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    Published on: December 7, 2009

    The Financial Times reports this morning that Tesco, which has run a highly effective Clubcard loyalty marketing program in the UK, plans to expand usage of the program to its US Fresh & Easy Neighborhood Market division.

    The story, by the always reliable Jonathan Birchall, notes that “a loyalty programme would mark a shift in Tesco’s strategy in the US. The company originally envisaged Fresh & Easy, which it launched in 2006, as a ‘hard discount’ store focused on delivering the lowest possible price to shoppers.

    “The move comes as Tesco steps up its marketing efforts in the US as it gains scale. It launched its first regional radio and newspaper advertising campaign in September.”

    The story points out that whatever Fresh & Easy does in terms of loyalty marketing, it will have to do without the considerable expertise and experience of Dunnhumby USA, the date analysis and marketing company that Tesco owns with Kroger - a retailer with which Fresh & Easy competes. Kroger has US supermarket exclusivity with Dunnhumby, and so Fresh & Easy will have to find another route to creating a program here.
    KC's View:
    It has always been felt here that Tesco was operating with one hand tied behind its back by not using some sort of loyalty scheme in its Fresh & Easy operations - and it was the hand that was capable of delivering the most effective punch. Dunnhumby’s expertise may not be available, but that doesn’t mean Tesco will be starting from scratch. Far from it.

    Fresh & Easy has had more than its share of problems to deal with, and there remains considerable skepticism in some quarters about its ability to survive long-term. The use of a loyalty marketing scheme, however, could be a game-changer.

    Published on: December 7, 2009

    The Wall Street Journal this morning has an interview with Craig Herkert, Supervalu’s new CEO, in which he discusses the new direction in which he is taking the company in an troubled economic environment. Some excerpts:

    On the economy: “The way we talk about it internally is, expect that this is the new normal. Now, one would certainly hope that we're not at 10% unemployment as the new normal. By the new normal, I mean the customers' focus on value.”

    On pricing: “In too many cases, we've trained our customer to only buy certain goods when they're on promotion, because we've allowed the gap between the promotional price and the regular price to become too great.

    “So the regular price on product X was $4.19 and the promotional price was $2.99. Maybe the regular price should be $3.49 and the promotional price maybe stays at $2.99. But if I can sell more at regular price and not send my customers down the street ... I'll be much better off.”

    On expanding the Save-A-Lot limited assortment chain: “The average household income of the Save-A-Lot shopper is $40,000 a year. That's about half the U.S. population. There is an underserved market segment there ... We have gotten approval from our board to reduce our dividend next year and we intend to primarily invest the proceeds of that to grow our Save-A-Lot business. We've also reduced costs for our Save-A-Lot licensees by 20% to 30%.”
    KC's View:
    The question not answered by Herkert in this interview is which divisions of the company will be sold in view of the new normal. Most people seem to agree that Bristol Farms will be sold off sooner rather than later; Shaw’s is the other division that seems to be the other that, because of a relentless pursuit of the middle, is likely to be at risk of a sale.

    There seem to be two popular theories about what could happen to Shaw’s, by the way. One is that Kroger buys the whole thing and totally changes the competitive set in New England. And the other is that Delhaize/Hannaford and Ahold/SAtop & Shop buy Shaw’s and split it, with Hannaford getting the southernmost stores and Stop & Shop getting the northern units.

    Fun to speculate. But for the record, I have no idea how much of this stuff may be accurate.

    Published on: December 7, 2009

    Fascinating interview in the Richmond Times-Dispatch with Jim Ukrop and Bobby Ukrop. the chairman/CEO of the Virginia supermarket chain that bears the family name, in which neither does anything to dispel rumors that the company might be sold.

    “We are going to live here the rest of our lives,” says Bobby Ukrop. “We are not going anywhere. The ebbs and flows of any business or organization may change. . . . We have been in a variety of businesses, so while some approaches might change, we are still going to be around."

    "Whatever the future holds, we will take very seriously our presence in the community," adds Jim Ukrop. "And whatever happens in the future, I think I know Bobby and I will be looking at it from a point of view of what is the best for those folks that work for us and their futures and for the community. Period."
    KC's View:
    There has been a lot of second guessing - here and elsewhere - about Ukrop’s current situation. But one of the things that the Times-Dispatch story makes clear is how important the Ukrop family and the company have been to the community they have served for so many years. it hasn’t been without controversy, because not everyone has agreed with the Ukrops’ methods or priorities. But I have to say that I am impressed with the service culture that exists in the stores, but that only exists there because it is a reflection of deeply held, foundational values exemplified by the family.

    Amid the second guessing, attention should be paid.

    Published on: December 7, 2009

    The New York Times reports that the nation’s unemployment rate dropped from 10.2 percent in October to 10 percent in November, an unexpected improvement that represented the “best report since the recession began two years ago.”

    According to the Times story, “Many forecasters suggest that the turning point — from jobs being cut to jobs being added — will come by March, assuming the economy continues to grow, as it finally started to do in the third quarter. If they are right, the beginning of a work force recovery would come more quickly than after the last two recessions, in the early 1990s and 2001, despite the much greater severity of this downturn.”

    The Times also writes that “although 15.4 million people are struggling to find work, the November report revealed signs of improvement across the country. More than 50,000 temporary workers were hired, the first surge in months and often a precursor to companies hiring permanent workers. Employees worked more hours, even in manufacturing.

    “And, reflecting the increased hours, the average weekly wage for most of the nation’s workers rose by nearly two-thirds of a percentage point in a single month, to $622.”
    KC's View:
    Nice to get some economic good news, even if there seems to be a lot of sentiment out there that a reversal and/or correction almost certainly is in the cards for January and February. I cannot help but get the feeling that when all the forecasters talk about good economic news, they all have their fingers crossed.

    Published on: December 7, 2009 responded quickly to published rumors over the weekend that it was planning to open a chain of physical locations in the UK where customers could pick up products ordered online.

    The company said it had “no plans” to open any such locations, but did not comment further on plans or if it could partner with other retailers.
    KC's View:
    It seems to me that one of the few areas in which in might make sense for Amazon to open physical locations would be for its Amazon Fresh business, in zip codes where it has sufficient penetration to make such an investment sensible. And it might even make more sense to create an alliance with another retailer - say, a company like 7-Eleven with a broad presence - that would create delivery depots.

    But the one thing that would be an enormous mistake for Amazon would be to start investing in bricks-and-mortar. What Amazon does, it does great - and better than any other company with which I’ve dealt. And there’s plenty of room in the e-commerce business for Amazon to continue to grow.

    Published on: December 7, 2009

    USA today reports this morning that Cargill-owned Beef Packers Inc. has recalled 22,723 pounds of ground beef sent to stores in Arizona and New Mexico because of concerns that they could be contaminated with a drug-resistant strain of salmonella. Several illnesses, but no deaths, have so far been linked to the ground beef.

    This is the second significant recall this year by Beef Packers, which had to recall more than 800,000 pounds of salmonella-contaminated ground beef back in August; there were 39 illnesses connected to that recall.

    USA Today reports that there has been a nationwide voluntary recall of College Inn No MSG Chicken Broth by Del Monte Foods because of mislabeling - the product actually does contain monosodium glutamate. No illnesses have been reported that could be connected to the mislabeling.

    • Unilever reportedly is recalling 10 million cans of Slim-Fast drinks in the US and Canada because of concerns about bacillus cereus, a micro-organism, which the company says “may cause diarrhea and possibly nausea and/or vomiting."
    KC's View:
    Not to make light of a food safety problem, but it seems to be that for people who need to drink Slim-Fast, the diarrhea and vomiting might be seen as a value-added.

    Published on: December 7, 2009

    • Walmart reportedly has signed a deal with the Federation Internationale de Football Association (FIFA) to create branded World Cup shops inside its stores all over the world, with merchandise customized for the country in which the stores are located. This is the first time that FIFA has created such a retail linkup with one retailer; Walmart also has committed to host special events connected to the 2010 World Cup.
    KC's View:

    Published on: December 7, 2009

    • In upstate New York, the Watertown Daily Times reports that Golub Corp.’s Price Chopper wants to acquire four P&C supermarket locations owned by bankrupt Penn Traffic; despite some rumors, no price tag has been connected to the hoped-for acquisition.

    The stores are in Canton, Potsdam, Massena and Gouverneur; both sides reportedly agreed to the deal in principle before Penn Traffic went into its third bankruptcy.

    • The Lakeland Ledger reports that more than 500 protesters marched for two miles through Lakeland, Florida, to demonstrate against the chain’s purchase of tomatoes from growers that activists say abuse and underpay workers.

    Publix has denied any culpability, saying that it does not want to get involved in a labor dispute between the growers and the Coalition of Immokalee Workers (CIW), which organized the protest march.

    Retail Week reports that France-based Carrefour and UK-based online retailer Ocado are discussing a possible partnership that would bring e-grocery services to the French retailer’s shoppers. A partnership would allow Carrefour to use Ocado’s software systems while providing its own fulfillment services.
    KC's View:

    Published on: December 7, 2009

    • Wal-Mart de Mexico, also known as Walmex, said that its November sales were up 8.8 percent to the equivalent of $1.88 billion, on same-store sales that were up 2.1 percent.
    KC's View:

    Published on: December 7, 2009

    • Tyson Foods has named Donnie D. King, group vice president of refrigerated and deli, fowl and export sales, to be senior vice president of poultry and prepared foods, replacing Donnie Smith, who recently was promoted to be president/CEO of the company.

    In addition, Noel White, senior vice president of pork margin management, has been named senior vice president of beef and pork, replacing Jim Lochner, who has been promoted to be COO of the company.
    KC's View:

    Published on: December 7, 2009

    On Friday, MNB featured the following story from a reader:

    After being on vacation for two weeks I returned to stock up at Aldi's and was truly amazed at all the new higher end products that are on the shelves for the Holiday Season. Then when I was going through the check out there was a mildly handicapped gentleman in front of me buying a few things and it turned out he had no money to pay for the few items. When I realized this I was going to offer to pay, but the cashier was quicker than I and voided the charge as an error and let the man have the merchandise. I was blown away by the generosity and the ability of the cashier to exercise this decision.

    My response was that the cashier should be applauded, as should Aldi for creating an environment that makes such decision-making possible.

    To be honest, I was profoundly disappointed by this response from an MNB user:

    Good for the cashier, but who said that Aldi’s created this atmosphere. I don’t believe any retailer empowers their employees to give away their products or services without higher approval. Just think how fast that would lead to a all red P&L. It is easy to be generous with other people’s money.

    I think you are wrong about that. I believe that at great retailers, the people on the front lines are, in fact, empowered to make such decisions without fear of being second guessed. (Stew Leonard’s is one that comes immediately mind, because I am a shopper there...but I know that there are others...and they would be considered among the thought-leaders in this industry.) Now, empowerment also means creating an understanding about when such decisions are appropriate...but to say that is amounts to just giving away other people’s money amounts to a terrible misunderstanding about the importance of what happened at that Aldi checkout lane.

    That decision by an Aldi employee strikes me as a warning to its competitors that Aldi is not exactly the chain you think it is. Be afraid.

    MNB took note on Friday of a The New York Times report that Cargill is conducting a “large-scale test to see whether animal vaccines are an answer to one of the nation’s most persistent food-safety problems” - E. coli contamination. The biggest concern seem to be about who will pay for a vaccine that could raise the cost of beef.

    MNB user Kelly Jacob responded:

    You won’t like this response, Kevin.

    To me, it’s one more reason to inch towards being a vegetarian!!  Right now, I have become a “flexitarian” since I occasionally eat meat, but with all of the hormones, the antibiotics and now E-Coli vaccines, the idea of it all makes me queasy!!

    When you think about 300 million people in the US and compare it to the number of people who become ill due to E-Coli contamination each year, I don’t think it’s worth the added “chemicals” to our food chain.  Once again, if you are too young, too old or have an illness and are susceptible to E-Coli in meats or produce, take responsibility for yourself and COOK THE HECK OUT OF IT.

    They shouldn’t make blanket decisions for the masses that could end up having far worse repercussions ... why are so many women getting breast cancer in their 20’s now? Wonder if those hormones to make cows produce more for longer are at fault?  Why do we have virus-resistant strains now that every animal is poked with antibiotics?)  You have to acknowledge these things that are relatively new over the last 20-30 years, don’t you think?

    I’m fine with your response. Of course there should be choice. Some beef will be vaccinated, some will not...and everything should be clearly labeled so that consumers can make informed decisions.

    Another MNB user wrote:

    Great - another thing to add to our meat in addition to all the existing hormones and antibiotics that are already tainting so much meat.  I'd rather spend the extra dollars to buy locally produced completely natural beef with no artificial hormones, colors, vaccines and whatever else is being artificially added to cows these days.

    Again, there should be and will be choice. Transparency is key.
    KC's View:

    Published on: December 7, 2009

    In Week Thirteen of the National Football League...

    St. Louis 9
    Chicago 17

    Houston 18
    Jacksonville 23

    Tennessee 17
    Indianapolis 27

    New Orleans 33
    Washington 30

    Detroit 13
    Cincinnati 23

    San Diego 30
    Cleveland 23

    San Francisco 17
    Seattle 20

    Tampa Bay 6
    Carolina 16

    Denver 44
    Kansas City 13

    Philadelphia 34
    Atlanta 7

    Oakland 27
    Pittsburgh 24

    New England 21
    Miami 22

    Dallas 24
    NY Giants 31

    Minnesota 17
    Arizona 30

    KC's View: