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    Published on: March 29, 2010

    Albert Gonzalez, the 28-year-old college dropout and computer hacker who had pleaded guilty to stealing millions of credit and debit card numbers from Heartland Payment Systems, a credit and debit card payment processor, which gave it access to transactions at retail chains that included TJ Maxx and BJ’s Wholesale Club, as well as from Hannaford Bros. and 7-Eleven, has received a federal prison sentence of 20 years and a day, plus hit with a $25,000 fine.

    Bloomberg reports that “as part of his plea, Gonzalez agreed to forfeit more than $1.65 million in U.S. currency, a condominium in Miami, a blue 2006 BMW automobile, IBM and Toshiba laptop computers and related equipment, a Glock 27 handgun, a Tiffany diamond ring and three Rolex watches.”

    The writes that “when US Department of Justice attorneys first brought charges in the Heartland case in New Jersey last year, they called it the largest credit card theft case ever prosecuted in the United States. Heartland alone said it racked up $129 million in losses because of the breach.
    KC's View:
    There is nothing funny about this story, but it is sort of amusing to think about Gonzalez getting out of prison in a couple of decades and trying to operate a computer. It isn’t hard to imagine that they will be vastly different in 20 years...and part of this guy’s punishment ought to be giving him access to nothing more complicated than an abacus.

    The defense attorney in the case claimed that Gonzalez hacked the accounts not for the money, but for the challenge. Which doesn’t exactly explain the Tiffany ring, the BMW and the watches.

    Published on: March 29, 2010

    The Virginian-Pilot reports that there remains a lot of uncertainty in Virginia about the future of Farm Fresh. “After the longtime president of Farm Fresh retired early this month, all eyes turned to parent company Supervalu Inc. to see what changes it might make to the supermarket chain,” the paper writes. “Within a week, Supervalu appointed Gaelo de la Fuente to replace Ron Dennis at the helm of Farm Fresh. He has not made himself available to talk about Farm Fresh, and the corporate owner in Eden Prairie, Minn., also has little to say.”

    One thing that Supervalu is saying is that it plans no immediate changes.
    KC's View:
    The sense I get is that the smart money believes that there is little question that there are going to be changes at Farm Fresh ... greater centralization for one thing, and at least some banner conversions into the flavor-of-the-month Save-A-Lot format for another. There are none in Farm Fresh’s market ... at least for the moment.

    Published on: March 29, 2010

    National Public Radio has an interview with Corby Kummer, senior editor of the Atlantic, who wrote a piece for the magazine recently favorably comparing the produce sold at Walmart to that sold at Whole Foods. Some excerpts:

    Follow the yellow brick road... “It wasn't exactly like coming into Oz, but it was very surprising. I'd been told that Wal-Mart was going after high-ish-end supermarkets, and I'd better get myself to one of their so-called supercenters and have a look at the fruit and vegetables. So I did. It wasn't so easy in Boston because the closest stores in Boston are the oddly named neighborhood stores, which, of course, you know, are vast and look nothing like neighborhood stores that we think of. But I found myself in this supercenter, and I found very good-looking produce, and, in fact, one of those pick-your-own apple bags - you know, they're cute and white and have pictures of apples and handles on them - from exactly the same Massachusetts farm that I had seen at Whole Foods the day before. So, I decided I'm going to try doing a regular marketing here.”

    On a taste test he engineered... “I went armed with the exact shopping list to get the same set of ingredients at Whole Foods and Wal-Mart and bring them into the restaurant kitchen, where I can assure you the cooks were very surprised to see a parade of Wal-Mart bags coming into their walk-in ... (The guests/tasters) only knew they came from two different purveyors and that they were the same thing, and that they had to score them on sheets. They were local food bloggers and food tasters and restaurant critics and one farmer who turned out to be another contributor to the Food Channel, who turned out to be the ringer. She knew the difference. But most people found themselves routinely preferring the vegetables and fruit from Wal-Mart, and they weren't happy when it was un-blinded.”

    The Walmart initiative... “They've launched this initiative very quietly, because it's still in the test phases - but, of course, a test phase for Wal-Mart has huge implications and huge immediate results, which is that they're trying to revive agriculture in areas for staple crops, not fancy heirlooms like we think of with farmers markets, staple crops: onions, potatoes, lettuce, herbs, things that are - have really only been available from California and Florida and Texas, big-ag states.

    And they're saying if you can deliver them to one of our distribution centers that's within a day's drive, we will buy from you, not California and Florida, and the money that we save on the three to five days of truck transport, we'll pay you a slight premium, as long as we can offer it at Wal-Mart at the same price we would be for produce from the big-ag states. That's their initiative.

    “It is huge because, in a state like mine - I just talked about apples in Massachusetts, once an extremely important crop commercially, lost out entirely to Washington State. And now - and to an extent, New York State. And now both of those states are losing out to China, which decided 10 to 15 years ago to plant enormous crops of apples.

    So the - all of this centralization doesn't pay off for farming areas, and Wal-Mart recognized this and recognized that a lot of university networks and nonprofits are trying to help farmers get access to enormous markets like Wal-Mart by helping smooth the distribution network, which is always the big sticking point in buying local produce for big supermarket chains. So they decided: Let's capitalize on this government investment, some of it from smoking settlement money in tobacco-growing states, and see what we can do to try to get farms to raise these staple crops they long ago had to give up.”

    The long-term strategy... “Everyone's suspicious of Wal-Mart. I'm suspicious of Wal-Mart. And the proof of their sincerity is going to be whether they renew these contracts year after year, because very right-minded - I'm not going to name supermarket chains that make a big deal of buying local produce - will buy it for one year from a farm, and the farm gets all excited, invests in a lot more acreage, and then the next year, the buyer has disappeared because there's a lot of staff turnover. There's no loyalty to this farmer, and this farmer is stuck with a lot of crop that she or he can't sell. The majority of farmers, at least in Massachusetts, are women.

    “So the question is whether Wal-Mart is going to, you know, put its money where its mouth is - which I think it will, because it's hardly publicized this at all - and buy year after year from the farmers who do increase their acreage.”
    KC's View:
    One of the other things that Kummer tells NPR is that he has heard anecdotal stories that Whole Foods can be tougher for suppliers to work with than Walmart...which is sort of ironic, considering the Bentonville Behemoth’s reputation.

    Published on: March 29, 2010

    The Business Journal of Milwaukee reports that next month Roundy’s Supermarkets will pay a $150 dividend to Willis Stein & Partners, its private equity owner, six months after it paid the equity group a $75 million dividend.

    According to the story, “Milwaukee-based Roundy's also paid a dividend of $280 million to Willis Stein in 2005. Willis Stein bought Roundy’s in April 2002 for $750 million and had unsuccessfully attempted to sell the grocer in 2007 before credit markets tightened.”
    KC's View:

    Published on: March 29, 2010

    The Boston Globe reports that Supervalu-owned Shaw’s plans to meet with the United Food and Commercial Workers (UFCW) today as it faces a widening pattern of picketing not just by the UFCW, but also by other unions - including the Teamsters and the AFL-CIO - coming to New England in support of the workers.

    About 300 workers at Shaw’s warehouse in Methuen, Massachusetts, have been on strike since March 7, when they rejected a contract offer from Shaw’s.
    KC's View:

    Published on: March 29, 2010

    • The Wall Street Journal reports on how Walmart has won the support of dozens of Chicago ministers in its quest to expand its presence in the Windy City.

    “The ministers, most of them African-Americans together representing thousands of congregants, are pressuring the city council to grant approval for a Wal-Mart ‘supercenter’ - a store with a full grocery that also sells general merchandise - on the city's South Side.

    “Some of the same ministers as recently as last year opposed bringing the discount giant to the South Side, concerned that the company's pay was inadequate and that the store would hurt nearby businesses. But the need for jobs and tax dollars in the recession - along with a big push by Wal-Mart - has changed their minds. The shift sets up a showdown between the ministers and another community group, largely financed by unions, that opposes the proposal, which remains stalled in the city council.”
    KC's View:
    It does not seem like a big leap to suggest that the ministers may be more in touch with the needs of their communities than the union leaders. Can I get an “Amen”?

    Published on: March 29, 2010

    The Washington Business Journal reports that Five Guys Burgers and Fries was the nation’s fastest growing US restaurant chain last year, growing its annual sales by 50 percent to $453 million.

    Restaurant consulting firm Technomic says that Tim Horton’s was number two with 23 percent growth, and Buffalo Wild Wings was number three with 22 percent sales increases. Rounding out the top ten were Jimmy John’s Gourmet Sandwich Shop, Wingstop, Noodles & Company, BJ’s Restaurant & Brewhouse, Chipotle Mexican Grill, Firehouse Subs, and Potbelly Sandwich.

    According to the story, “Five Guys, which opened its first restaurant in Arlington in 1986, grew slowly in its first few years, with just a half dozen Washington locations by 2001. It began franchising regionally in 2002 and then nationally in 2003. The chain now has 550 locations in 35 states, and opened 300 of those locations in less than five years.”
    KC's View:
    There are a lot of folks who are pleased by the Five Guys growth, though I’ve gotten the impression that there are at least some that the franchising has resulted in at least some locations that don’t live up to broader company standards.

    Other than that, it is interesting that of the ten fast-growth chains, two specialize in wings and three in sandwiches.

    Published on: March 29, 2010 reports on a new study from the Scripps Research Institute suggesting that “bacon, cheesecake, and other delicious yet fattening foods may be addictive.

    “A new study in rats suggests that high-fat, high-calorie foods affect the brain in much the same way as cocaine and heroin. When rats consume these foods in great enough quantities, it leads to compulsive eating habits that resemble drug addiction, the study found.”

    The researchers found that eating too much junk food has essentially the same impact on the brain - it “overloads the pleasure centers,” and when people crash or return to some semblance of normality, it takes increasing amounts of food or cocaine to achieve the same high.
    KC's View:

    Published on: March 29, 2010

    • The Grand Rapids Press reports that “Spartan Stores and Walmart both have announced new price cutting strategies that include making those price drops obvious to shoppers as they go down the aisle.

    Spartan Stores, which operates 96 stores across the state including Family Fare and D&W Fresh Markets, will launch its new price campaign Sunday. Stores will highlight deals with large, yellow sale signs hanging from the ceilings and shelves. One sign, for example, trumpets ‘This week's big deal’.”

    In addition, “Walmart, the country's largest grocery retailer, also plans to pump up its promotions over the next six weeks, it has told market analysts. Starting April 1, customers would be greeted by signs advertising price rollbacks on 10,000 items, mostly food.”

    Fox News reports that a husband and wife on Long Island, New York, are facing charges that they tampered with packages of Jell-O pudding mix - buying them, replacing the mix with sand and concrete, and then attempting to return them for a refund.
    KC's View:

    Published on: March 29, 2010

    I wrote Friday in “OffBeat” about what I viewed as the appalling treatment of a senior sales executive by a major beverage company - at 58 years of age, with awards and positive reviews in her past, she was let go. There was something unsavory about the dismissal...and I wondered what the elimination of people with age and experience will have on CPG companies in a cost-cutting frame of mind.

    One MNB user wrote:

    I enjoy reading your commentary and have been a faithful reader for more than six years. I would prefer not to have my name printed, but thought it was a good idea to share a similar situation. Over the past five years, I watched my company (a major consumer products company) eliminate jobs, many times during periods of economic stability. The interesting portion was the majority of the employees who had their jobs eliminated were over 50 years old. Eventually, the same job elimination came to me. After a significant number of years in service, it appears the company wanted to have their sales force younger and forgo the experience offered by more seasoned employees. The greatest concern is not the changing of jobs and moving back into the sales force after 50 years of age. It is the fact that the compensation package you are offered is designed to force you to accept. You cannot sue the company for aged based discrimination or any other issues, as the litigation will take years and after 50 years of age, it is significantly difficult to enter a job market which favors younger people. Basically, you need the compensation package to survive!

    My point is you are forced to accept compensation packages which do not ever measure the sacrifices you placed with the years of service. Once you do find a new job, the exhilaration of starting over again is great! However, understand at your age, you will find it difficult to ever receive a job with a major company again. The smaller companies pray for employees with experience who can grow their smaller lines and utilize the contacts they have built up over the years. The reasoning behind not using my name is I am still under the time frame of not disclosing or disparaging my previous employer.

    Again, you are insightful and I thank you for allowing those folks over 50 years old the opportunity to offer an opinion on an industry wide problem.

    Another MNB user wrote:

    WOW, did that hit home.

    Parallel universe…..I was the 2nd highest paid sales person in 2008, met all my sales goals, numbers, every facet (from new accounts, sales, profits etc.)  and I had a similar whitewashed creepy crawly departure from my employment….with fake trumped up charges, all addressed in meetings and summarily dismissed…yet they let me go anyway.  It was cost cutting, absolutely…and my immediate boss had made a 200K error, and was given the directive to recoup it somewhere – it was either her, or me – so guess who got let go!
    And, after a very challenging 2009, I am so very grateful to them for the favor they did me!  I am now in a dream job, appreciated, with room for growth and creativity, my talents and experience are appreciated, and ii turned out to be the best thing that ever happened to me!  It really is true, that when one door closes, another door opens.

    On another subject, we got the following question about the conversion of Ukrop’s to martin’s by its new owner, Ahold:

    Open Sunday?  Alcoholic beverages sales?  Pricing changes?  Other?

    I appreciate your following this and your commenting on it.  We all can learn from understanding others and what is actually happening; this is a big one!

    It's already been reported that they'll be open Sunday and selling booze.  As for pricing, we'll see...

    I’ve used “OffBeat” a number of times in recent weeks to decry the calls for a four-day school week and even the elimination of senior year of high school, which I think are being made more for financial reasons than because of any real concern about the educational system.

    MNB user Cleve Young responded:

    You’re right on the mark with the last sentence of your school commentary: it is about learning more. And it also has to be about learning more ‘good’ stuff, not just stuff. My son is a high school junior and is currently taking a ‘Young Entrepreneurs’ class. Which is kind of an unusual type of thing in a school as small as his (graduate class of 80 kids). I’ve been fascinated by what he has been working on all year. They work with professionals from the working world as mentors, create detailed business plans, cost analyses of overhead and competition, go to the County Clerk and get an actual business license, and then have to give a presentation to an investor panel. We went to the school last week and there was my son up on stage with a nice tie doing a PowerPoint presentation with equipment and overhead cost estimates, tax rates, insurance rates and profit margins. He talked about the area competition, reasoning for his business plan, customer potential, marketing plans, and so much more. I couldn’t have been prouder. And I also have never seen a more compelling high school course which presents real world concepts and experience.

    How often do those of who have been working for many years deal with recent college graduates and realize how utterly unprepared high school and college have made them for the ‘real’ world of work. So before the experts/activists worry about how much time kids are in school, or how much money they are spending per kid, or all the other stuff they go on and on about, the should start with reviewing WHAT they are teaching and is it really relevant and needed. A kid sitting in school for 4 hours learning concepts which will help him compete in the workplace is much farther ahead than if she goes through 12 hours of fluff and junk.

    I agree with you, but would also suggest that we can;t just be training people for workplace tasks. They also should be taught things that will help them live a thoughtful and fulfilling life, if they choose to have one. That means learning Shakespeare and Hemingway, it means learning how to cook and the importance of good food, it means creating a love of the world that could translate into a desire to travel.

    I’m a big fan of the notion of a “liberal arts” education, though the word “liberal” in that description may create a certain animus for the concept these days.

    As in this email from an MNB user:

    Every once is a while you manage to get me in a stir to write one of these responses. I know from reading you over the years there is a liberal slant to you….that is OK…you deserve to get it wrong because everyone deserves the privilege to do and be what they want in this country. Plus you got the “soapbox” which gives you the advantage to be glib and smug.

    Schooling is not about the time spent but about the quality of that time. There are programs in this country being taught by great educators that take kids to whole new levels. They teach kids how to learn because there is an “art to learning” that can be taught. The kids who attend these various programs have better math skill, better memory skills, and cognitive learning skills. It can be done and is being done without taking away the process of being a kid getting to grow up in this great country of ours. You are who you are because of this process…Gates, Jobs, Forbes, Buffet, etc, etc, etc…and yes even Mr. Obama, are who they are because of growing up in this great free (for now) country.

    My father went from working in a steel mill to making a great living for his family later in life. He would not have been able to do that in any country other than here. My father use to say that working in the mill was good honest work, but he lived in a country that allowed him to get more out of life if he wanted it.

    Putting kids in school year round and taking away their senior year, may make them learn more, but it will not make them better citizens and contributors to the American dream. And by the way, most of the great men in this country had little if any formal education, but good old fashioned… on the job training. This can only happen here, which is why people are fierce to protect our way of life.

    At the risk of being glib and smug...and of being accused of abusing my soapbox...I have no idea what the hell you are talking about.

    It seemed to be an attack on me for being 1) liberal, and 2) wrong. You seem to suggest that pushing for better and longer schooling is a notion that is anti-freedom ... that the notion of formal and extensive schooling is somehow anti-American.

    Could it be that you equate formal schooling to some level of intellectualism, and that you are suspicious of intellectuals as being part of the liberal elite?

    If so, I suspect William F. Buckley Jr. would have disagreed with you.
    KC's View:

    Published on: March 29, 2010

    The Final Four have been determined in the NCAA Men’s College Basketball Tournament, as Michigan State will play Butler, and West Virginia will play Duke.

    The winners of these games on Saturday will play for the championship next Monday night.
    KC's View:

    Published on: March 29, 2010

    Alex Miller, president/CEO of Daymon Worldwide, told the company’s employees this morning that Supervalu has decided to terminate its relationship with the private label giant, effective May 15.

    The announcement comes just a week after Safeway made a similar announcement to its suppliers, effective May 28.

    Daymon insiders say while the timing of the two announcements is unfortunate, there appears to be no connection between the two decisions. Safeway continues to put the emphasis on its more service-oriented Lifestyle stores, while Supervalu is focusing on its Save-AS-Lot limited assortment store business.

    In his comments to employees, Miller emphasized that Daymon remains proud of the private brand portfolio work that it did for Safeway for five years and Supervalu for six years, and that it will continue to operate off-site satellite offices near both company’s headquarters. Insiders tell MNB that it is possible that Daymon could continue to work with suppliers that are in the private brand business, and in fact could continue to see its products on Safeway and Supervalu shelves.

    “When one door closes, another one opens and we see this as an opportunity to focus more on our supplier needs in the region,” said Miller.

    Daymon also maintains that while the loss of business is disappointing, it is not critical - Daymon is a diversified global company operating in 22 countries, with processes and businesses extending into packaging design, in-store activation and c consumer events. Insiders say that the Supervalu and Safeway losses amount to less than 10 percent of overall business.
    KC's View:
    Tough timing for Daymon, but certainly survivable.

    Daymon always has struck me as a strong and well-managed company, the kind of company that will use these events to instigate diversification at one end of the business, while perhaps looking at what the Safeway and Supervalu decisions teach it about the private label brokerage biz.

    The decisions by Supervalu and Safeway in all likelihood mean that both companies - as well as other retailers not changing their source of private brands - are taking the notion of branding very seriously. This says much for what Daymon has both preached and achieved...and now it has to deal with the downside of its own success - companies that want to bring these specialized functions in-house.