retail news in context, analysis with attitude

Published on: November 9, 2009

ABC News has a story on its website saying that Walmart “is defending its sick leave policy after a workers' advocacy group issued a scathing report saying the company made it difficult for employees to take sick time for themselves and their children.

“The report, issued this week by the National Labor Committee, criticizes Walmart for giving demerits to workers when they're out sick and making them pay for their first sick day with a personal day or vacation day, or not get paid.”

Walmart told ABC - and said that it was telling human resources managers - that “we must be clear that no one will lose their job if they get H1N1."

At issue is Walmart’s “point system,” which “doles out points or demerits to employees who miss work because of illness or an emergency not recognized by the company. Four absences in a six-month period lead to disciplinary action that can result in termination if more points are accrued, according to the report. A clean record for six consecutive months erases all points from an employee's record.” In addition, Walmart makes employees “pay for their first sick day with a personal day or vacation day, or not get paid.”

Critics say that Walmart’s policy actually encourages people who have developed flu symptoms to go to work, because they often are in a situation where they cannot afford to lose a day’s pay; this runs counter to the recommendation by public health officials that people stay home when they think they are getting the flu.

Published on: November 9, 2009

The Arizona Republic reports that both Safeway and Fry’s Food Stores have begun advertising for temporary employees, anticipating the possibility that 25,000 employees at the two chains could go out on strike this Friday.

According to the story, “the United Food and Commercial Workers Union Local 99, which represents them, has threatened to call a strike if the companies and the union fail to reach a contract deal by 6 p.m. Friday. The union and the companies have been negotiating for more than a year ... The contract that expired Oct. 31 was actually a 12-month extension of one that expired in 2008 ... While the two sides remain apart on salary, pension and other benefits issues, the main obstacle in negotiations has been the companies' insistence that employees shoulder some health-care costs.

Published on: November 9, 2009

The Denver Post reports that the United Food and Commercial Workers Local 7 is asking its international leadership “to authorize a strike before the busy food holidays of Thanksgiving and Christmas,” saying that "if (Kroger and Safeway) know we can go out before the upcoming holidays, I believe they will bargain seriously and a settlement can be reached.”

The international UFCW leadership has thus far not approved a strike, even though local membership has voted to authorize one. Management at Safeway and Kroger-owned King Soopers has been in negotiations with organized labor since April on a new five-year deal, and negotiations have centered around the issues of wages, health care and pension funding. Both grocery chains have said they have replacement work forces in place if a work stoppage were to occur.

Published on: November 9, 2009

Sedano’s Supermarkets, the number one Hispanic retailer in the United States, announced today that it will acquire three Albertsons supermarket locations in Central Florida. This acquisition marks Sedano’s Supermarkets’ first expansion beyond its South Florida headquarters and brings the total number of stores to 33 in Florida.”

“We’re very excited about expanding into Orlando,” said Javier Herrán, director of marketing for Sedano’s. “The expansion into Central Florida helps us meet customer demand, while allowing us to quickly establish a presence and significant footprint in the Orlando market, as we pursue opportunities for continued strategic and conservative growth.”

According to the announcement, the stores, which vary in size from 58,000 square feet to 65,000, will feature Sedano’s staple Latin products as well as mainstream everyday items. Sedano’s will officially take control of the three locations in the first quarter 2010.

Published on: November 9, 2009

Crain’s New York Business reports on how Fairway Market, one of the New York City area’s most innovative grocers, “is wooing a much larger audience. Since bringing in investors three years ago, the quintessential Big Apple grocer is on a fast track to become a superregional chain of 15 stores generating more than $1 billion in revenue. The five existing shops in the New York area already bring in more than $500 million in sales. Another three are in development in Douglaston, Queens; Pelham, N.Y.; and Stamford, Conn.”

The fast track is changing the way that Fairway does business, the story suggests. Since Sterling Investment Partners invested a total of $180 million to gain a controlling interest in the company, “more than 100 executives have been hired to manage the growth, and another 1,200 workers will be added over the next two years, with each store requiring about 400 employees. Increased expenses will be spread across a larger empire, and leases for new stores are less expensive because of the downturn.

“The Harlem headquarters is now populated by executives including Tod Nestor, a Wharton School of Business MBA who was hired last month as chief financial officer; three new attorneys; and a head of security who is a former FBI agent and a former chief of police in Greenwich, Conn. The list goes on.”

CEO Howard Glickberg, whose grandfather founded the company, says he has “concerns about ‘suits’ who lack his hands-on experience, but they appear to be mitigated by the fact that his 26-year-old son, Dan, has become the public face of the company in the stores, on the internet, and in local media coverage. Dan Glickberg currently is executive vice president in charge of marketing, the his father says that he will be CEO some day, not one of the “suits” who populate the office.

Published on: November 9, 2009

The Produce for Better Health Foundation (PBH) is out with its annual survey of moms, and it reveals that “despite Moms’ strong belief in the health benefits of eating fruits and vegetables, their families still aren’t eating enough ... Research shows that Moms continue to strongly believe in the benefits of eating fruits and veggies, but are still having trouble meeting the USDA’s 2005 Dietary Guidelines for Americans recommendations of up to 13 daily servings of fruits and vegetables”

According to PBH, this is the first year in the last four that “a reported decrease in fruit and vegetable consumption has been noted. In 2009, fruit consumption dropped 12 percent from 2008’s numbers and vegetable consumption was down 6 percent.  The survey points to the recessionary environment present at the time the survey was conducted, in January, 2009, for the slight reduction in intake, especially in lower income households. Over time, survey questions about what made it difficult to eat more fruits and vegetables were varied slightly from year to year in an effort to better understand obstacles to increasing consumption. Until 2009, cost was not seen as a key obstacle to including more fruits and vegetables in the diet. Higher-income Moms actually reported an increase in their fruit and vegetable consumption levels on the 2009 survey”

In addition, the survey reports that “each year between 2006 and 2008 Moms viewed canned, dried, frozen and 100 percent juice as more healthy than the previous year. This is consistent with the fact that all of these types of fruits and vegetables, in addition to fresh, help people achieve their daily recommended consumption levels.  In 2009, however, these positive views decreased while less-nutritious ‘fruit flavorings’ in juice drinks, soft drinks, water, and other beverages were viewed as more healthy.”

Published on: November 9, 2009

Fascinating piece in Business Week by the always reliable Matthew Boyle in which he writes about the genesis of the $5 footlong sandwich promotion at Subway - it was created by a Miami franchisee, Stuart Frankel, who noticed a significant sales decline on weekends.

“Instead of dealing with idle employees and weak sales, Frankel suddenly had lines out the door,” Boyle writes. “Sales rose by double digits. Nobody, least of all Frankel, knew it at the time, but he had stumbled on a concept that has unexpectedly morphed from a short-term gimmick into a national phenomenon that has turbocharged Subway's performance ... Frankel's $5 footlong idea illustrates how a huge company can wake up and eventually seize on a good idea that's not generated at headquarters. Frankel, along with two other local managers in economically ravaged South Florida, ceaselessly championed the idea to Subway's corporate leadership amid widespread skepticism. Once it was approved, Subway's marketing team quickly generated a memorable campaign that firmly established the $5 footlong nationwide. The promotion's success spawned imitators and created an unprecedented demand for staple ingredients such as turkey, ham, and tuna.”

The promotional idea has propelled Subway past both Wendy’s and Burger King in the fast food wars, though there is some concern at the company about how much juice the promotion has left. But that’s okay, because “Frankel has moved on to a new idea. Now he's pushing for Subway loyalty cards that let purchasers accrue points toward free sandwiches.”

Perhaps not surprisingly, he’s encountering some skepticism at headquarters.

Published on: November 9, 2009

The Wall Street Journal reports that “McDonald's Corp. is setting a course to add a dollar menu for breakfast starting in January ... as it looks to head off a slowdown in morning sales.”

At the same time, Crain’s Chicago Business reports that “Dunkin’ Donuts will begin selling six items for 99 cents on Monday in the Chicago area as it competes with McDonald’s Corp. for eaters looking for cheap breakfast. Dunkin’ Donuts’ limited-time value menu will only be available at its 500 Chicago-area locations and will feature: a sausage egg and cheese wrap, bacon egg and cheese wrap, egg and cheese wrap, raspberry Danish, hash browns and package of five munchkins.”

Published on: November 9, 2009

• Bloomberg reports that Walmart plans to open 40 more cash-and-carry stores in India as part of its partnership there with the Bharti Group. They opened their first unit there last May.

Published on: November 9, 2009

• The Food Marketing Institute (FMI) has recognized Tom Zaucha, president/CEO of the National Grocers Association (NGA) with a lifetime achievement award for “more than 40 years of stellar service to the food industry, including 27 years at the helm of NGA.”  FMI president/CEO Leslie G. Sarasin presented the award to Zaucha at an FMI board of directors meeting in Toronto, Canada.

Zaucha is scheduled to retire from NGA early next year.

• The Grand Rapids Press reports that Meijer “has dropped prices up to 30 percent on more than 400 popular toys from Barbie to Star Wars Legos” in an effort “to hold its own against the country's biggest retailers, Walmart and Target, in a holiday price war.”

• The Seattle Times reports that Starbucks is expected to open the first of 100 “individualized” stores in the UK today, with a cafe in Central London that recalls some of the more community-oriented units recently opened in Seattle - part of a broader effort to recapture the company’s mojo after a period of time during which the combination of over-expansion and the recession seemed to sap Starbucks of its momentum.

"We are not trying to disguise that it's Starbucks," Tim McCoy, head of communications for Starbucks in the UK, tells the Times. "It still says Starbucks on the door, but we needed something different. There are a lot of copycat chains around and we thought people would feel better disposed to us if they felt the store was part of their community and knew the people there."

Published on: November 9, 2009

• PriceSmart, which operates membership warehouse clubs in Latin America and the Caribbean, reports that its fourth quarter sales were $298.0 million compared to $286.1 million in the fourth quarter of fiscal year 2008.  Total revenue for the fourth quarter was $305.1 million compared to $292.0 million in the prior year. Operating income in the fourth quarter of fiscal year 2009 was $11.9 million compared to operating income of $12.9 million in the fourth quarter of fiscal year 2008.

For the just-completed fiscal year, PriceSmart reports that net warehouse sales increased 11.6 percent to $1.2 billion, compared to $1.1 billion in the prior year, and total revenue for fiscal year 2009 increased 11.8 percent to $1.3 billion from $1.1 billion in fiscal year 2008.  Annual net income was $42.3 million, compared to $38.1 million during the previous year.

• Wal-Mart de Mexico said that its October sales rose 12.8 percent to the equivalent of $1.62 billion (US), on same-store sales that were up 5.1 percent.

Published on: November 9, 2009

Responding to last Friday’s piece - and my skepticism - about Ahold’s newest reorganization of its US operations, one MNB user wrote:

Ahold's latest reorganization of their US retail holdings is just another chapter in their constantly changing playbook since Ahold bought the US retailers and may again be "too little too late". For example, Giant Food of Landover,is on their third CEO since Ahold took over the chain and the external leadership the company had in the region in the community, business, civic, and consumer circles has dimmed significantly since several well-known former Giant executives departed.   Giant's lack of continuation of what made Giant the best food chain in the region is the reason why their market share declined so dramatically and the reason why Wegmans, Harris-Teeter, and Food Lion came to town so strongly to take away Giant's "cookies"!  The same can be said for their other markets too with their CEO's constantly going thru revolving doors.   Maybe they will get it right this time!

Maybe. But maybe not. And most informed people I know are betting on the latter.




Regarding the role of online shopping, which projections suggest will be the sole economic bright spot during the holiday shopping season, MNB user Lisa Bosshard wrote:

I'm in the 40 something category and have seen a shift in shopping habits over the past several years.   While I don't know many who shop exclusively on-line, what I do think we'll find is a new 'hybrid' shopper who spends some of their dollars through on-line retail and some in traditional brick/mortal stores.  For my family it comes down to convenience more than cost. We don't have many days off during the holidays to shop and have to make the most of them. To be honest, I don't find that you save much money shopping on-line by the time you include shipping charges... In spite of this thought however, I did recently save $35 on a backpack (including shipping) because I did my homework - as a friend likes to say, I hunted it, killed it and drug it home; had a caveman moment there...

Another MNB user wrote:

As I approach the big six-oh (t-minus 26 days and counting – argggghhhh!), the wife and I find it harder to brave the mall for the yearly Christmas shopping.  It isn’t so much the physical stress as the mental part of the shopping that has pushed us to do 90% of our shopping online. Why rush from store to store looking for THAT item for the grandkids, only to find it out of stock, when we can locate it quickly online.  And, most times, even including shipping, cheaper than from the mall or big box stores.   The catalogs started arriving in the mail about a month ago and the wealth of ideas for gifts is greater (and in some cases, stranger) than ever, opening options that would never be found in hours of driving, parking, bustling and hustling.   Sure makes it easier for Maw and Paw!

To me, the quality of the holiday season is in direct inverse proportion to the amount of time spent in stores doing actual shopping. And I don’t think I’m alone.




On another subject we featured here last week, MNB user Derek A. Helderman wrote:

As a registered dietitian, I have mixed feelings about the New York Times' article highlighting the new found role of Sam Kass, White House Chef.  I agree that he is most likely more qualified to discuss food and nutrition issues than some legislators.  However, let's make no mistake that he is not a nutrition expert.  He, for all practical purposes, is a cook.  As the NY Times article stated, he has no formal culinary training.  He honed his skills the old fashioned way; and if he's cooking for the first family he's obviously a talented cook.  He, however, has spent no time formally researching, studying and being tested on nutrition, hunger, health and wellness.  A registered dietitian has.

I don't agree with or support most of what the Obama administration has done or plans to do.  I feel that trying to legislate health, wellness and weight loss will be a terrific failure and will add undue taxation and restrictions on the lives of Americans.  The answer to improving the health of our country is not a simple one to be sure.  However, the answer lies not in restricting the choices of citizens and taxing them for their lifestyles, but in education.

I have to add that I thoroughly enjoy your witty commentary on the website.  Your viewpoints bring lightheartedness and common sense to subjects of serious levity.

I’m blushing.

And I love the phrase “serious levity.” I may add it to my business card.

Another MNB user chimed in:

Great coverage and insights about what is going on in the White House…but…” a chef is far better able to talk about nutrition than a lot of elected officials.”  What an understatement based on what I have been hearing during the insurance reform debate…almost anybody is far better able to talk nutrition than our elected policy wonks…




Responding to last week’s coverage of continuing executive changes at Supervalu, one MNB user wrote:

Your comments regarding SVU’s need for individuals with strong marketing and merchandising background diminishing is absolutely true. When people like Steve Kaczynski were hired in Division President roles, it was almost a requirement. The reason was due to the fact Jeff Noddle was interested in keeping “local relevance” at the banners during and after the centralization process.

As it turns out, Division Presidents have almost no say in any merchandising or marketing plans. BDM’s at corporate are actually telling VP’s at the banners what products will be carried, what promotions will be launched and what items will appear on the front cover of the ads. – like running an ad featuring Dole Banana’s in Bigg’s market – where Chiquita Brands Int’l happens to be located. Decisions like placing Tide 150 oz. 16.99 as a front cover item in Virginia Beach where per capita income is below state and nation don’t make sense. While $16.99 may be a great deal, shoppers in that market may have gone to Harris Teeter who advertises 50oz at $5.99.

And by the way, these decisions are being made by people in MN who have not been to these markets to see the stores.

I understand CEO Craig Herkert is putting a hold on “centralization” for certain markets and/or certain categories but in some areas (New England and Pennsylvania) the damage has been done.




I keep arguing that eventually DVDs are going to go away, to be replaced by downloads, but MNB user Michael Schillo disagrees:

People like physical product and it will never go away. It will evolve, yes. But it will never disappear.

Reminds me of the argument back in the 1950's that one day, we will eat capsules to nourish ourselves.

Wrong.  People like to eat.  They enjoy the meal aspect of it.

People will always buy some sort of physical products. As gifts. For portability. Etc.

To think it will be 100% digital is simply wrong.

But, Michael...if I eat a pill instead of the plate of pasta, I may get the nutrition but I don't enjoy the experience.  If I download a movie instead of buying a DVD...watching it is precisely the same experience.  What's important, it seems to me, is the quality of the content, not the physicality of the media.

Which is why DVDs will vanish. Maybe not soon, but eventually. And sooner than we all think.




MNB user Bill White had some thoughts on the passing of Gene Walters:

I worked at Farm Fresh for a couple of years  in the late '90's, just after their bankruptcy and subsequent buyout by Richfoods.  As a member of senior management, I had some interaction with Gene Walters, who, as you have mentioned, stayed on as a consultant.  He still appeared in our commercials, as the "trusted voice" of Farm Fresh, and really enjoyed that role.  As we revitalized "his" chain that had been pillaged and run into the ground by others, Gene and I had many conversations about the chain, where it had been, and where it was headed.  As I saw that twinkle in his eye, it was apparent that he was synonymous with the Farm Fresh chain and its core values, and he genuinely cared what happened to it in the future.  Most people who had cashed out of a chain such as Farm Fresh would not have had the same attitude.  He cared about the people, and how secure their jobs were, and genuinely felt bad when the chain declared bankruptcy.  In the stores, he was loved by the employees, who felt his love for them and his passion for the business he ran so well for so many years.  He was truly a good person. Gene left a great legacy - we should all hope to be half the person that Gene Walters was, and live our lives the way he lived his until the very end.  May he rest in peace.

Amen.




Finally, I=in a story about beer preferences last week I noted that the great Robert B. Parker once wrote that “the worst beer I ever had was wonderful.” To which one MNB user responded:

Perhaps its optimistic thinking, but didn’t the Parker quote in fact say “sex” instead of beer?

My subconscious  says they are doubtless related…

True. Dr. Parker did wrote that about sex. And beer.

I’ve been lucky enough to meet and interview Dr. Parker, and I’ve read pretty much every word he’s ever written. And I don’t think he’d disagree with the observation that when he finds a good line, he doesn’t mind using it again. And again.

Published on: November 9, 2009

It’s Week Nine in the National Football League...

Washington 17
Atlanta 31

Baltimore 7
Cincinnati 17

Kansas City 21
Jacksonville 24

Green Bay 28
Tampa Bay 38

Detroit 20
Seattle 32

Tennessee 34
San Francisco 27

Arizona 41
Chicago 21

Houston 17
Indianapolis 20

Miami 17
New England 27

Carolina 20
New Orleans 30

San Diego 21
NY Giants 20

Dallas 20
Philadelphia 16