retail news in context, analysis with attitude

Published on: November 3, 2009

Sansolo Speaks: “The Power of Fun”
by Michael Sansolo

It’s a serious world out there. We get the reminders every day in the news, at work and many times even at home. So let’s honestly ask for one second whether, as Mary Poppins once said, an element of fun can make any job a game.

Because, if we think Mary had a point (and didn’t she always), we should be looking for ways to make everyday tasks more interesting and lighthearted. And why couldn’t that include both cooking and shopping?

The answer may have come from Sweden in the form of a great video easily found on YouTube.

In the video, part of a project sponsored by Volkswagen, the entrance to a subway station in Stockholm is given a unique transformation. The station features a pair of escalators (up and down of course) and a staircase between them. Nothing special there…right?

Except Volkswagen paid to have the stairs transformed into a huge working piano. The stairs became black and white key and, incredibly, when stepped on they played notes. Then the cameras rolled.

At first, commuters didn’t know what to make of the change. But as they tried the piano steps, they were instantly transported. Suddenly the simple process of heading in or out of the subway station took on a new element—fun. And the customers reacted. In excess of 65 percent more people started taking the stairs, an enormous jump from the earlier pattern, because the stairs were now more fun.

Suddenly a hum-drum, everyday experience was altered and people reacted. The escalators was still easier, but the stairs were now fun. The question: could we do the same?

There are food stores out there that drench themselves in fun. For years, I was lucky to shop at Stew Leonard’s in Connecticut, which may be the high palace of supermarket fun. To be honest, Stew’s was inconvenient for me and my wife for many reasons. We had a lengthy drive to get there and because of the limited number of products, we always had to use a second store almost weekly.

But we made the trip for two reasons. First, we loved the fresh products at Stew’s and secondly, shopping there was fun. Unlike other stores, our then small children behaved wonderfully at Stew’s because it was an adventure filled with songs, performances and costumed characters. It’s an experience other retailers have struggled to repeat.

While most stores can’t be Stew Leonard’s, nearly all can build an atmosphere of fun. After all, food is fun and cooking as we’ve learned from every celebrity chef can offer it’s own fun and rewards. But customers aren’t going to see that unless we lead them there. They are trudging through a serious world, with serious problems and serious constraints. Unless we interrupt that world, like the piano steps did, fun stays on the sidelines.

The question isn’t can it be done? The question should be why couldn’t it be done?

There are retailers who build fun with recipes and the endless celebration of food. Others do it with samples and demos. Some even turn technology into fun by enabling scanners (self and otherwise) with interesting noises that make cash registers with sounds from old time money changing to Star Wars weapons.

It’s so easy to argue against a point like this and there are so many reasons to argue that an element of fun won’t make shopping, cooking or clean up any easier. But then again, if fun can make people get walking up the stairs in Sweden, maybe the unexpected can do similar things in your stores and companies.

You won’t know unless you try.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .

Published on: November 3, 2009

The New York Times this morning reports that “public health experts worried about the spread of the H1N1 flu are raising concerns that workers who deal with the public, like waiters and child care employees, are jeopardizing others by reporting to work sick because they do not get paid for days they miss for illness.”

According to the Timespiece, “Tens of millions of people, or about 40 percent of all private-sector workers, do not receive paid sick days, and as a result many of them cannot afford to stay home when they are ill. Even some companies that provide paid sick days have policies that make it difficult to call in sick, like giving demerits each time someone misses a day.

“Public health experts say policies like these encourage many people with H1N1, commonly called swine flu, to report to work despite official warnings from the government and most companies that they should stay home.”

The problem has caused some in Congress to push for legislation that would require companies of a certain size to provide at least seven days of paid sick leave a year, though many in the business community say this is needless legislation because companies are capable of working it out with staffers on a case-by-case basis. And, of course, the debate comes at the same time as there is broader national discussion about health care in the US.

Published on: November 3, 2009

The Centers for Disease Control & Prevention (CDC) said yesterday that an E. coli outbreak apparently connected to ground beef products distributed by Fairbanks Farms of Ashville, New York and sold in the northeastern US, has sickened more than two dozen people and caused at least one fatality.

Fairbanks already has recalled more than 545,000 pounds of product suspected of being contaminated,.

According to a Reuters story, “All but three of the 28 cases listed by the CDC were in the U.S. Northeast and 18 were in the New England states. Sixteen hospitalizations were reported, said a CDC spokeswoman. The bacteria involved were from a common strain, so tests were under way to see if all of the reported cases were related.”

“Over the weekend, Fairbanks Farms ... recalled 545,699 lbs (248,450 kg) of ground beef products.” Published reports say that the company has had two other recalls over the past two years.

Published on: November 3, 2009

There is a report in the Chicago Tribune that Kraft Foods is likely to formalize its original $16.7 billion (US) bid to acquire Cadbury, but that such a move will have the effect of turning the bid hostile, since Cadbury management already has characterized the offer as insufficient.

According to the story, Kraft believes that there are no other legitimate rivals in its quest to acquire Cadbury, and therefore does not want to essentially bid against itself. At the same time, a declining share price for Cadbury stock and improved earnings by Kraft’s businesses are believed to have put Kraft in a better position to achieve its goal.

Published on: November 3, 2009

In The UK, the Telegraph reports on a proposal by stock analysts at ING that Tesco should move to acquire Ahold’s US businesses, including Stop & Shop and Giant. There is, the analysts suggested “compelling strategic logic” for such an acquisition, which would allow Tesco to acquire what the story says is “an undervalued asset at a low point in the US consumer cycle.”

Such a move, the analysts continue, would be infinitely preferable to Tesco continuing to spend money on its west coast Fresh & Easy Neighborhood Market chain, which they say is “too risky.”

The Financial Times notes that the coverage of the analysts’ speculation had the impact of running up Tesco’s stock price a bit, but not much beyond that - the chatter appears to be highly speculative at best.

Published on: November 3, 2009

There is a terrific piece in The New Yorker this week about the Amazon-Walmart price war being fought over 10 books...and what the likely broader impact will be.

“You might wonder why Wal-Mart recently decided to start its own price war, taking on Amazon in the online book market. Wal-Mart began by marking down the prices of ten best-sellers—including the new Stephen King and the upcoming Sarah Palin—to ten bucks. When Amazon, predictably, matched that price, Wal-Mart went to nine dollars, and, when Amazon matched again, Wal-Mart went to $8.99, at which point Amazon rested. (Target, too, jumped in, leading Wal-Mart to drop to $8.98.) Since wholesale book prices are traditionally around fifty per cent off the cover price, and these books are now marked down sixty per cent or more, Amazon and Wal-Mart are surely losing money every time they sell one of the discounted titles. The more they sell, the less they make. That doesn’t sound like good business.”

The New Yorker continues: “Amazon and Wal-Mart hardly seem reckless, though. So why did they go to war? The answer is that they didn’t, really. Sure, Wal-Mart is making a statement that it’s a player in the online world, but the real goal of this conflict isn’t to lure readers away from Amazon, and it isn’t to get people to buy one of those ten books. It’s to lure them online, away from big booksellers and other retailers, and then sell them other stuff.

“Usually, price wars wreak havoc because they erode the pricing power of an entire business. But, because this price war involves just ten items, its impact on revenue will be small, and outweighed by the positive effects of all the publicity. (It has garnered publicity because it involves books. A big banana price war has been raging in Britain, but you probably haven’t heard about it.) It’s textbook loss-leader economics.”

Published on: November 3, 2009

The Charlotte Observer reports that Family Dollar is celebrating its 50th anniversary, having “grown to 6,700 stores in 44 states, selling low-priced food, household goods and clothing in neighborhood locations. That's helped it flourish in a value-conscious economy that has socked a range of other retailers and left Family Dollar's core low- and middle-income customers struggling.” The paper features an interview with CEO Howard Levine, whose father founded the company in 1959. Some excerpts:

On the economy: “There was a lot of people living beyond their means. I think that's changed. People are going to be more thoughtful and conservative about the way they spend their money every day. How or when it stops, and how long it goes, I don't know, but ... until that equilibrium gets back to where people are comfortable, I don't think you start seeing a lot of real ramp-up in the economy. My view is, we're still bouncing on the bottom.”

On competing with Walmart: “We obviously wouldn't entertain getting in a pricing war with Wal-Mart. I'm pretty sure we would lose. All of our customers shop Wal-Mart, so we've had to compete with price, but more than just price. We have smaller stores located in the neighborhoods where our customers live and don't charge a pricing premium for that. We've had to have a way of managing our business so we don't get caught up in everything they're doing.

“Fortunately...(dollar stores) have carved out this niche of value and convenience, and it hasn't impacted Wal-Mart in a negative way. Everybody who picks a fight with Wal-Mart loses. Just tick down the list - most recently Circuit City, to all the regional discounters, to Sears and Kmart, probably, in the near future.”

On the company’ positioning: “Our year that just ended was a big year. It wasn't our biggest year ever, but it was so much better than what everybody else was doing, and that gave us a lot of visibility. We have grown in terms of the management talent and technology we've brought in. We're not the most sophisticated company out there, but we're still growing, and I think people appreciate that more than ever.

“We still have the same basic principles. We want to treat people fairly; we want to give people a career; we want to give people the opportunity to make money ... We're working hard on continuing to build upon that.”

Published on: November 3, 2009

The Wall Street Journal this morning reports that “Italian coffee maker IllyCaffè SpA has a stealth plan for moving in on Starbucks Corp.'s turf. By joining forces with independent coffee shops across the U.S., Illy can get its name in front of more customers without having to buy or rent its own shops.” The company is “expanding its reach by signing contracts with cafes in the U.S. that agree to serve Illy exclusively and allow Illy a hand in quality control. For the shops, aligning with a premium brand is a way to differentiate themselves from chains and other independent shops—and to charge higher prices.”

Published on: November 3, 2009

• The Deseret News reports that Associated Foods has completed its acquisition of 34 Albertsons stores in Utah from Supervalu. The units are being rebranded as Fresh Market stores, and customers who bring in their old Albertsons loyalty cards will be rewarded with a free five-pound bag of sugar.

Terms of the deal have not been disclosed.

• Amazon.com said yesterday that it has completed its $850 million acquisition of Zappos.com, the online shoe store that generates in excess of $1 billion a year in sales.

Published on: November 3, 2009

• Publix said yesterday that its third quarter sales were $5.83 billion, up 0.6 percent from the $5.8 billion that it generated during the same period a year ago, on same-store sales that were down 4.7 percent. Q3 profits were $254.9 million, up 26.3 percent from $201.8 million a year ago.

• Clorox reports that its first quarter earnings were up 23 percent to $157 million, pumped up largely by concerns about the H1N1 virus and sales of disinfectant wipes. Q1 sales were down less than one percent to $1.37 billion.

Published on: November 3, 2009

• Food products manufacturer Michael Foods Inc. said yesterday that it has hired James Dwyer Jr., the former executive vice president of private brands and e-commerce at Ahold USA, to be its new president/CEO.

Published on: November 3, 2009

MNB had a story yesterday about layoffs at Target headquarters in the company’s marketing department, and one reader took note of something that we missed:

Target should get a thumbs up for this: The laid-off workers will get full pay and benefits through Dec. 14, severance based on years of service and the option to continue their health insurance for 12 months at their current employee rate.

Good point. It isn’t exactly heartless. But they still don’t have their jobs, and the explanations seem less than forthright.




On another subject, one MNB user wrote:

Isn’t it ironic that an article about Tesco’s Fresh & Easy rebooting to better relate to the US consumer describes a button on their web site that says “Customer favourites” instead of “Customer Favorites”………to quote the legendary Maxwell Smart (a.k.a.- Agent 86) “Missed it by that much!”
 
Good point...except, to be fair, on the Fresh & Easy website they use the US spelling, “favorites.” The British spelling was used by the British periodical in which we reported that the story appeared...and they used their own style, not the one used by Fresh & Easy.




MNB took note yesterday of a The Lakeland Ledger report saying 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’.”

My comment: 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.

MNB user Ken Wagar responded:

As I understand it from the local Florida Newspapers Publix is being asked not only to pay more for their tomatoes but to also ensure that the increase goes directly to the farm workers. How would they do that? Is that their responsibility? Maybe we as consumers should track how many lbs of tomatoes we purchase per year and then should donate a penny per lb directly to the farm-workers. Or maybe that should be law thereby fixing the problem with no undue burden on anyone.

Then we can do the same for our meat to make sure the farmer gets taken care of and more for our milk so the Dairy farmer gets taken care of and more for our running shoes so the Malaysians get taken care of and more for our automobiles so that the union workers get taken care of (Oh yea, we did that….boy did that work out well.)

If there are abuses of US farm workers aren’t there other remedies or shouldn’t there be?
 
This is either the answer to the economic challenges of millions of people or it is one hell of a slippery slope.

We all make choices.

I prefer to buy US products when the quality is high (New Balance sneakers, for example) and when I respect the corporate culture of the companies with which I do business. I prefer not to do business with companies that I think are exploitive in any way. I don’t know everything about every company with which I do business, but I try my best and I keep my eyes open.

All I was questioning yesterday was Publix’s position that it is inappropriate to take sides in such a battle. I think retailers sometimes should take sides, and in fact can benefit by taking ethical positions in such matters. (Again, this is not a perfect world and this is not a perfect science, and I am sure I will be hoisted on my own petard and accused of being inconsistent because of past positions taken on other ethical/moral issues.)  Now, more than ever, consumers want to know about the values of the companies with which they do business...and this seemed like it could be one of those cases where taking a stand might make sense.

Published on: November 3, 2009

In the fifth game of the Major League Baseball World Series, the Philadelphia Phillies defeated the New York Yankees 8-6. The best-of-seven series now returns to New York with the Yankees holding a 3-2 series lead.



And, in Monday Night Football action, the New Orleans Saints defeated the Atlanta Falcons 35-27.