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    Published on: November 19, 2009

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    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, available on iTunes and brought to you by Webstop, experts in the art of retail website design.


    Today marks MorningNewsBeat’s eighth birthday. That’s right, it has been eight years since the first time I sat down at the laptop to turn out one of these reports. I remember that day well. I’d survived the collapse of a previous online business with which I had a stake, one that managed to claim not just an enterprise but a number of long-term friendships and working relationships.

    And I recall thinking to myself that I was tired of other people screwing up my career and business; if that was going to happen, I might as well do the job myself. And so, operating on Internet time and on a shoestring, I managed to get MorningNewsBeat designed and online in a matter of weeks, and figured that if the content were differentiated enough, the business would take care of itself.

    Go figure. It has sort of worked out.

    It has been my pleasure over the last eight years to be writing about a retailing business during a time of great tumult, change, and even controversy. Someone once asked me what I did on days where there is no news; the simple truth is that I wouldn’t know.

    It also has been my great good fortune to have you as members of the MNB community: engaged, interested, patient on mornings when I am running a little late, understanding of the typos, and far more than just readers. It has been a fun ride.

    And, I’ve had wonderful sponsors over the past eight years, who have responded as much to your engagement as to my sometimes unorthodox approach to editorial content. They make it possible for you to get MNB each morning, and I appreciate you paying attention to their products and services. Because I believe in promoting my sponsors whenever possible, I will use this opportunity to suggest that you click on their ads and see what they have to offer: the new iPhone application developed by MyWebGrocer, the fabulous olive oils created by California Olive Ranch, the executive search services available from Samuel J. Associates, as well as the the offerings of Bunzl, Webstop and EcoBags.

    (Am I being a little commercial here? Sure...but a guy’s got to make a living, and I have tuitions to pay. But these are terrific companies, and I am grateful to them.)

    No great words of wisdom this morning, no off-kilter of off-the-wall observations about a world a little bit insane.

    Just a simple thank you. Couldn’t do it without you. Wouldn’t want to.

    That’s it for this edition of MNB Radio. Now, let’s back to business - the news in context, analysis with attitude, and the serious levity that I hope makes MNB different.

    And that I hope will keep making MNB different. Because as they say, I’m going to keep doing it until I get it right.

    For MorningNewsBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: November 19, 2009

    The Penn Traffic Company, parent to P&C Foods, has filed for bankruptcy protection for the third time in a decade, but this time there is a difference - the company has decided to sell all or most of its assets, including 79 stores.

    The Post-Standard reports that “Penn Traffic made the announcement Wednesday afternoon, days after troubling flares were sent up to investors and customers in the form of missed loan payments and empty store shelves. The company made the filing in federal bankruptcy court in Wilmington, Del.

    “Penn Traffic plans to continue to operate its stores under court protection from its creditors while it seeks a buyer. It might already have a buyer in mind, considering it has locked in a date ... The company will also continue to pay its 5,700 employees, who draw $2.3 million each pay period, and continue benefits, according to documents it filed Wednesday with federal bankruptcy court.”

    The Post-Standard also reports that “retail analyst Burt P. Flickinger III said late Wednesday that an unnamed investment group was exploring the possibility of “putting the company back together.

    “If you get some of the better people from before and new capital in, I think it could work, the company can be saved rather than auctioning it off,” Flickinger tells the paper. “Sometimes, financial advisers push for that, because they get fatter fees.”
    KC's View:
    This probably was inevitable. No matter what they did at Penn Traffic, things never seemed to get better.

    Maybe new ownership can do better.

    Published on: November 19, 2009

    Tops Friendly Markets announced that the company will be opening its first new store since it was sold by Ahold to Morgan Stanley Private Equity and became a locally operated company.

    The store is in Spencerport, NY, the site of a former IGA store. The addition of the new location is part of Tops’ previously announced $150 million capital investment plan. The project is scheduled to start in March 2010 and is expected to be completed in summer, 2010. Tops will add as many as 100 new positions to operate the full-service grocery store.
     
    “With our capital improvement plan in place, it is first on our list of priorities is to invest in those communities where we have built lasting relationships and a strong customer base, and Monroe County and the greater Rochester area certainly fits that description.” said Frank Curci, Tops’ president and CEO. “The Village of Spencerport has been without a grocery store for five years, and village officials and residents have graciously opened their arms and welcomed us into their community. I have no doubt that Tops is the right fit, and that we’ll live up to our promise to provide our new neighbors with the widest variety of products at a great value, within a one-stop shopping experience.”
    KC's View:
    What’s that old saw about a window opening even as a door closes?

    Good for Tops.

    Published on: November 19, 2009

    In Minnesota, the Star Tribune has an interesting piece about Supervalu. Here’s the lead:

    “Every few months, St. Paul-based Old Home Foods likes to roll out a temporary, unusual flavor of yogurt, and right now it's ‘Sugar Cookie.’ But customers at many Cub supermarkets won't see it on the shelves.

    “The maker of yogurt, sour cream and cottage cheese learned recently that Supervalu, the parent company of Cub, no longer will make room for ‘Old Home 100’ yogurts or Old Home's ‘Gaymont’ brand, named for the bacteriologist credited with bringing yogurt to the United States in the 1940s.

    “The reason? Check with Supervalu's new CEO.

    “Craig Herkert, who took over in May, says reviving the sagging fortunes of the $44 billion Supervalu will require sweeping some products off shelves. Herkert is also pursuing an ambitious plan of expansion, the fusion of Supervalu's disparate parts into one company and making the company less complicated.

    “Supervalu must do all of that while focusing on the customer, said Herkert, who's worked in supermarkets in this country and abroad.”

    The story notes that Herkert’s broad strategy initiatives include a) reducing the number of SKUs offered by the company’s stores as a way of simplifying the shopping experience, b) doubling the number of value-driven limited assortment Save-A-Lot stores, and c) getting the company’s financial situation under control.

    Herkert expresses the company’s mission this way: “We aspire to be America's neighborhood grocer," he tells the Star Tribune. "That's what we are. It's all we do."
    KC's View:
    There’s a lot of sweeping going on at Supervalu...as both executives and products are swept out under the new regime.

    I don’t know how much of that yogurt gets sold on a regular basis, and maybe these kinds of efficiencies make sense. But there is a point where SKU discipline crosses the line and becomes counter-productive because stores lose the texture and vibrancy that bring people in the front door. Of course, if Save-A-Lot is the model for all future Supervalu growth - and Herkert certainly seems in love with the format - then that tells us a lot about where the company is going.

    So then we have to ask, how long before divisions like Bristol Farms are either spun off or sold? Because it certainly doesn’t seem to fit the model for what works in Herkert’s Supervalu.

    Published on: November 19, 2009

    The New York Post reports that Raul Vasquez, CEO of Walmart.com, says that his website will compete aggressively on price with Amazon.com this holiday season, continuing the pattern that began weeks ago as both online retailers lowered the price of best-sellers and prospective best-sellers to $9 in a tit-for-tat price war.

    "If they react and match our prices, we're going to continue to lower our prices," says Vasquez, who also disputes the notion that Amazon plans to be the Walmart of the internet.

    "If there's going to be a Walmart on the Web, it's going to be Walmart.com," Vasquez says.
    KC's View:
    This simply reinforces the view here that Walmart is playing a market share game in almost every segment of its business. It cannot allow Amazon to get too far ahead in the online business...which is why it needs to draw the line here and now.

    BTW...not to get too self-promotional here, but Michael Sansolo and I can only hope that both Walmart and Amazon decide to get into a price war with our book, “The Big Picture: Essential Business Lessons From The Movies.” (Available right now on MNB, and coming to bookstores on March 1.)

    Published on: November 19, 2009

    The New York Times reports on a new study out of Emory University saying that “if current trends continue 103 million American adults will be considered obese by 2018. That would be 43 percent of adults, compared to 31 percent in 2008.”

    There are real economic implications here. The Times
    The study also indicates that by 2018, “Colorado would be the only state where less than 30 percent of adults would be obese. In six states — Kentucky, Maryland, Mississippi, Ohio, Oklahoma and South Dakota — more than 50 percent of adults would be obese.”

    The study was conducted for the United Health Foundation, the American Public Health Association and the Partnership for Prevention.
    KC's View:
    There is a certain irony that on one day there are stories about hunger in America, and the next day we have stories about increased obesity levels.

    Of course, the stories are not mutually exclusive. We live in a world where these two conditions can exist side by side, a world the complexity of which is such that we actually have to deal with hunger and obesity at the same time.

