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    Published on: December 8, 2009

    by Michael Sansolo

    Professor Marianne Jennings of Arizona State, a terrific writer and speaker on business ethics, says there is an easy test for culture in a company. In short, it’s what people do when no one is around watching. If you doubt the power of what she says, think about how differently you drive when you see a police car in the mirror. For many employees, a manager on site is just the same. What’s more telling is what happens when no one is watching.

    Last Friday MNB ran an interesting letter about the incredibly thoughtful response by a cashier in an Aldi store, who helped a mildly disabled customer with trouble paying. Incredibly, on the same day I was in another Aldi store, seeing something possibly more profound, which cost the company nothing and gave an interesting look into its culture.

    But let’s start with some context here. In many ways, Aldi serves the most economically distressed shoppers in the market. The stores are simple; the merchandising sparse. It’s easy to expect that service would be the same. Yet, what I witnessed was a cashier going out of her way to compliment shoppers on their choices and greeting everyone with a warm and engaging voice. In short, she was going far beyond expectations and treating shoppers in a way some might rarely see anywhere in their lives.

    It’s hard to know how Aldi is training for these moments, but clearly something is working. The message to treat customers with dignity and kindness is coming through.

    Sadly, it’s also too easy to see the opposite in action. Again, let’s have some context. Last week I escorted a group of 11 Italian retailers on a tour of stores in New York and Chicago. Many stores rightly have reasons to withhold any great welcome to groups and given the time of year, most of the requests for meetings with managers were politely declined even though the group was welcomed to tour.

    In most stores we visited - Target, ShopRite, Whole Foods, Trader Joe’s and Walmart stand out - employees were both courteous and curious. Frequently they went out of their way to explain the rules of a visit and answer some quick questions.

    Sadly, we saw the opposite reaction in a store I’ve heard many people (including Kevin Coupe) rave about. To avoid calling them out publicly, let’s just say it was an independent operator in northern New Jersey. Now this is a terrific operator with interesting merchandising, wonderful fresh products and a solid emphasis on pricing. But just as a kind cashier can elevate Aldi, a rude employee can do the opposite to a store as strong as this one.

    As the Italians walked around the store many of them drifted to the sample stations. One employee (apparently a manager) was audibly annoyed, asking loudly if the group intended to buy anything. I had to point out that they were in fact purchasing food to eat ( a total of $130 to be exact) but that did little to change his mood. Once out of the store, the Italian retailers admitted they were stunned by the comments and questioned why any store employee would act that way.

    Of course, some retailers will reason that being rude to a group of visitors is hardly going to impact business. After all, the visitors aren’t coming through again so what harm is there.

    I’d argue: Plenty.

    First off, in many of their other store visits the Italians found retailers eager to discuss products from Italy. Some wanted to discuss future business; others discussed trade possibilities. Nearly all asked for professional feedback.

    But worst of all, think of the message that came through to other shoppers of the store who heard the rude comment. To untrained eyes and ears, what they might have determined was that the store puts out samples grudgingly, while watching if shoppers are actually buying that product. Just as anyone within earshot of the Aldi cashier would have given the store credit for caring and kind associates; in the New Jersey store the exact opposite message would have come through.

    Culture, as Jennings says, is what happens when no one is watching. In truth, though, someone is always watching. And that’s why culture always matters.

    Michael Sansolo can be reached via email at .
    KC's View:
    Michael is a kinder, gentler person than I. If I’d been writing this column, I would have called out the offending retailer. (Want a hint? See the MNB archives, and check out our edition from March 27, 2009. Apparently the enthusiasm of the opening days has turned into something less attractive in a matter of just eight months.)

    Published on: December 8, 2009

    The Indianapolis Business Journal reports that Marsh Supermarkets may be for sale.

    The chain, which was bought by Sun Capital Partners three years ago for $88 million and the assumption of more than $200 million in debt, reportedly is “lean and profitable” after a restructuring effort that cut $70 million in costs and sold off $80 million in real estate.

    The Journal suggests that rather than being sold as a unit, the chain is likely to be broken up and sold piecemeal.
    KC's View:
    The simple fact is that almost everything is for sale at the right price. But it is getting the right price that is the trick, especially these days.

    Perhaps Sun needs the money. But you wouldn’t think that this would be the perfect moment to sell off a supermarket chain, whether as a lump or in pieces. (Just ask Ukrops.)

    Could Marsh get sold? Sure. But my sources tell me that it is unlikely to happen anytime soon.

    Published on: December 8, 2009

    New research from The Nielsen Company looks at how people are shopping for food at a time when more folks than ever are eating at home and even (gasp!) cooking. The findings indicate that people are more positive about the grocery shopping experience than conventional wisdom would suggest.

    Among the results:

    • “Only nine percent of the primary shoppers in U.S. households dislike or hate shopping; 38 percent ‘get in and get out’.”

    • “More than half (53 percent) of U.S. consumers tell Nielsen they really enjoy or like grocery shopping. Eighteen percent of the consumers in this category regularly browse the entire store when shopping.”

    • “Approximately 30 percent of grocery items are purchased on deal, with deal rates up nearly 11 percent for high-income households, nearly 10 percent for middle-income households and 7 percent for low-income households.”

    • “Thirty-eight percent of consumers report that grocery shopping is a chore, but not a difficult one. These consumers know which parts of the store have the items they want.”

    • “Planning is key, with a large percentage of U.S. households using shopping lists (58 percent), store circulars (47 percent) or coupons (37 percent) and comparing prices (50 percent) on most grocery store trips.”

    “Only nine percent of consumers purchase from end-aisle displays on most grocery trips, and three-quarters of consumers never ask for assistance in the meat or produce department, requiring retailers to get their product assortment right.”
    KC's View:
    I’ll echo what Todd Hale, Nielsen’s senior vice president of Consumer & Shopper Insights, says on this. Now is the moment for US supermarket retailers to get aggressive and ambitious in terms of their marketing and merchandising efforts. They have to make their stores better than ever, they have to know and treat their shoppers better than ever, and they have to continue to earn share of stomach every day.

    Time to play hardball. Everybody who sells food is the enemy.

    Published on: December 8, 2009

    Fascinating piece in the New York Times about the various reasons that CPG companies give for half-filled boxes and bags, which serves as a response to a Consumer Reports piece about “products that filled as little as half their packages, a practice that, even given accurately listed weights, strikes some as a deceptive marketing ploy.”

    Among the responses to questions posed by the Times:

    “Pasta Roni, a Quaker Foods brand, says that its Garlic & Olive Oil Vermicelli occupies well under half its box because of ‘size variances’: the company uses the same size box for all pastas, but vermicelli is more compact than, say, rigatoni.

    “Uncle Ben’s, a Mars brand, said of its Fast & Natural Whole Grain Instant Brown Rice that the half-filled bag within its box ‘may appear larger than required,’ but is necessary to get a ‘quality seal’.”

    “As for Mrs. Paul’s, its parent company, Pinnacle Foods, stated that its packaging ensures ‘our fish fillets remain separate from each other to retain their shape, texture and flavorful coating’.”

    Consumer Reports had previously reported that “Frito-Lay’s that Lay’s Classic potato chips bags are only half filled to prevent breakage, and Post Foods’...Shredded Wheat cereal is about two-thirds filled because overfilled bags can be difficult to seal — not to mention cereal’s settling in shipment.”
    KC's View:
    The real issue here is that everything you do - whether you are a retailer or a manufacturer - is open for examination...whether in the mainstream media or in the blogosphere. Smart companies will address these issues in the FAQ sections of their websites, because it is always smarter to be ahead of the wave than behind it. Or under it.

    Published on: December 8, 2009

    The Tampa Tribune reports that Delhaize-owned Sweetbay Supermarkets has opened a new store there that is “a virtual showcase of eco-friendly energy-saving projects not usually seen in grocery stores. There are motion sensors that turn on lights when customers walk nearby. And rather than open-air shelves, huge areas of the store have refrigerators with glass doors ... There are hyperefficient air conditioners, on-demand water heaters, restrooms that use reclaimed water for flushing and even preferred parking close to the door for hybrid cars.”

    As a result, the Tribune writes, “Publix officials are thinking along similar lines to save energy, and a slew of projects will start appearing in their stores soon, if not already.”
    KC's View:
    All of these companies have learned the lesson that these kinds of projects are both good for the environment and good for the bottom line. The Tribune notes that “the changes will save the company money. An average Sweetbay supermarket can rack up an electric bill of $26,000 a month, officials say, using as much power as about 50 average homes. New technology in the Tarpon Springs store will cut that bill by 20 percent to 30 percent and reduce water use by 40 percent.”

    Green is good.

    (Maybe that’s the line that Gordon Gekko will use in the new sequel to “Wall Street” scheduled to be released in 2010.)

    Published on: December 8, 2009

    In western New York, the Post-Standard reports that bankrupt Penn Traffic is saying that “it has a bidder who has set a guaranteed minimum price on the company’s assets at $36.5 million. It did not name the bidder, but said Penn Traffic and the bidder have been in “extensive negotiations” over the deal. That bid is also subject to court approval and other bidders could step in at a court auction of the company later in the month. The filings also stated the bidder could be an insider.”
    KC's View:

    Published on: December 8, 2009

    • The Wall Street Journal reports that Nestle plans to use fair trade chocolate - from farmers guaranteed a minimum price as well as additional support for social and environmental initiatives - for all of the KitKat bars sold in the UK.

    According to the story, “The announcement is the latest move by Nestle to burnish its credentials as a socially responsible company. Nestlé still battles the legacy of the 1970s-era scandal around its practice of selling baby formula to mothers in the developing world. The scandal's negative taint remains particularly strong with British consumers.”

    Reuters reports that Cadbury has promised to formally respond to the $16 billion takeover proposal by Kraft Foods on December 14.

    • It appears that Green Mountain Coffee Roasters has won the bidding war for Diedrich Coffee, for which it offered $290 million, besting a bid made by Peet’s Coffee & Tea.
    KC's View:

    Published on: December 8, 2009

    • The California Grocers Association announced that George Frahm, executive vice president of Retail Operations & Administration for Stater Bros. Markets, was elected California Grocers Association’s 2009-2010 Chairman of the Board of Directors at its Annual Meeting on Dec. 3, 2009.
    KC's View:

    Published on: December 8, 2009

    • Ingles Markets reports that its 2009 annual sales were $3.25 billion, up 4.3 percent, on same-store sales that were up 7.9 percent. Annual gross profit increased $36.7 million, or 5.2%, to $743.1 million, compared with $706.3 million for the year earlier.

    Ingles’ Q4 net sales totaled $830.1 million, compared with $842.8 million for the comparable quarter in fiscal 2008. Gross profit for the fourth quarter totaled $184.8 million, an increase of $4.4 million compared with the fourth quarter of fiscal 2008.

    • Tesco PLC said that its total third quarter sales were up 7.7 percent, and UK sales up 2.8 percent.

    • BJ’s Wholesale Club reports that its November sales were up 6.4 percent to $833.6 million from $783.2 million reported in the same month last year; same-store sales were up one percent.
    • PriceSmart, which operates membership club stores in the Caribbean and Latin America, said that its November net sales increased 2.9 percent to $108.7 million from $105.6 million in November a year earlier. Same-store sales were up 0.8 percent.
    KC's View:

    Published on: December 8, 2009

    Another comment on the initiative taken by the Aldi cashier, as elaborated upon by Michael Sansolo in his column today.

    MNB user J. Schindler wrote:

    I also wondered if Aldi actually empowered their cashiers to that extent.  But if the cashier did it without authority then it was not really "easy to be generous" as he/she likely was risking his/her job.

    This reminded me of my wife's experience over 30 years ago at Wendy's with three small children in tow.  After ordering she realized she had left her purse at home.   She said she could bring back the money in a little while but the supervisor on duty gave her the food and said not to worry about it.  A day later I did return to pay but he refused to accept my money.   That gesture did more for my perception of Wendy's than a gazillion dollars worth of TV advertising.


    Interesting email from MNB user Gary Breissinger:

    When I read Craig Herkert’s comments about consumer value perception and the possibility that retailers (and indirectly manufacturers) are training  consumers to only buy on deal, I was struck by strong feeling of déjà vu. It seems like only yesterday that Durk Jager and I were preaching this same message about the importance of “everyday value” --and building consumer trust and loyalty to brands and stores--in support of P&G’s “ValuePricing” initiative in the very early 90‘s.

    That initiative had a transformational impact on P&G’s business for over a decade. However, when it comes to promotion spending, we are dealing with a cyclical phenomenon that requires continuous attention and a truly long term focus on the business that few manufacturers or retailers can sustain. Maybe it is time to re-drain the promotion swamp, re-establish the integrity of list prices,  reduce the excessive level of hi-lo promotion and make the relationship between everyday shelf price and merchandising prices more credible to consumers?

    Self-inflicted wounds are the most damaging---and manufacturers and retailers once again seem intent on  distorting the true value proposition of their respective brands.

    All excellent points. Though it always seems like the swamp is bottomless, and that draining it is an exercise in futility because someone always has a stake in keeping it deep and murky.

    BTW...I had another thought about yesterday’s Herkert interview in the Wall Street Journal. I wonder what Supervalu’s independent retailer customers think when they read about his plans for the company, which seem primarily retail-focused.

    Yesterday, I made a little joke.

    We had a story about how Unilever 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."

    And I wrote, with tongue firmly in cheek: 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.

    One MNB user wrote:

    We teach ServeSafe Food Manager training and we are busting a gut over here after reading your “value added” comment about the Slim Fast recall.  Thanks for the Monday a.m. laugh Kevin!

    Another MNB user wrote:

    You just had to say it didn’t you? I can’t stop laughing but I think others may view it differently.

    And, from another MNB user:

    You’ll take some heat for that, but I laughed out loud…

    Our wives would probably commiserate over the fact that we both never pass up an opportunity to go for the cheap laugh.

    Keep it up!

    And another:

    Boy are you going to get mail on that one, although I can see the “tongue-in-cheek”, others will probably not find it so funny. Hang tight, this too will pass, especially if you drink a can of Slim-Fast.

    Still another MNB user wrote:

    I’m sure you’ll hear from the people with no sense of humor, but let it roll off you.  That was funny!

    To be fair, there was one - but just one - email that criticized me:

    I’ve been a faithful reader (and occasional contributor).

    Your comment on “Not to make light of food safety issues” is completely off the mark.

    Your supposed sensitivity disregards the suffering caused by the consumption of these products that may cause diarrhea and vomiting.

    Your comments may also cause suffering to those who may be using those products in an attempt to deal with obesity or other issues.

    I hope you will make an apology to the entire MNB community and carefully consider the personal impact your remarks in future.

    The thing is, MNB is what it is. Serious levity. Sometimes (though not often) I’m going to make jokes that everybody is going to find funny, and more often I’m going to make jokes that are going to offend some folks. But I’m always going to make jokes, and I’m almost always going to go for the cheap laugh.

    Because, as a smarter man than me once wrote, if we didn’t laugh, we’d all go insane.
    KC's View:

    Published on: December 8, 2009

    In Monday Night Football action, the Green Bay Packers defeated the Baltimore Ravens 27-14.
    KC's View: