retail news in context, analysis with attitude

Published on: February 23, 2010

by Michael Sansolo

Harry Truman was wrong. Apparently if you can’t stand the heat, you really do get out of the kitchen…even if your kitchen is paradise.

Last week Kevin ran the following item on MorningNewsBeat:

El Bulli, the 60-seat restaurant in Spain that is often said to be the world’s best and that is only open for six months every year with reservations virtually impossible to get, will close as a commercial operation in 2011. El Bulli’s chef, Ferran Adria, announced that El Bulli will be transformed into a non-profit foundation.According to Adria, the pressures of innovation and living up to El Bulli’s reputation had become onerous.

Now I’ve never been to El Bulli and unlike Kevin, this place isn’t on my bucket list, which is no surprise to anyone who has ever eaten with me. But from a business perspective, I find this one of the worst announcements ever.

Re-read why the chef is giving up: the pressure of innovation and living up to El Bulli’s reputation had become onerous. Essentially it got to be too hard to be great anymore. This would be the equivalent of the Yankees saying the history of winning all those championships had become too much, so the team was switching over to curling. (As a Mets’ fan, I hope the Yankees consider this.)

Now, to be fair, Chef Adria is no quitter. While his wonderful reputation can be a burden, he does seem to accept the challenge and in interviews about his plan he talks about how this change - the restaurant is being converted to a non-profit foundation focused on food innovation - will allow him to achieve even greater heights. (Of course, what I don’t get is that El Bulli was actually losing money every year, in fact a considerable sum on a per customer basis. Sure the food tastes great, but if you lose money on every transaction you aren’t exactly a paragon of business.)

But let’s move beyond that. Being great is never easy. It requires discipline, talent, luck and more. Success, excellence and acclaim are all wonderful, but they all come with the pressure of fulfilling that reputation every day. In short, it’s hard to get to the top and harder still to stay there.

And that is exactly where we all want to be.

It’s the reason I love Shaun White, the US’s gold medal winning snow boarder who has been famously trying to ditch the nickname “the flying tomato.” White delivered a lesson on living up to your reputation at the Olympics last week. His performances in the half-pipe were so exceptional that he was assured the gold medal even before taking his final run down the mountain. Asked how he wanted to handle what was essentially a victory lap, White joked that he’d ski straight down the middle and do nothing.

Only, that’s not what a champion does. So with the gold medal already won, White uncorked an amazing array of tricks that was nothing short of breath-taking and probably struck awe into his already beaten foes. That’s living up to a reputation and sending a message to the future.

Every day in every business we have these choices to make, especially in the pursuit of greatness. So in many ways we want to follow the path of El Bulli and understand that there are times to step back, examine the future and prepare for even greater feats. There are times we need to honor our reputation and one breath later set out to make it a memory.

As the catcher-philosopher Crash Davis says in Bull Durham when his protégé asks to enjoy a moment of success: “The moment’s over.” Move on.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: February 23, 2010

The Washington Business Journal reports that both The Fresh Market, based in North Carolina, and New Jersey-based Wakefern Food Corp. are looking to find opportunities to set up shop in the nation’s capital and/or the surrounding area.

According to the story, “Wakefern is concentrating its local expansion on Maryland and is seeking locations both for the 65,000-square-foot ShopRite stores and the 35,000- to 40,000 square-foot PriceRite stores.” The more upscale Fresh Market, on the other hand, which already has one location in Baltimore and will open another in Annapolis branch next month, “hopes to add 10 new locations to its portfolio nationally this year, and 15 the following year, with some falling in the D.C. area. The chain is seeking 20,000-square-foot sites.”

Published on: February 23, 2010

There is a lovely little story in the Sacramento Bee about an independent store called Compton’s Market in the eastern section of that city. According to the story, the store - owned by the Compton family since Eisenhower was in office - has had a reputation for both service and quality, using a tangible connection with the neighborhood as way of staying relevant even against bigger and more aggressive competition. However, faced with a younger generation that did not want to be in the grocery business, the brothers who ran the store - Mike and Dan Compton - decided to sell to Pam and Sunil Hans, a couple from nearby Marysville.

And while the Hans plan to invest the store to keep it up to date, they also are planning to do everything possible to create a sense of continuity and comfort for shoppers. It is the kind of store where people walk from their homes to do their shopping, or feel comfortable sending their kids on foot or on bikes to pick up this or that. That’s a rare legacy these days, and one that the new owners know they must not squander.

And here’s the crazy part. Or maybe it’s not so crazy. Mike Compton, 58, who wanted to begin a second career, hasn’t quite done so. Many days, you can find him in the store, dusting the shelves and interacting with shoppers. He’s not sure what he’s going to do yet...and at some level, the store is still his home.

Published on: February 23, 2010

The Washington Post reports that the recession has chalked up one more victim - breakfast sales at many of the nation’s fast food joints.

“Breakfast sales had grown at a ravenous pace during the boom years as busy workers scarfed down sausage biscuits on the way to the office, fueling a $57 billion business and accounting for as much as a quarter of sales at some fast-food chains,” the Post writes. “Chains opened earlier and expanded their morning menus to accommodate the traffic as lunch and dinner sales flatlined.

“But as the jobless rate hit 26-year highs fewer people headed to work, and even those who did worried about their spending. So they poured bowls of cereal at home or simply slept in, putting breakfast on the back burner.”

Published on: February 23, 2010

• Walmart has reached a deal to acquire Vudu, which the New York Times describes as “three-year-old Silicon Valley startup whose online movie service is built into an increasing number of high-definition televisions and Blu-ray players, according to two people briefed on the deal.” Terms of the deal were not disclosed.

While Walmart is the largest seller of DVDs in the country, “it has so far lacked a way to deliver movies digitally to people’s homes — a glaring weakness as consumers shift from renting and buying physical discs to streaming movies over the Internet.” The Times writes that “Wal-Mart’s move is likely to give a lift to sales of Internet-ready televisions and disc players, which generally cost a few hundred dollars more than devices without such connections. These products allow people to watch movies and shows over the Internet, bypassing their traditional cable or satellite service. The deal could also allow Wal-Mart to one day sell a variety of other merchandise through people’s televisions via the Vudu service.”

Published on: February 23, 2010

• The Atlanta Journal-Constitution reports that José Octavio Reyes, who runs Latin America for the Coca-Cola Co., “sought to debunk what he called myths and misconceptions, including that carbonated soft drinks are close to peaking,” while giving a presentation to Wall Street analysts in Florida. According to the story, “Reyes contends that carbonated soft drinks are not close to tapping out. Per capita consumption in Brazil, for example, is not as heavy as in Mexico, giving Coca-Cola some elbow room. More consumers are joining the middle class, and 40 percent of the Latin American population is under age 21.”

• Bloomberg reports that Dan Heinrich, CFO at the Clorox Co., told the same group of financial analysts that the company “has considered several acquisition targets and is willing to spend as much as $500 million if the right asset were to become available. He said that the company would especially be interested “in bolt- on transactions in international markets, such as Latin America and Asia, especially laundry and household-care brands.”

• And, at the same analysts meeting, Energizer Holdings CEO Ward Klein introduced the company’s latest shaving system, the Schick Hydro, which, according to the Wall Street Journal “uses blade guards to control skin-bulging while shaving, thus reducing irritation ... A new hydrating ‘reservoir’ has aloe-infused lubrication, and once it is depleted, users will more clearly be reminded to replace the cartridge, he said. The blade also features a flip-top trimmer to more easily groom facial hair.” The new system is due out in April.

The announcement came a week after Procter & Gamble announced its new Gillette Fusion proGlide, which is scheduled to come out in June.

• The Atlanta Business Chronicle reports that employees of the Kroger Co. in Atlanta and Savannah, Georgia, have ratified a new contract, though details of the new contract were not divulged.

Published on: February 23, 2010

Research firm Millward Brown is out with a new consumer study concluding that Amazon.com is the the most trusted brand in the US, based on “trust” and the willingness of consumers to recommend it to others. Number two was FedEx.

Ironically, the most trusted brand in both Canada and Japan is a company that probably would not make the list if the study were done today - Toyota.

Published on: February 23, 2010

We had a story the other day about how the Scripps Networks, owner of the hugely successful Food Network, plans to launch a new Cooking Channel on Memorial Day 2010. The company already has announced a number of series starring Food Network veterans such as Emeril Lagasse, Bobby Flay and Rachael Ray.

I thought this sounds like a great idea.

One MNB user wrote:

Spot on!! The food network not only provides households with wonderful ideas it also acts a teaching tool for those of us in the food retail business. I would be lost without this channel in my home. What better way to learn about new techniques, or kitchen gadget, or combination of foods and or spices. This channel’s only competition in my home is HGTV ... after all my wife has some control.

MNB user Patrick Kline wrote:

As a supplier to many successful retailing groups in the Minneapolis./St. Paul market place, I find it interesting that the proliferation of food network programming-and better than ever sales of high end cooking equipment- does not seem to compute to increased basket counts. Maybe I should not be that surprised, I watch a lot of NFL football but rarely, ok never, play tackle football myself.




Yesterday, MNB noted a Reuters report that the Obama administration has promised to provide $400 million for a Healthy Food Financing Initiative, “which is modeled on a successful Pennsylvania program that in the last five years has led to more than 80 supermarkets being set up in ‘food deserts’ - areas that were previously underserved by sellers of healthy food.” Included in the support is $250 million in tax credits “to encourage food retailers to set up food stores in areas that would not otherwise be served by supermarkets.”

One MNB user was not enthusiastic:

When will the government realize they are the one's helping to compound the issues of food deserts. They can pour more good money on top of bad with tax incentives for retailers and few will take or succeed. The real opportunity for food deserts to be addressed is in the eating habits of its citizenry. Traditionally food deserts serve a lower income demographic with a high household penetration of food stamp use. Studies have shown time and again that food stamp monies have a disproportionate % of usage on foods with little to no nutritional values (junk food if you will). So, it's nice the government wants more "fresh food" offerings in food deserts but why doesn't the government limit the scope of what people using food stamps can buy - healthy, nutritious foods! Since it is government money the government should steer consumers to this. If people then start buying nutritious foods then there will be a market for them in those food deserts and guess ! what happens? Retailers will open up stores without government tax subsidies. They'll open up stores because it's the right business decision. This approach probably contains too much common sense, so it’ll never happen. However, one can dream!

It probably gets incredibly complicated to have such a rule - one can only imagine the lobbying money that would be spent by companies desperate to be on the approved list. But in theory, what you say makes a lot of sense.




MNB took note the other day of published reports saying that some 12 wine merchants and vintners have been convicted in a French court for passing off Merlot and Syrah grapes as Pinot Noir grapes between January 2006 and March 2008.

That was pretty much the extent of my story. Which struck one MNB user as insufficient:

You left out the funny parts of the French wine scam story!   (1)  The way they were convicted:  someone noticed sales of “pinot” grapes from a particular region were considerably higher than that region even produced (Oops!)  (2) a quote from one of the defendants: “Not a single American customer complained.”

How embarrassing!

This reminds me of when my old roommate would drink my relatively pricy wine and replace it with Two Buck Chuck because - as a humiliating blind taste test confirmed - I couldn’t taste the difference so who cares?

And another MNB user wrote:

C’mon!  I bet you are going to receive a few emails regarding this one.  It seems weekly you write about the importance for businesses to be transparent.  How the consumer should be able to know exactly what it is that they are eating, or drinking in this instance.  You seemed pretty quick to make a joke, but this is quite the contrast from your usual hard line stance on transparency.

Wait a minute. What I write was that I wanted heads of the convicted wine counterfeiters on pikes - you may have taken it as a joke, but my point was that was a serious, unforgivable infraction.

How much more hard line do you want me to be?




Lots of reaction to yesterday’s piece about a story in The Atlantic by food writer Corby Kummer in which he comes up with what to some will be a surprising conclusion - that in many cases Walmart’s fresh produce was as good or better than Whole Foods’, and certainly less expensive.

MNB user Pat Patterson wrote:

If history is an indicator, your article on Walmart's Heritage Agriculture program will give Walmart control over the pricing approach of many small farmers.  It may be great that these small scale operations will now have a large scale buyer seeking their product, but at what price?  History points to Walmart's consistently aggressive efforts to reduce price to an uncomfortable minimum, uncomfortable for the supplier that is.  Small scale farming is only marginally profitable without Walmart slamming their fist down on the negotiation table, what now?

I'm trying to reach back to a class I probably slept through during my college years to retrieve definitions for that horrible M word, monopoly.  Not being an economist I would ask those that are for a rigorous look at these terms.  In my own little way I will continue to swim upstream continuing to shop my area's local operators and small chains.

Another MNB user wrote:

Let’s put some balance back into this. First Wal-Mart is no Whole Foods. The reason why Wal-Mart started up the talk of buying product locally was for economics and nothing else. The found that buying what they could locally  saved them a lot in freight based on many of the DC and store locations. Plus it didn’t hurt that in even smaller towns it help to dry up the roadside stands. Trust me it hasn’t hurt the town farmers markets nor has it done anything to the feeling by the shoppers that the produce quality at best is average ... Be careful when you go here, just like all the attention they once gave to store of the community and organic, but of which you won’t seem much anymore if you walk their stores. As for Wal-Mart working with the First Lady that would be a good thing as she is working on something very important to all. Wal-Mart and the political machine it has working Washington DC will also see it this way as after all it doesn’t cost them anything.

MNB user Brian Baker wrote:

I would say the Corby Kummer must be shopping at an “outlier” Wal-Mart Store. I live in Kansas, and in my city I only have 3 choices.

1.       Wal-Mart
2.       Kroger
3.       Hy-Vee – only one recently added store

Thank the “Grocery Gods” for Hy-Vee. While the Kroger stores, (formerly Dillon’s) have improved slightly over the past year, I believe it was only because Hy-Vee came to town. Wal-Mart has ALWAYS been a distant 3rd from a perishable perspective. I travel to Chicago frequently and I am in regularly in a Whole Foods store and there is absolutely NO comparison to the quality of product that I see in the Whole Foods vs. Wal-mart in my home town.

While I would welcome a quality change in the produce department in Wal-Mart, and have not seen it yet, I would still be very skeptical at Wal-Mart’s motives. They have demonstrated they really do not care about anything but the bottom line. If this change is for real, I doubt they will sustain it any longer than required to convince the public they have changed. The old adage, “you can not change a leopard’s spots” comes to mind anytime I hear a report of Wal-Mart changing to an upgraded offering.

But MNB user Deon S. Winchester seemed considerably more upbeat:

This can be a win-win situation for all stakeholders. Walmart's efforts can serve to increase the size of the market by making organics more affordable to its mass-market. It can also attract the middle of the road organic consumer. “Synonymous” low prices that extend to organics are good for Walmart's bottom-line. Together with the increased competition with Whole Foods can lead to healthy organic options being more affordable to the food consumer.




I wrote yesterday about a fascinating piece in the Boston Globe over the weekend about a company called Harvest Power, which has pulled together $40 million in funding from venture capital firms in order to create a business that will turn leftover food from homes, restaurants and supermarkets into compost, electricity, natural gas, or steam for heating.

My comment: I’m always in awe of this sort of stuff. It is so far beyond my ability to understand ... and idea that people who recycle waste into energy and fuel is just fascinating. It will no doubt require us all to sort of change the way we think about things...but it certainly seems worthwhile.

The other good news - this is designed to be private enterprise, which should generate jobs, and avoid going on the public dole. So everybody should be happy.

MNB user Blake Steen responded:

I could not agree more with your assessment.  As a conservative this looks like a great thing and with the private sector involved “everyone should be happy.”




Last week, it was reported that Ukrop’s longtime policy of allowing nonprofits and charities to solicit outside its stores has been reversed by Ahold-owned Martin’s Food Markets, which is absorbing the 25 Ukrop’s units acquired by Ahold and its Giant of Carlisle division. The decision was said to be in line with a longtime Martin’s policy, but a major shift for Ukrop’s, which enabled the fundraising as part of its much vaunted commitment to the local community. Affected will be organizations like the Salvation Army and the Girl Scouts. I was critical of this decision, for which I myself was criticized last week. And then, was again by this MNB user:

I agree with your reader's comment that you seem to have something against the Ahold banners.  Keep in mind that community support goes well beyond the sidewalks.  I have relatives that live in the DC area and the amount of money Giant gives to the schools through their A+ programs is staggering.  I don't know if Martin's does the same, but if they do that will serve far more kids in the community than allowing girl scouts to sell cookies on the sidewalk will...

I certainly don’t mean to be unfair to Ahold. But...it is not just my perception that Ahold has squandered much of its community connection over the past few years through some missteps that seemed to be a reflection of misplaced priorities. And the Ukrop’s situation, in my humble opinion, seems to be much the same thing.

(Actually, who am I kidding? I’m not all that humble about my opinion.)




Regarding the apparent trend of state legislatures considering internet sales taxes, MNB user Geoff Harper wrote:

I’ve said it before, and I’ll say it again.  Internet retailers need to Compete (verb), rather than getting a free ride on sales tax.

And another MNB user wrote:

I do not enjoy paying taxes either. However, it escapes me as to why internet retailers should not be required to charge state sales taxes where they are levied.  Brick and Mortar pay sales tax.  The unintended consequence of free internet taxation could be that the sales increase on the internet and consequent sales tax revenue decrease could reduce revenue to a point where increases in payroll tax and property tax would have to be instituted.  Sales taxes are basically user taxes, if you do not wish to pay do not buy.   We do not pay sales tax here in Idaho on internet purchases, yet. However, in this recessionary time we are reducing funding for our schools (and everything else) but will not tax internet purchases, ( we even refused to raise by beer taxes $0.01 per can (beer tax had not been raised since the 80”s because our Republican Party run government does not want to raise any taxes.  I know that someone out there has reasons why the internet sales should not be taxed and I would like to hear that side of the story.




Finally, one MNB user wanted to respond to one of my movie reviews from last Friday:

I'm glad to hear you say that you didn't love The Hangover. I'm with you.  I saw it over the holidays and though it was funny at times, it was not a great movie by any stretch of the imagination (although Ed Helms from “The Office is a true comedic talent). Maybe I'm getting old too?  I went on IMDB to read critic reviews and was amazed by how many people loved it.  There were a certain number of reviewers that were unimpressed, which was reassuring to know that I am not completely out of touch.

I'll leave it for you to decide, but there may be a few business lesson here...the power of a great preview (Mike Tyson scene comes to mind) and also excellent word of mouth.  Maybe it comes across better in a crowded movie theater (audience experience factor=in-store shopping experience)? Maybe young people set the bar too low for a product (in this case a movie)? Maybe I am overanalyzing...
 
I saw Tropic Thunder the same week -- much smarter and funnier. A pleasant surprise.

Not a huge Tropic Thunder fan, either.

I’m not sure when it happened, but I seem to have crossed over to that age when I compare everything to the good old days. When it comes to film comedies, the bar is high - Monty Python’s Life of Brian, Young Frankenstein, His Girl Friday, Annie Hall, etc...

And regarding another review, an MNB user wrote:

Thank you for your recommendation to watch the Monty Python documentary. We just finished watching them Saturday night and got a good chuckle out of every episode. I've been singing "Always Look on the Bright Side of Life", "Sit On My Face,” and "The Lumberjack Song" for a few days now.

Then my work here is done. Until next time...

Published on: February 23, 2010

• The Campbell Soup Co. said yesterday that its second quarter profit rose 11 percent to $259 million, compared to $233 million during the same period a year ago. Q2 sales were up one percent to $2.15 billion.