    Published on: November 19, 2009

    Reuters reports that Agriculture Secretary Tom Vilsack said yesterday that “schools that serve more fruits, vegetables and whole grains to pupils should see higher federal support rates than those serving less-healthier meals loaded with high fats and sugar ... Child nutrition programs, which include school lunch and breakfast, are due for an overhaul but Congress is not expected to act before 2010. The government has targeted improving the nutritional quality and access to school meals amid rising child obesity rates.”

    However, Vilsack did not put specific numbers to his observation, and did not say how much more money schools with better nutrition programs should get.
    KC's View:
    The irony, of course, is that at least some of the schools serving the crappiest lunches may be the ones that most need federal funding.

    I have no problem with tying federal funding to behavior. But maybe it would make more sense to say that the funding has to be used for healthier foods.

    Of course, just doing this in a vacuum doesn’t make sense. If schools don’t teach nutrition, don;t offer gym classes, and if parents don’t buy in to the whole notion that their kids ought to eat better and exercise more, then all the funding parameters in the world won’t be worth a damn.

    Published on: November 19, 2009

    CNN reports that Kellogg’s is warning that there will be a shortage of Eggo waffles until mid-2010, owing to flooding at an Atlanta factory during October that shut down production on the popular frozen breakfast item.

    The company says that it will be rationing available product to stores across the country as it works to return its manufacturing and inventory to acceptable levels.
    KC's View:
    Rationing? Does that mean we’ll be seeing town hall meetings and waffle parties as people protest this unacceptable development?

    Published on: November 19, 2009

    NamNews reports that Canada’s Metro Inc. has forged a new deal with Dunnhumby,
    “aimed at improving consumer loyalty through the development and implementation of more customer-centric strategies. Metro said the venture will help it to ‘be even more relevant to customers, to be more targeted in our efforts and to be more efficient in our marketing’.”

    Advertising Age reports that Coca-Cola’s Minute Maid brand “is introducing a new packaging design for its mainstream global juice businesses, which include the Minute Maid, Del Valle, Andina and Cappy brands. When the rollout is complete, the new packaging will cover half of the juice portfolio's volume.” According to the story, the new design “features a stack of fruit, with a slice of the fruit balanced on top. It is meant to bring consumers closer to the fruit, the tree and the grove, as well as improve the products' shelf appeal at the point of sale.”

    The re-design, Ad Age writes, was done independent of Pepsi’s disastrous decision to redesign the Tropicana juice packaging, which eventually was reversed because of consumer reaction. However, Minute Maid execs say they were mindful of what happened and were careful not to do anything that would disrupt the brand’s equity.

    Bloomberg reports that Target CEO Gregg Steinhafel is saying that the company may open smaller stores as a way of gaining a presence in urban markets.

    “We know that consumers in dense urban areas love Target,” Steinhafel says. “We have to work harder at trying to get a smaller Target in those areas.”

    Bloomberg reports that Royal Ahold CEO John Rishton “is confident the owner of the U.S. Stop & Shop grocery chain will stay independent amid speculation its 2.5 billion euros ($3.7 billion) of cash may attract buyers.”

    Rishton tells Bloomberg: “We haven’t spent all this time, trouble and effort to strengthen our business and recover, and get ourselves into a very strong position, to become a takeover target. Having too much cash isn’t a problem, frankly.”
    KC's View:

    Published on: November 19, 2009

    • BJ’s Wholesale Club reports that its third quarter earnings were down 37 percent to $17.7 million, from $28.2 million during the same period a year ago. Q3 sales were up about two percent to $2.51 billion, on same-store sales that were off 2.5 percent.

    • Canada’s Loblaw Cos. said that its third quarter earnings were up 20 percent to the equivalent of $178 million (US), on Q3 sales that were $8.9 billion (US), down from $8.92 billion (US) during the same period a year ago. Same-store sales were down 0.6 percent.
    KC's View:

    Published on: November 19, 2009

    • Vincente Trius, who has been running Walmart’s Latin American business, reportedly is leaving the company after just five months in the job.

    No reason for the departure was given. Walmart says it hopes to announce a replacement shortly.

    Trius ran Walmart’s Brazil business for 11 years before going to Asia for a year, after which he moved into the Latin American job.
    KC's View:

    Published on: November 19, 2009

    ....will return.
    KC's View: