retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: March 16, 2010

    by Michael Sansolo

    Food safety issues always concern me, but quite honestly it’s usually in an intellectual sense. I hear about the problem and think of the supply chain and sales implications. Kevin and I debate issues of transparency, responsibility and more.

    But the bottom line is I’m kind of like the famously emotionless Mr. Spock of Star Trek fame, strangely unaffected. And I’ll bet I’m not alone because usually the problem usually doesn’t impact me. I don’t own stores nor do I sell products. So unless I consume the product in question (and that has happened), I can easily cite statistics on why the problem really, really isn’t all that big. In short, the problem is business, not personal.

    This week there’s a difference, as the world of safety is suddenly feeling very personal.

    The issue is this: my sister drives a Toyota Prius. And suddenly the thought of her out on I-95 or running my young nephew to Little League practices gives me nightmares. I’m betting I’m not alone on this one.

    Now intellectually, I know the well-publicized cases of unintended acceleration of the Prius and the corresponding lack of braking are very, very, very rare. The problem Toyota has right now is that the company is in the crosshairs of consumer concern and media attention. Every fender bender involving a Toyota is cause for national panic and cable news reports. Already we are seeing questions raised about the legitimacy of some of the complaints of runaway cars.

    Intellectually it makes me feel better. But really, I still worry.

    Clearly, Toyota has a problem both in quality - which may be overstated - and in public relations - which cannot be understated. The auto company that a few months ago was synonymous with quality now sees that reputation shredded further with each passing day. It is stunning that Toyota’s future is probably murkier than any other car company out there and that’s not a small feat these days.

    I say this as someone who has owned three Toyotas, all of which have lived on and on in miles and years. I say it because I think of my sister and my nephew and I wish they could trade the car in yesterday, except it now has no value on the trade-in market.

    I’m betting I am not the only person out there with a Toyota or relatives driving a Toyota. I’m betting I’m not the only person whose intellectual understanding of safety is getting shaken by the string of Toyota reports. I’m betting I’m not the only person who is having their Mr. Spock side challenged by this incident.

    This is a good moment to consider issues of food safety within the context of the Toyota problem. The anxiety that so many of us are feeling about our cars is the same uncertainty and concern felt by many shoppers every time a report comes out about a new food safety concern. It gives us the opportunity to think about what lessons we can learn from how Toyota has handled its situation, and what we should be doing better in our industry.

    I’m betting we’d all talk about better communication, quicker action, more transparency and, of course, getting very pro-active to prevent problems in the first place. One has to believe there are Toyota executives and dealers who wish they could magically go back in time and do it all again. We shouldn’t let their lesson pass without learning something from it as business leaders and consumers.

    There’s an old joke about how when you fall down it’s funny; when I fall it’s a tragedy. In other words, everything matters most when it matters to me.

    Toyota is helping me see the safety problem a different way because it impacts my sister and her son. And maybe that’s something I needed to see all along.

    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 .
    KC's View:

    Published on: March 16, 2010

    Two stories this morning suggest that Walmart is looking at both food and money as engines of growth as it looks to generate more shopper traffic.

    MarketWatch reports that one grocery industry analyst is predicting that Walmart plans to get much more aggressive on pricing in the grocery aisles as a way of luring more shoppers into its stores.

    The story quotes Citigroup analyst Deborah Weinswig as saying that Wal-Mart is "lacing up the gloves as it prepares to step back into the ring and win the modern day price war in food retail.”

    Weinswig’s research note suggests that Safeway, Kroger and Supervalu have managed to level the playing field when it comes to price, and that Walmart no longer enjoys a distinctive price advantage in the consumer mindset.

    And, MarketWatch writes, “Grocery store investors will pay close attention to Wal-Mart's price cuts. If Wal-Mart does indeed get aggressive, grocery chains may be forced to enact more price cuts of their own. This could hurt their sales at established stores and eat into profit growth just when they were hoping the worst of the recession is over.”

    The Wall Street Journal reports that Walmart plans to expand by 50 percent the number of stores that offer financial services such as check cashing, money transfers and the sale of prepaid Visa cards.

    “The expansion would push the number of Wal-Marts with ‘Money Centers’ to 1,500, or a little less than one for every two Wal-Marts in the U.S., giving the nation's biggest retailer a financial presence that only a handful of banks have,” the writes. “Wal-Mart plans to open its 1,000th money center Tuesday.”

    In addition, the story says that Walmart is trying to figure out a way to take bank deposits at its Money Centers.

    Walmart has been stymied in its efforts to actually obtain a bank charter, as traditional banks have successfully lobbied legislators and regulators, arguing that the world’s biggest retailer should not be in the financial services business. Walmart does have a bank charter in Mexico and is seeking one in Canada.
    KC's View:
    Walmart always reminds me of what, in Annie Hall, Woody Allen said about a relationship:

    “It has to move forward or it dies.”

    Or what Matt Hooper (Richard Dreyfuss) said about sharks in Jaws:

    “All this machine does is swim and eat and make little sharks.”

    Either way, think about Walmart as a shark.

    Just when you thought it was safe to go back in the water...

    Published on: March 16, 2010

    The Jacksonville Daily Record has an interview with Winn-Dixie CEO Peter Lynch, in which he addresses some of the steps that the company has been taking to regain viability in its markets.

    To this point, Lynch has been focused on renovating and upgrading the company’s fleet of stores, and he said that expansion is definitely on his mind. “We will start building new stores in existing markets when we have a better market share,” he says. “We opened a brand new store four weeks ago in Covington, La., which is just west of Lake Pontchartrain. The opening far exceeded our expectations. (The store has an open-air produce market outside.) Opening week, about 30 percent of the produce we sold was sold outside the store. There is no sliding door. Instead, you walk through a 28-foot wide opening ... (In jacksonville) our real estate division is always looking for sites. As soon as we find the right site, we will open a new store. We would love to have a new store in our hometown.”

    Other excerpts:

    Re: company morale... “I would say morale is very good in our company. Think about it. Here is a company that could have been extinct. We saved it, we’re on track, we’re stable, we have cash and haven’t even gone into the line (of credit) since I’ve been here. So they have jobs and think about this environment people are in today, where it’s tough. They’re feeling good about the direction of the company. They like seeing the stores remodeled. I think morale is very good at Winn-Dixie today.”

    Re: Winning back customers... “They’re saying there’s been a lot of improvements in the store, particularly the ones that have been remodeled. But our challenge is always how do you get someone who’s been shopping at Publix or some other place the last 10 years because they got upset with something that happened at Winn-Dixie? And how do you get them back? That’s the tough part. That’s word of mouth, that’s by invitations to remodels and grand reopenings. You’ve got to win them back and you’ve got to win them back one at a time. That’s the hard part because they don’t just come back automatically ... We understood what the problems were. The stores were old, tired, dirty, didn’t have the products customers wanted and they weren’t fresh. We’ve taken that now and we have very fresh stores. We have better variety in the stores. We put better service in the stores. We’ve spent nearly $2 million in each of these stores to clean them up. We think we’re on track to getting stores back to where consumers feel very proud to shop there again. It’s the invitation ... it’s easy to turn them off, but it’s very hard to bring them back because people have choices. The good news is they are coming back, but it doesn’t happen overnight.”
    KC's View:
    I know there are a lot of people who are cynical about Winn-Dixie, but I’m impressed by Lynch and the people from the company who I have met seem enthused about its direction. And this new Louisiana store is supposed to be terrific...

    Published on: March 16, 2010

    Advertising Age has a very interesting story about how Budweiser employed a consulting organization called the Cambridge Group that spent four years and garnered millions of dollars in fees to create its “Drinkability” ad campaign - which, in essence, tanked, resulting in “Bud Light posting the first full-year sales decline in its history.”

    The situation “resonates beyond A-B, as agencies increasingly chafe under the growing influence of consultants,” Ad Age writes. “Marketers are under pressure to justify their budgets, and CMOs, skating on ever-thinner ice, are trying to bring a more scientific approach to a discipline traditionally heavily reliant on gut calls. The degree to which these consultants' recommendations and findings can translate directly into creative is becoming a familiar frustration for agencies.”

    Not surprisingly, the folks at Cambridge Group maintain that they had nothing to do with creative execution - implying that if “Drinkability” failed, it wasn’t because the research and recommendations weren’t wrong.

    The ad agencies concede that Cambridge Group wasn’t directing their efforts, but that the amount of money and time spent on consultant fees seemed to have an outsized impact on marketing thinking.

    “Cambridge's exhaustive findings led directly to dramatic shifts in how Budweiser and Bud Light were marketed,” Ad Age writes. “Each brand largely abandoned the emotional appeals that had helped them become the two largest beer brands in the U.S. for straightforward pitches about process and product attributes that coincided with worsening sales for both labels.”
    KC's View:
    In some ways, it sounds very similar to the situation last year when PepsiCo seemed to allow a marketing consultant to dictate a packaging change for its Tropicana brand that resulted in a near-disaster for the juice icon; sales plummeted until the company went back to the old packaging design that customers could actually recognize.

    It is easy to blame consultants. They present a big target. And there certainly are plenty of situations in which ad agencies have made bad recommendations that resulted in sales declines.

    The ultimate responsibility has to be laid at Budweiser’s door. Somebody there has to have a BS detector, someone has to say, “Wait a minute...are we getting away from our essential value proposition?”

    I cannot understand why, at some point, nobody asked the question that I asked pretty much every time I saw one of these commercials: “Isn’t ‘drinkability’ setting the bar fairly low? Isn’t this the bare minimum of what one would demand of a beer?”

    Apparently nobody had a dictionary.

    Published on: March 16, 2010

    The Atlanta Journal Constitution reports on how both Coca-Cola and PepsiCo are using social media to allow its customers to help shape the image of their brands - a radical notion in an industry where brand equity has always been tightly managed and protected.

    Examples:

    • “Coca-Cola’s Facebook page has added about 1.5 million fans this year, growing from 3.5 million in January to 5.18 million now. That makes it one of Facebook’s top fan pages. Less than two years after Facebook required a reluctant Coca-Cola to take ownership of the site from two fans who built it, the social networking site has become a fulcrum of Coca-Cola’s online marketing efforts.

    “Coca-Cola used its Facebook page to guide its charitable giving while building pre-game buzz about this year’s Super Bowl commercials. It promised to give $1 to the Boys & Girls Clubs of America — and a glimpse at the company’s ads — every time a Facebook user gave a friend a ‘virtual Coke.’ The offer found 126,000 takers.

    “Coca-Cola is also sending a team of three young people around the world to 206 countries and territories: everywhere Coca-Cola is sold. The ‘Expedition 206’ team, which was chosen by online voting in more than 150 countries, is tracing its progress on Facebook and hoping for new cadres of fans to pop up in each country it visits.

    “In China, the word’s most populous country, the program allows online fans to follow the journey and trade “Expedition 206 stamps.” So far, more than 46 million active users have traded more than 100 million digital stamps. Coca-Cola says it tries to harness material from fans, rather than flood the Web with its own content. About 70 percent of the material on the brand’s main Facebook page is from fans, with 30 percent from the company, such as questions about where fans enjoyed their last Coca-Cola.

    • “PepsiCo is touting its Pepsi Refresh Project as a large boost for its signature brand. The yearlong program encourages fans to submit ideas and vote online as to how Pepsi should distribute $20 million to charities, causes and businesses of their choosing. PepsiCo says it has some rules and guidelines, but only about where the money can go ... PepsiCo is tracing its progress, and touts the big numbers. RefreshEverything.com has generated more than a million unique visitors since the January launch. To date, ideas posted on the Refresh Project have received almost 3 million votes.

    “Pepsi has doubled its number of Facebook friends to more than 611,000 since the project went live two days before Christmas. The project generates nearly 1,000 ‘tweets’ daily on the micro-blogging site Twitter.com.”

    Meanwhile, “PepsiCo is pushing its ‘DEWmocracy 2’ campaign for Mountain Dew. The online program allows fans to design the next Mountain Dew product from flavor to package design to advertising campaign. That kind of power is typically reserved for brand managers and advertising agencies. PepsiCo said it is shifting control of product development to its most passionate brand loyalists, crafting a campaign that elevates a ‘do it yourself’ attitude.
    KC's View:
    The reality is that customers are using social media to shape perceptions about your brand anyway. So you might as well embrace it and be part of it. Sure, there are risks...but the bigger risk is to resist the inevitable pull of social media. You end up looking irrelevant.

    Published on: March 16, 2010

    The Lakeland Ledger reports that “Publix Super Markets Inc. has launched a diabetes management program that includes free access to a generic medication.” The program “gives free supplies of metformin, a generic form of the drug Glucophage, to Publix pharmacy customers with Type II diabetes.

    “Customers will also have their diabetes medications enrolled in an auto-refill program and can access health information online at www.publix.com/diabetes.”
    KC's View:

    Published on: March 16, 2010

    The Contra Costa Times ran an op-ed piece by Larree Renda, executive vice president at Safeway, in which she talked about the 20th anniversary of the Americans with Disabilities Act (ADA).

    Excerpts:

    • “Safeway is committed to raising awareness and encouraging other employers to tap this vast talent pool all too commonly known as the ‘disabled..’ As our nation regains its economic footing and we celebrate the anniversary of ADA, it is worth remembering that economic recovery should, at its core, include all segments of the population that along with a paycheck, gainful employment affords a priceless measure of self worth.

    “While our nation has made progress, data on employment tells us that our nation is falling short of the spirit and intent of the ADA. In fact, people with disabilities remain on the outskirts of the workplace. According to the U.S. Department of Labor, of the some 27 million civilian, non-institutionalized Americans 16 years or older with a disability, approximately 80 percent are not even present in the workforce.”

    • “In our view the key is two fold: first, employers must understand that physical or intellectual disability does not predict poor employability or productivity. In fact, our experience proves the opposite. We employ nearly 10,000 people with disabilities, and they are among our most loyal and productive employees, covering a broad range of jobs both in our retail and support operations. For instance, we have developed creative workplace solutions for visual and hearing-impaired clerks working in our retail stores.

    “Next, employers should understand they are not required to fly solo when employing people with disabilities. There are a host of national and regional organizations focused on training and placing people with disabilities in the workplace ... Many of these organizations provide on-site staffing to coach both the employee and employer on how to acclimate and accommodate people with disabilities. Employers can utilize third-party coaches who shadow employees during their early days on the job. The process has created benefits well beyond providing a job. Through our experience we have gained unique and unexpected insights into the real value of mentoring and training.”
    KC's View:
    Hard to be believe it is 20 years since the ADA first became law. Don’t know about you, but now I am shocked by any building that seems inaccessible to people with disabilities.

    Would anyone suggest that this is a case of government meddling that ought not have been passed? That this was legislative interference that was unnecessary?

    Because from where I sit, this seems like a law that has made the world a better, more compassionate place.

    Published on: March 16, 2010

    In Green Bay, WBAY-TV News reports that Roundy’s-owned Copp’s Food Market ran its usual coupon book in last Sunday’s newspapers, including a phone number that was said to offer information about pharmacy locations.

    Except that the number was wrong. Instead of having an “866” prefix, it had an “800” prefix.

    And the number as printed brought callers to an adult hot line that offered steamy conversation in exchange for their credit card numbers.
    KC's View:
    What’s really funny about the story is that a local alderman, contacted by constituents who called the number, says that he is concerned that the mistake could end up costing them money.

    You’d think that anyone who called the number looking for pharmacy info but instead heard a breathy voice asking for a credit card number would immediately hang up. You pull out your credit card, and you’re getting a different kind of medical assistance.

    Published on: March 16, 2010

    • The National Retail Federation (NRF) 010 Easter Consumer Intentions and Actions Survey, conducted by BIGresearch, predicts that holiday celebrants will spend slightly more this year with the average person expected to shell out $118.60, up from $116.59 last year. Total spending is expected to reach $13.03 billion.

    • Published reports say that the Food Marketing Institute (FMI) spent $880,000 during the fourth quarter of 2009 to lobby the federal government in budget issues, credit card fee reform, retail crime, and other issues.
    KC's View:

    Published on: March 16, 2010

    ...will return.
    KC's View:

    Published on: March 16, 2010

    Attend FMI 2010 Customer Connect - the premiere industry event showcasing emerging opportunities; delivering consumer insights through thought-provoking research and education; and, fostering industry collaboration and community.  Engage with retailers, wholesalers, suppliers, and service providers from around the globe. Learn new skills, exchange solutions and build new relationships.    
     
    Choose from six dynamic education paths:

    • Future Connect Leadership Development
    • Sustainability – Healthy Planet
    • Private Brands Innovation
    • Health and Wellness
    • Technology-Enabled Business Solutions
    • Consumer Trends – The Next Evolution of Shopper Behavior


    Plus...More than 400 exhibiting companies representing a diverse array of suppliers will showcase products, services and solutions.  Learn valuable new ways to enhance retail merchandising strategies and gain fresh perspective for store operations.

    FMI 2010
    Education: May 10 – 13, 2010
    Exhibit Floor: May 11 – 13, 2010
    Mandalay Bay Convention Center — Las Vegas, Nevada


    Register today for FMI 2010!

    For a detailed brochure, click here .

    To register, click here.
    KC's View: