kinds of programs are having an impact, as demonstrated by increased sales in selected stores.

    Seems to me that this is an intelligent way for communities to attempt to deal with the significant public health program that obesity has become. Better to provide options than to try to ban or tax certain kinds of foods or drinks, and to support those options with educational programs and the kind of public funding that can make a difference.

    Sure, some people will decry this as unnecessary or inappropriate social engineering...but it seems to me that the money spent to support an inner city business might be a smaller investment than the long-term costs of an entire population that has to be nursed through heart problems, diabetes and the like. Plus, you support small businesses that may be able to grow and pay taxes and eventually hire people who will have to pay taxes, and who then may start up their own businesses. The entire effort seems to me to be a healthy approach to public policy, with a focus on long-term strategies instead of short-term band-aids. It isn’t the only thing that should be done, and it cannot be considered a solution in and of itself. but it is the right kind of beginning.

    Published on: November 2, 2009

    Retail Week reports that even as Tesco’s US division revamps its stores to make them more appealing and easier to understand by American shoppers, and breaks a new advertising campaign designed to reintroduce the concept to consumers, it also is overhauling its website to reflect a singular message - Fresh & Easy keeps things simple to save people money.

    According to the report, “The site displays messages mocking its US rivals such as Walmart and Whole Foods. Slogans include ‘Wholesome food, not whole paycheck’ and ‘Big box discounts without the big box’ . .. The site enables more interactivity with customers through a ‘Your thoughts’ section and a ‘Customer favourites’ button to highlight popular products. It has also launched $25 and $50 gift cards in time for the festive season and made the site available in Spanish because many of its customers are Spanish speaking.”
    KC's View:
    While I’m not sure I buy Tesco CEO Sir Terry Leahy’s contention in the story that the only thing wrong with Fresh & Easy is the economy in the western US, I do think that one of the problems with the stores when they opened was their lack of quirkiness, a desire for uniformity that made them a little vanilla - there weren’t a lot of compelling reasons to choose Fresh & Easy over another option.

    It sounds like maybe Tesco is addressing this problem. (The Spanish thing is a good indicator. I remember going to a Fresh & Easy in a middle class Hispanic neighborhood in Arizona and thinking that it looked the same as one in a more upmarket Anglo neighborhood elsewhere, with virtually no Spanish language magazines in the periodicals section. Maybe that’s been adjusted.)

    Usually, I’m trying to get a sense of Fresh & Easy from three thousand miles away. But this week, Michael Sansolo and I are in Nevada and California, doing a couple of speeches ... and we’re going to see some Fresh & Easy stores as we travel, as well as some other banners. So we’ll get to see the Fresh & Easy reboot up close.

    Published on: November 2, 2009

    The Wall Street Journal reports that the US Federal Trade Commission (FTC) is giving Whole Foods six more months to sell some of the assets it got in its 2007 acquisition of Wild Oats. Earlier this year, under pressure from the FTC and the treat of ongoing litigation, Whole Foods agreed to sell 32 Wild Oats stores and the company’s private brand by September 8.

    Offers have been received though deals have not been struck, but the FTC apparently believed that there was enough of a good faith effort to grant an extension.
    KC's View:
    Isn’t it nice that Whole Foods and the FTC are getting along so well these days?

    Published on: November 2, 2009

    The Lakeland Ledger reports that the Coalition of Immokalee Workers (CIW), a Florida farmworkers advocacy group, plans to expand its picketing of Publix stores in south and central Florida to its Lakeland locations, in an effort to get the retailer to pay more for tomatoes and thus improve the living conditions of local workers. In addition, CIW wants Publix to stop doing business with suppliers that it maintains is guilty of abusing workers.

    According to the story, Publix spokeswoman Shannon Patten “says the chain does not want to become involved in what it calls a labor dispute between the CIW and tomato suppliers. ‘Publix pays fair market value for our tomatoes and we don’t determine that price,’ Patten said. ‘It’s just not our place to determine what the rate should be, which is why this is a labor dispute that should be settled between the workers and the growers’.”
    KC's View:
    While I do not know the specifics of the Publix-CIW disagreement, as a consumer I actually believe that it is well within the purview of a retailer to take sides in such cases. If the CIW is correct in its assertions, then Publix should stand up and be on the side of the farmworkers. If the CIW is not, then Publix should say so and why.

    As a consumer, I want to know where my retailer stands on such issues. But maybe that’s just me.

    Published on: November 2, 2009

    USA Today reports that the National Institutes of Health will spend $30 million to to study the safety of bisphenol A (BPA) a chemical used in many containers - including baby cups - about which there are health concerns.

    A series of studies have linked BPA with health problems that include diabetes and heart disease. However, the FDA did publish a draft assessment saying that BPA does not pose a health hazard when people are exposed to small amounts, and that conclusion has been confirmed by European Food Safety Authority (EFSA) Authority, Health Canada, the World Health Organization, Health and Consumer Protection Directorate of the European Commission; the European Chemical Bureau of the European Union; the European Scientific Panel on Food Additives, Flavorings, Processing Aids, and Materials in Contact with Food; and the Japanese National Institute of Advanced Industrial Science and Technology, as well as the Grocery Manufacturers Association (GMA) and the American Chemistry Council.

    However, that hasn’t stopped the Connecticut, Minnesota, the Canadian government, Consumers Union (CU), the Consumer Federation of America (CFA) and Walmart from disagreeing with the FDA decision; in Walmart’s case, it is not selling children’s products containing BPA. In New York State, Suffolk County has banned the use of bisphenol A (BPA) in empty beverage containers for children under the age of three.

    The money for the NIH study reportedly is coming from the economic stimulus package passed by Congress earlier this year and signed by President Obama.

    According to the story, the US Food and Drug Administration (FDA) is scheduled to release its own BPA reassessment later this month.
    KC's View:

    Published on: November 2, 2009

    In Minnesota, the Star Tribune reports that Target laid off eight percent of its marketing staff last week, cutting the 1,100 people it employed in that segment of the business to about 1,015.

    To put those numbers in perspective, Target employs 12,000 people at its headquarters in the Twin Cities, but earlier cut the HQ staff by nine percent.
    KC's View:
    What’s interesting about the Star Tribune story is that Target says that “the layoffs were unrelated to the economy or Target's financial performance,” and that the layoffs “don't indicate a change in the company's strategy.” Rather, they just a part of a reorganization designed to align marketing to “the needs of the business.”

    Maybe it is just feeling bad for the folks who lost their jobs two months before Christmas - as I feel bad for anyone who has lost a job anytime, having lost more than a few jobs in my time. But if you don’t need to lay people off for economic reasons, and the strategy has been sound up to this point, wouldn’t it be nice to keep people employed so as not to add to recessionary woes?

    The latest unemployment figures will be out this week, and people are going to moan and groan - with good reason - when they are worse than the last figures released by the government. But wouldn’t it be nice if people with the ability to do something about it - as apparently Target is, since it isn’t blaming the economy, its own performance, or even its strategy for the cutbacks - actually did something to keep things from getting worse.

    On the other hand, maybe Target is lying, and a recessionary economy combined with a flawed strategy has created tangible concerns about its current and future performance...and that’s why the company is laying people off.

    Published on: November 2, 2009

    • The Financial Times reports this morning that Walmart “has stepped up efforts to mobilise local political support for new store openings in US cities and urban areas” such as Chicago, where it wants to open a second store, and New York and Philadelphia, where it hopes to establish beachheads.

    According to FT, it is worth both the expense and the patience to deal with resistance to its plans that often is orchestrated by organized labor, since “Eduardo Castro Wright, chief executive of Walmart's US stores, has estimated that urban markets where the retailer is underrepresented could yield billions of dollars of new sales. "
    KC's View:

    Published on: November 2, 2009

    Last week, there was a poll published by Ad Week that evaluated how early Americans think retailers should begin their end-of-year holiday advertising - eight percent of Americans think that Christmas advertising should begin after Labor Day, 42 percent say that after Halloween is most appropriate, and 35 percent say that marketers should wait until after Thanksgiving.

    Well, Sears seems to have reached its own conclusion in this matter...and began pre-Halloween to promote Friday specials and early Saturday openings that it equates with the high drama and low prices of Black Friday, the day after Thanksgiving on which the Christmas shopping season traditionally begins with expanded hours and deep discounts.

    Sears hardly is alone in trying to drive early holiday traffic through its front doors. Walmart already is advertising popular holiday toys for $10 apiece, and is engaged in a online price war with Amazon and Target over bestseller book prices. And Reuters reports that Walmart has launched a second round of price cuts on toys, slashing prices in 100 popular toys by between 20 and 30 percent.

    All of this tumult seems to reflect the widely held anticipation that the holiday shopping season isn’t going to be a merry time for a lot of retailers, with overall retail sales expected to be flat - at best.
    KC's View:
    It’s interesting. There was a study put out last week by an organization called the Buxbaum Group, described as a “consulting and turnaround investment firm, that specifically addressed the end of year holiday shopping season and how retailers should position themselves.

    "In general," said Stevan Buxbaum, executive vice president of the firm, "consumers are still focused on price and value. The winners will be those chains that have the guts to slash prices the most. Eking out a profit in this environment requires highly rationalized SG&A (selling, general and administrative) costs and lower overhead. Wal-Mart is No. 1 in that regard, followed by the warehouse clubs and Target. Everybody else is in the rearview mirror."

    Buxbaum said that the top one percent of richest Americans might unwrap a MacBook Pro or find a Lexis SUV parked in the driveway, but the vast majority of shoppers will have a very different holiday this year: "We have gone from the 'aspirational' shopper--people who spent beyond their means for the sake of status or the sheer thrill--to the 'desperational'
    shopper. Now, most people are just trying to find value."

    But I believe that the “aspirational” shoppers of the past have not lost their aspirations, and that most of them are not “desperational.” Maybe I’m too upbeat about this, but I think that a retailing approach - and ad advertising campaign - that actually focuses on helping people achieve their aspirations at a lower cost, or in a way that satisfies both their sense of value and values, could be an smart way to go. Not the only way, certainly, but a way that does not encourage lowest common denominator thinking.

    Published on: November 2, 2009

    The Retail Survey Group is out with its annual US Supermarket Experience Survey.

    Overall, according to the report, “supermarkets received higher ratings for cleanliness, general grocery variety, and cashier friendliness. Respondents were also relatively pleased with the prices of items on sale at their grocery store. On the other hand, the lowest rated factors were variety of organic and ethnic items, quality of fresh seafood, and not surprisingly, the prices of items not on sale.”

    Douglas Madenberg, president of RSG, said, “We were struck by the low ratings for natural and organic variety, as well as the ethnic and international choices available. These are areas that are increasingly important to grocery shoppers, even with their current financial circumstances. Mainstream supermarkets are not adequately satisfying these needs.”

    Here are some of the other highlights:

    • Respondents from the Southern U.S. were most satisfied with their visit.

    • Male and female shoppers were equally satisfied, while older customers gave higher ratings than younger respondents.

    • Satisfaction was highest in the morning hours and declined throughout the day.

    • Supermarkets in the Northeast received relatively low ratings for produce and cleanliness but higher marks for natural/organic variety and value for the money.

    • West region shoppers gave lower ratings for meat and checkout speed but were more satisfied with their overall visit than were shoppers in the Northeast and Midwest.

    • Use of self checkout technology was far more common among younger shoppers. Those under age twenty-five were twice as likely to use a self-service register as those over age forty.

    • Nearly three out of five grocery shoppers referred to the store’s advertising flier/circular at some point before or during their visit. Respondents in the Northeast and Midwest were more likely than those in the West and South to refer to a store’s ad.

    • Despite the national trend toward less usage of plastic shopping bags, nearly three-quarters of respondents used plastic bags for their groceries. About one in five supermarket customers brought their own reusable bags. Women were more likely than men to bring a reusable bag to the store.

    The survey was of 1,400 U.S. grocery shoppers, who were asked to rate many aspects of their supermarket visit – from quality and variety in the produce department to restroom cleanliness; from service at the deli counter to checkout speed.
    KC's View:
    Compare Madenberg’s comments to those of Buxbaum in the previous story, especially when it comes to aspirational shopping.

    Now, i have to be a little careful here, because I don’t want to be guilty of endorsing the survey finds that reflect most closely my own biases. But I honestly believe that the RSG survey - while it admittedly is just a snapshot of a moment in time - is a more accurate reflection of what retailers need to do.

    Published on: November 2, 2009

    BrandWeek has an interview with Walgreen’s chief innovation officer Colin Watts, in which he evaluates the current state of CPG product innovation. An excerpt:

    “What I see among the big, major consumer packaged goods companies is marketers know that no matter what the economy is like, their success is predicated on coming forward with new innovation year after year. And the entrepreneurial start-ups also know that frankly, [hard] economic times or not, if they have an idea or innovation, they need to market it and they are looking at this situation as basically, even though it’ll be a bit more challenging for some of the products that are premium-priced, they recognize there’s an opportunity to actually push their innovation in the marketplace itself.

    “I do think more than ever, we at Walgreens are seeing people being very careful and watching what their price points are. There used to be a tradition that if I introduced something new, I would always ask for a bigger premium from the consumer for it. What you’re seeing now is innovation that goes in the other direction: I’m actually trying to find a way to reduce that opening price point. I’m trying to make this something that is more value-oriented for the consumer because it’s very difficult in today’s environment to introduce a brand new product that is meeting an unproven need and price it really high and expect people to jump on it.”
    KC's View:

    Published on: November 2, 2009

    The Seattle Times reports on Starbucks decision to consolidate its two frequent shopper programs beginning the day after Christmas - offering elements of its $25-a-year gold card program to the more than three million people to have Starbucks pre-paid cards in their wallets. The new program, which will be free, will offer a free beverage upon registration. According to the Times, “after using the registered card five times, customers qualify for free brewed refills, free flavor syrups and soy, a free tall drink with purchase of one pound of whole bean coffee and two continuous hours of free Wi-Fi a day.” Customers who patronize Starbucks a minimum of 30 times a year will get be classified as “gold” shoppers and will get all these benefits plus a free drink for every 15 purchases and a personalized card.
    KC's View:
    This makes a lot mores sense than the old program, the logic of which simply eluded me - I’m a good customer, I have a Starbucks card, but there never was any compelling reason for me to lay out an extra $25 to be part of a program of dubious value.

    It wasn’t that long ago that CEO Howard Schultz - who has been trying to find his footing since he decided to take back the top job from Jim Donald - said that his goal was this: “We don't want to be cool. We want to be relevant."

    At least now its frequent shopper program will have some relevance to regular customers.

    Published on: November 2, 2009 reports that “Milwaukee-based Roundy’s Supermarkets Inc. has entered into an agreement with Aurora Health Care to purchase all Aurora-operated pharmacies located inside (its) Pick ’n Save and Copps stores in Wisconsin.” Terms of the deal, which is expected to close before the end of the year, were not disclosed.

    • The Los Angeles Times reports this morning that “consumers are showing a willingness to pay a little more to get big-name brands, including Colgate toothpaste, Kellogg's Frosted Flakes and Gillette Fusion shavers. That's good news for the economy and the multibillion-dollar companies that make those products and have been battling to keep shoppers from trading down to store brands to save money.”

    "The strongest brands are the most resilient to economic stress and the first to bounce back as soon as consumers can pay for it because they don't want to trade down," Allen Adamson, managing director of San Francisco-based branding firm Landor Associates, tells the paper.

    USA Today this morning writes that Kellogg’s is facing criticism over a “swine flu-conscious claim now bannered in bold lettering on the front of Cocoa Krispies cereal boxes: ‘Now helps support your child's IMMUNITY’.”

    While some critics say the claim is exploitive, Kellogg’s says the health claim is valid and pre-dates the H1N1crisis.
    KC's View:

    Published on: November 2, 2009

    ...will return.
    KC's View:

    Published on: November 2, 2009

    In Week Eight of the National Football League...

    Denver 7
    Baltimore 30

    Cleveland 6
    Chicago 30

    St. Louis 17
    Detroit 10

    Miami 30
    NY Jets 25

    Houston 31
    Buffalo 10

    Seattle 17
    Dallas 38

    San Francisco 14
    Indianapolis 18

    NY Giants 17
    Philadelphia 40

    Oakland 16
    San Diego 24

    Minnesota 38
    Green Bay 26

    Jacksonville 13
    Tennessee 30

    Carolina 34
    Arizona 21

    And, in the Major League Baseball, the New York Yankees are within one game of winning the World Series, defeating the Philadelphia Phillies 8-5 on Saturday and 7-4 on Sunday. The Yankees now lead the best-of-seven series 3-1.
    KC's View: