retail news in context, analysis with attitude

Published on: January 6, 2010

The Los Angeles Times reports on a new poll released by The Conference Board saying that only 45 percent of those people surveyed are happy in their jobs - the lowest level in more than two decades. Twenty-two years ago , the Times notes, more than 60 percent of Americans said they were happy in their jobs.

According to the Times story, “Workers across all age and income brackets are increasingly dissatisfied with everything from the nature of their positions to the quality of their bosses. And relatively few derive any intangible or psychic benefits from their work. In fact, more than 1 in 5 people don’t expect to be in the same position a year from now.

“And it’s not all attributable to the recession and people being weighed down with more duties after layoffs of co-workers. Satisfaction numbers have been declining steadily through both booms and busts for much of the last two decades.”

Published on: January 6, 2010

USA Today this morning reports on a trend that has become steadily more apparent on the nation’s television screens - that some fast food chains have decided that diet and nutrition is their “sweet spot,” and that they will unveil “new products and ad campaigns in an attempt to lure calorie-conscious consumers during the month when the $170 billion fast-food industry typically sees sales slide.”

Among the companies engaged in this effort: Taco Bell, with its “Diet Drive-Thru Menu”; Starbucks, with new hot panini sandwiches and “skinny lattes”; Dunkin Donuts, with egg sandwiches made from egg whites-only; and Subway, which continues to mine a segment that has propelled its business over the past few years.

The reason: “Consumers feel fat in January,” USA Today writes. “Some 61% would like to lose 20 pounds, says a survey from NPD Group. And 64% of Americans say they are taking steps to improve the ‘healthiness’ of their diets, according to the 2009 Food and Health Survey from the International Food Information Council.”

Published on: January 6, 2010

The Minneapolis / St. Paul Business Journal reports that Target is greeting the new year with a new promotion “featuring bulk-packaged and other low-priced merchandise inside approximately 1,000 of its 1,740 stores.

“The Great Save, modeled after warehouse clubs like Costco and Sam’s Club, will include products such as paper towels, granola bars, t-shirts and bath towels. A 35-pack of Market Pantry water, for example, will cost $3.59, representing a savings of roughly 40 percent.”

According to the story, “The move is the latest by Target to promote household staples - rather than the trendy clothing and housewares that it became known for over the past decade - to drive sales. The cheap-chic formula worked wonders before the downturn hit, but as money became tighter, customers shifted spending away from discretionary purchases such as clothing in favor of food and essentials. That trend plays more to the traditional strengths of Target rival, Bentonville, Ark.-based Wal-Mart Stores Inc.”

Published on: January 6, 2010

Radio Iowa reports that supermarket chain Hy-Vee and convenience store chain Casey’s are both working with the US Census, providing outposts where people can get information about how to fill out their 2010 Census forms. At Casey’s the information will be provided in unmanned boxes, while at Hy-Vee, the story says, “Part-time Census workers will staff ‘Quality Assistance Centers’.”

The story says that “Iowans will start getting Census questionnaires in the mail in mid-March. Iowa and Minnesota tied in 2000 for the highest return rate, with about 67 percent of Iowans who received a Census form in 2000 returning it in the mail ... The funding for about 100 federal programs is distributed, based on a population formula.  According to a recent Census estimate, Iowa now has more than three million residents, but the state is expected to lose a congressional seat as other states have had far greater population gains.”

Published on: January 6, 2010

The Chicago Tribune reports that “the battle for the shrinking American budget is moving online this year with a vengeance ... Frugal shoppers are turning to the Internet in droves to compare prices, hunt for bargains, download coupons and seek advice from fellow shoppers. Retailers, weary from years of building sprees, are diverting capital away from storefronts and to Web sites, investing in the technology to make online shopping easier, faster and cheaper.”

Here are two interesting notes from the story:

“Credit Suisse Securities LLC, the New York investment firm, issued a report Tuesday predicting that e-commerce sales will rise nearly 10 percent in 2010 to $144 billion after ending 2009 with an estimated 1.1 percent gain, the worst year on record.”

“Online data firm Forrester Research said the Web influenced $937 billion in U.S. store sales in 2009, a figure projected to reach $1.3 trillion by 2013, or about one-third of total retail sales.”

Published on: January 6, 2010

The Wall Street Journal reports that Warren Buffett’s Berkshire Hathaway holding company has come out against Kraft’s plan to issue new shares in the company to generate more cash to its bid to acquire Cadbury PLC.

"To state the matter simply, a shareholder voting 'yes' today is authorizing a huge transaction without knowing its cost or the means of payment," Berkshire Hathaway said in a statement.

Berkshire Hathaway is Kraft’s largest shareholder, with 9.4 percent of the company.

However, the Journal writes, “Buffett's action could end up working in Kraft's favor. His resistance, while a public slight to Kraft Chief Executive Irene Rosenfeld, may have in fact furthered her cause, giving her cover for not raising the bid and tamping down expectations among Cadbury shareholders.

Meanwhile, Reuters reports that Kraft is saying that at this point, shareholders representing just 1.52 percent of Cadbury stock have agreed to accept its $16.8 billion acquisition bid for the company, and experts are saying that it may have to raise its offer in order to be successful in its pursuit of the British chocolate manufacturer.

Published on: January 6, 2010

The Grand Rapids Press reports that Michigan-based Spartan Stores is responding to current economic conditions by “consolidating its distribution activities in the Grand Rapids area, resulting in the planned closure of a dry grocery warehouse in Plymouth by the end of March and the transfer of 138 union jobs ... The grocery retailer and wholesaler also eliminated about 25 administrative support staff positions in Byron Township this week, a company spokeswoman said.”

The moves are expected to save the company between two and three million dollars a year.

Published on: January 6, 2010

Tesco’s US division, Fresh & Easy Neighborhood Markets, announced yesterday that it is introducing Dutch Republic 1581(TM) Beer, a traditional Dutch pilsner-style beer from Holland, that it will sell exclusively in its stores.

According to the announcement, “Dutch Republic 1581 Beer originates from an eco-friendly brewery in Holland that invests in innovative technology to reduce its energy use and impact on natural resources. The year 1581 commemorates the year in which the Dutch Republic was founded; centuries later, Dutch Republic 1581 Beer brings a taste of Holland to discerning drinkers everywhere.”

Published on: January 6, 2010

In a challenging economy where everybody is looking for an angle and an opportunity, there appears to be one in Denver...

The Huffington Post reports that “Denver now appears to have more marijuana dispensaries than liquor stores, Starbucks coffee shops or public schools, according to city and corporate records. A push by City Council members to regulate the medical marijuana industry and restrict where dispensaries can locate appears to have prompted a surge in sales-tax license applications, city officials say.

“As of last week, Denver had issued more than 300 sales-tax licenses for dispensaries. That number slightly exceeds the number of Starbucks coffee shops in Denver and surrounding areas, calculated within a 50-mile radius. It is roughly twice the number of the city's public schools. It exceeds the number of retail liquor stores in Denver by about a third.”

Published on: January 6, 2010

• There are numerous press reports saying that the extended and unusually cold weather in Florida this winter isn’t just messing up people’s vacation plans and giving Mickey Mouse frostbite. It also is putting at risk millions of dollars worth of vegetable and citrus crops. Farmers reportedly are working overtime to salvage what they can, and Florida Gov. Charlie Crist has signed an executive order that will allow state agencies to assist the farmers in their efforts.

Published on: January 6, 2010

Randy Johnson, known as the “Big Unit,” announced his retirement from Major League Baseball yesterday.

The six-foot-ten-inch left handed pitcher - who played for the Montreal Expos, the Seattle Mariners, the Houston Astros, the Arizona Diamondbacks, the New York Yankees and San Francisco Giants over a career during which he won the Cy Young Award five times, second only to Roger Clemens - retires with a 303-166 career record and 4,875 career strikeouts, which puts him second in that category only to Nolan Ryan.

Published on: January 6, 2010

Responding to yesterday’s MNB notes about a New York Times story about the costs of credit and debit cards at retail, MNB user Ron Lunde wrote:

Cash ... what's the real cost of handling cash at retail? Very hard to find any studies on this subject. Government has many studies on costs of checks and cards, nothing apparently on the handling cost of cash. FMI did studies several years back, 1994, 1998 and 2000 ... but would guess those numbers are seriously dated.

A couple of  well respected academic types did some rather extensive research a couple of years ago and published the following: The average cash transaction is approximately $11.52. They estimated cash costs around 0.27 per transaction to handle, including tender time, deposit preparation, bank charges and other direct costs. If you scaled the $11.52 to $100.00, the cost is approx. $2.35. Credit costs at the time were around $2.56, signature debit around $2.26 and PIN debit around $1.39 ... on the $100.00 scale. Based on the tier system, large volume accounts appear to get lower costs than those above.... so might be actually lower than cash for all types of cards. (The study for cards included the same cost matrix as cash.) The study showed that the three types of card transactions averaged about $40.00 per transaction, compared to $11.52 for cash.

Consider that several studies show that approx. 4% of customers = 30% or revenue and spend on average $90 to $190 per week. If plastic were banned, that would shift the cash carrying burden to a retailer's best big basket and potentially most profitable customers. Since most consumers don't like to carry a wallet full of cash for obvious reasons (tried to pass a $100.00 bill lately?) and essentially have stopped writing checks for retail purchases, how will retailers accommodate the 4% of their customers that account for 30% of their business?

Not sure anyone is arguing for an all-cash society. The debate is really about whether we should be getting ripped off by fat cat bankers.

One follow up on yesterday’s story, by the way.

I suggested in my commentary that if retailers are successful in getting the card companies to lower their costs and be more transparent, they have to respond by showing that the result to some extent is lower prices. That’s been the argument to consumers - that the costs result in higher prices.

Retailers have to deliver on the implied promise.

It is a safe bet that at least two retailers will do precisely this: Walmart and Costco.

So if other retailers don’t deliver on the implied promise, it also is a safe bet that these two retailers will put them at a competitive disadvantage because of it.




MNB user jessica Duffy had a response to the story about how much more McDonald’s beef is tested than beef sold in supermarkets and cooked at home:

I have never let my kids eat at McDonald’s, but maybe I might lighten up on that one (oh, except for the whole CAFO thing). I also can’t bring myself to buy ground beef except on the rare occasions we can find grass-fed, because I personally have lost all faith in the meat industry in this country. My husband eats it out sometimes, but it certainly isn’t part of our usual diet anymore. I can’t think of any reason to trust this product.

Why do we always hear about E.coli contamination weeks after people have already been getting sick? Why does a person have to get sick before this stuff is tested? Wouldn’t it be less expensive to test the meat before it leaves the plant and have to discard it, than to have to deal with the ramifications and law suits associated with a major recall? I am so tired of recalls.

Y’think this reflects a growing and broadening concern among US consumers?

I do. And it is a long-term problem for the industry if it doesn’t get its act together.




Responding to yesterday’s Michael Sansolo column about the value of a great checkout person, MNB user Geoff Harper wrote:

Absolutely super article, and your best to date on MNB.  Mrs. Sansolo’s viewpoint is right on. My local supermarket (and a very good one) does not offer self checkout; the cashiers are the only non-service employees who recognize the frequent shopper and make brief small talk.  Part of looking forward to going to that store.

We also got a number of emails asking which store Michael and his wife were speaking of so highly.

My apologies. It wasn’t there because of an editing error.

It was a Giant store in Maryland.