retail news in context, analysis with attitude

This is why I love the MNB community. It is smart, savvy and picks me up when I miss stuff.

Case in point. Yesterday, we had a story about Walmart editing its selection in categories such as food bags and spices, and we referred to a Wall Street Journal story that said that the retailer would be focusing on top brands and private brands, and contained the following sentence:

”The key question is whether Americans will stick with generics if the economy improves.”

I got a phenomenal number of emails pointing out that anyone who would use the word “generics” as a synonym for private brands clearly is out of touch with the reality of the current marketplace....something with which I would agree. Profoundly.

Of course, it is not necessarily a surprise that newspapers would be out of touch with Main Street. To a great degree, journalists are trained to pay much more attention to Wall Street...

One MNB user made the following observation:

Retailers now have BRANDS - not "generics", a term that disappeared years ago. It is easy to find Retailer brands with clear positionings, careful thought given to package design, promotions that generate trial and loyalty... The brand management process that fueled the last fifty years of CPG growth is alive and well. Proof of its power is how smoothly it moved across the desk and fueled a whole new generation of retailer-based brand managers. Walmart isn't offering one brand of sandwich bag and a generic poor man's option; that would be insulting to their shoppers. They are offering two strong choices and they know it.

Another MNB user wrote, referring to an April Fool’s gag that I played in 2004 that eerily reflected the current reality:

I agree that every CPG out there should be very worried about this article today.  While your statement from 2004 was in jest, I experience the truth of one statement in particular every day:
"What none of these manufacturers seemed to comprehend," he added, "was that while everyone was worried about us putting a lot of smaller retailers out of business, they should have been figuring out how to keep us from putting manufacturers out of business."

I call on many very big CPG's who continually want to focus their marketing and promotion efforts on the top 5-10 retailers-especially Wal-Mart.  They want to do "bigger, better, fewer" promotions to support their business in just these 'top' chains.  What each of these companies forgets is that the basic blocking and tackling that builds your brand's business, should be done every day in ALL chains.  For some smaller chains, they stay relevant by offering more selection (be it local favorites or not) to some shoppers.  You can bet that the other 'top' chains are going to follow Wal-Mart's lead.  Brands that hold the second, third or fourth share of market should be doing whatever they can to build their businesses elsewhere.  Wal-Mart has already walked away from their brands.

And another MNB user chimed in:

As companies are forced to chose sides and carry less items, the whole total mix of suppliers and retailers will change. Some will win, while others will be thrown into a tail spin on profit and sales if they don’t know how to manage the change or have a plan for it. Let’s be honest, for those who have worked or managed a smaller format like the grocery stores of the 70’s, small stores were tough to run. For those of us who have club experience  we know all too well that limited sku’s many be nice inventory wise, but get the wrong items at the wrong time or in the wrong amount along with a down turn in the economy and watch out.

Be interesting for companies whose Marketing teams are spending big buck right now, how they plan to finance ongoing spending since marketing dollars are tied to cases ? Also the CEO of supplier who now must decided how large a percentage of their business do they want a retailer to have before the just hand them the keys… Also it seems the days of brand loyalty from both the retailer to supplier and retailer to the customer is fading fast. How will a CEO convince his board, shareholders, bankers to invest in his business for what a retailer wants since that business can change every time another suppliers drops his price a nickel ??

What is really happening here is that you’re seeing the death of EDLP and seeing the last of the players who never had a “ funding needle” in the arm just get hooked. Their now going to play the same games as all the rest in hopes of drying up all the marketing , advertising funds, demos, in store TV, etc that there is out there. In hopes that this will get the suppliers attention on their business and in their mines get them their fair share of the money that they feel that the suppliers have been keeping and or supplying the competition with.

The next shoe to drop will be to split a company up into two to three parts and play the supplier against each other, then after you feel you have the best “program” in the US, turn it over to a Global sourcing team and let them have a go at it.  Yes, Piñata buying is back… time will tell just when this retailer will be checking in to the Betty Ford Clinic for Buying….

In a story yesterday about personal service during last week’s DC snowstorm, I made a reference to a young woman in her twenties who recognized the value of small retailers that create a relationship with shoppers, and said, “hope springs eternal.”

Which led one MNB user to write:

I like to do some part time work at an on-line support forum that allows people to support each other in everything from MS or Fibromialgia, to PTSD, suicide, depression and addictions.   I often wonder about the teens & 20 somethings who feel life is so bad they're sure death is a better alternative.  So we chat for a while, and I offer my 60 years of advice which is usually met with at best, humor, but more often with "you're old, what do you know about kids today".

Then every once in a while, I run across a young person with such vision and fortitude, that I think, there's hope for this generation yet.    They're out there, we just need to find and nurture them.  Like me, who tends to lump all teenagers into the same "miserable excuse for a human" group, they also seem to think there are no coherent seniors left.  A view I'm finding more & more credible all the time.

I try though, to dispel this myth, and at the same time work on improving my own age-related prejudices. I truly believe, I receive as much help from these kids, as I impart, and for that I will be forever grateful.

Hope really does spring eternal.  I believe you are wise to recognize it, and even wiser, having been bold enough to print it.  We need ALL of the generations to "come together" more now than ever.

You never get “all” of any generation to come together and show that kind of moxie.

I had an uncle once who thought that being a night watchman was the best possible job because you could sleep through most of your workday. And he was part of a so-called more resolute and work-focused generation.

But I have to say that I spend a fair amount of time with young people. My kids, their friends, the students who I get to meet when I speak at colleges around the country, and the many young people who write to me here at MNB.

And I have a lot of faith in generations younger than mine. They are smart, informed and committed. They may get their information differently than I do, they may have different expectations from their work life and careers than I do. But they are terrific...and I’m challenged by them at almost every turn.

Hope does spring eternal.

Finally, I got this email about my commentary regarding commercials shown during the Super Bowl:

While I agree on your take regarding the commercials, the one showing the “green police” and Audi left me feeling different than you.  It reminded me that our big and growing government has decided what kind of light bulb we have to buy (compact fluorescent), has told us what kind of car to drive (hybrid, SUV’s are evil), is telling us what kind of energy to use (wind & solar),  what kind of healthcare we are going to have or at least trying to (government run “public option”), how much money people can make (limitations on CEO pay), and more.  I realize that good humor is based on reality.  The reality of the “green police” is too close to reality for me and I don’t find it funny.

Not only did I find it funny, but it made me want to buy an Audi. Not that I can afford one, but it made me want one.
KC's View: