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    Published on: April 1, 2010

    Sometimes, the stories come so fast and furious that there is no time to get them in the regular rotation...

    • Supervalu CEO Craig Herkert reportedly will announce this morning the conversion of virtually every store in the company’s portfolio to a limited assortment format, but said that the company will revolutionize the concept by creating different tiers for different demographics.

    “Look, we were prepared to sell off anything that didn’t fit into our concept of what a value-driven retailer ought to be, but these days you can’t sell anything to anyone if you’re looking for a decent price that won’t give the shareholders a fit,” Herkert reportedly will say in his prepared statement. “My feeling is that you can’t make square pegs fit into a round hole, so you might as well get some sucker to buy the square pegs. But that isn’t happening, not in this economy.

    “So we’re going to do the next best thing. We’re going to use a saw - and there are so many trees in Minnesota that there are plenty of saws to be found here - and we’re going to turn the square pegs into round pegs. We’re going to make them fit, or die trying.”

    According to documents provided exclusively to MNB in an early morning hours during a a clandestine meeting in a downtown garage, the Supervalu plan is to convert stores in upscale neighborhoods into high end limited assortment stores (called Save-Enough), stores in middle class neighborhoods into middle-of-the-road limited assortment stores (called Save-More), and stores in less affluent areas into the already existing Save-A-Lot format.

    “What this means,” Herkert is scheduled to say in his April 1 address to company employees, “is that we will carry one SKU in almost every category in the store. Just one size, just one brand. The prices will be incredibly sharp, and we intend to take manufacturers to the cleaners when it comes to slotting allowances. They’ll pay through the nose, because they’ll all be competing to get into our stores, and there will only be room for one per category. It’s genius!”

    Any chain that does not fit into the trio of formats will be sold off, according to internal company documents. And Shaw’s reportedly will be sold, just because corporate management thinks it is more trouble than it is worth.

    • Safeway reportedly will announce next week that it is establishing a new employment policy that will require that not only will all employees be non-smokers, but they also must be able to run a half-marathon, do 100 sit-ups and 100 push-ups, and hold their breath for 60 seconds under water.

    “At first we were thinking of only hiring former athletes,” a Safeway source tells MNB. “But then we realized that this was too broad a definition. After all, have you seen some football players and baseball players - they can be incredibly fat. So we decided to require the ability to perform specific physical tasks as a prerequisite for working here.”

    Current employees will be given six months to get themselves in shape, the Safeway source says, or they will be let go. “We ran the numbers, and it is cheaper to defend the lawsuits we’ll probably get hit with than it is to pay the insurance premiums that a bunch of fat smokers cost us.”

    • Kevin Coupe and Michael Sansolo announced that, following the successful publication of their successful “The Big Picture: Essential Business Lessons from the Movies,” they will next year publish a sequel - “The Little, Sometimes Black & White Picture: Essential Business Lessons from the Television Series of the Sixties.”

    According to the duo, the new book will look at both the comedies and the dramas of the era during which the Baby Boomers came of age. Included in the book will be chapters on Bewitched, an a look at the advertising business and the meaning of the two Darrins; Ironside, and how it presaged the critical legislation known as the Americans with Disabilities Act; “The Name of the Game, or how Gene Barry’s portrayal of Glenn Howard showed us Donald Trump before there was a Donald Trump; “It Takes A Thief, and its indictment of federal nannyism; “Mission: Impossible,” and what the move from Barbara Bain to Leslie Ann Warren to Lynda Day George says about the way women were and sometimes still are treated; and, finally, “Mannix,” which in its first season showed us how a sole and heroic man fights against the encroachments of a technological society, and how the change of format in the second season demonstrates the inability of a society to grapple with these profound issues.

    The publication date is tentatively set for April 1, 2011.
    KC's View:
    Once again, it is amazing how these stories always get reported on April 1.

    As I wrote this piece, a Mac McAnally lyric kept going through my mind:


    It’s a semi-true story ,
    Believe it or not ,
    I made up a few things ,
    And there’s some I forgot.
    But the life and the telling ,
    Are both real to me.
    And they all run together ,
    And turn out to be
    A semi-true story...




    And to those of you who might be offended by this story, let us just say that we kid because we love.

    Published on: April 1, 2010

    The Wall Street Journal reports that for the first time, Walmart saw more of its US sales come from groceries, generating 51 percent of the $258.2 billion in revenue that it generated last year, suggesting that “the retailer's aggressive push in food and other consumables is paying off.”

    According to the story, “Wal-Mart has been ratcheting up efforts to convert existing stores into supercenters, 100,000 square foot stores that sell consumables in addition to clothing, electronic products and household furnishings. Last year was the first year in memory that Wal-Mart did not open any standard discount stores. It instead converted 86 existing locations into supercenters as well as opening 49 new supercenters. The retailer now operates 2,750 supercenters in the U.S., while paring back its traditional discount stores to 803 from 1,350 five years ago. Wal-Mart also has been lowering shelves and widening aisles throughout its stores as part of a program to make the shopping experience more appealing.”
    KC's View:
    It wasn’t that long ago that Walmart didn’t operate supercenters and didn’t have any measurable percentage of the grocery business.

    Remember when?

    There was a time when supermarkets didn’t think that Walmart was a threat, thought that they had an unassailable advantage in this segment of the retail business.

    Remember when?

    Walmart is far from a perfect company. But it has learned much about mass marketing from its competitors, and in most cases has improved on their infrastructures and operations by bringing innovations and efficiencies to the marketplace, and by not being locked in by legacy systems.

    I am reminded of what Shylock says in “The Merchant of Venice” at the end of his “I am a Jew speech”:

    “The villainy you teach me I will execute, and it shall go hard, but I will better the instruction.”

    Published on: April 1, 2010

    The Nielsen Company is out with new consumer research about shopping habits in February 2010. Among the findings:

    “The recession continues its ravaging effect on retailers ... the downward trend of consumers shopping less hit a new low in February 2010, reporting a 4% year over-year decline in monthly all-outlet shopping trips.”

    “While per trip shopping basket rings began to pick up during and after the holidays, February remained static with a 1% increase compared to last year. Retailers’ focus on store brands and retail price cuts helped keep spending levels in check driving more value for shoppers.”

    “A closer look at monthly shopping trips shows that trends have virtually flat-lined in total and across all major retail channels. Grocery stores have been shopped two plus times more often than competitive retail channels.”

    “Other Nielsen trends show that consumers are not shopping more stores looking for deals as consumers consistently shopped fewer retailers each period in 2009 than they did in 2008. It is a tough market and breathing life into a different retail environment will take new strategies that keep shoppers satisfied and spending while they are in the store.”

    “As consumers are eating in more and out less, retailers are converting lost restaurant trips into grocery trips. And while grocery trips were up in the last eight of twelve periods ending February 2010, trips in the last four months are down. Value channels such as dollar stores, warehouse clubs and supercenters have fared the best showing growth in most periods in the last year and one-half.”

    “Only supercenters and club stores had positive trip growth in each period in 2009. Both, however, declined slightly in 2010 as consumer confidence remained low and poor weather conditions plagued major population centers.”
    KC's View:
    I sort of get the feeling that at some level, a lot of shoppers are sort of in a holding pattern. They adjusted their habits when the recession hit, they’re getting maybe a little more confidence but not so much that they’re making any big leaps...there is real worry that the bottom could fall out of the economy yet again, and it is going to take time for that feeling to go away.

    What this means, I think, is that smart retailers will find this to be a good time to get aggressive...to either open new stores or come up with new offerings that will appeal to shoppers. Nielsen’s Todd Hale says in the report that retailers need to
    “satisfy loyal shoppers with savings linked to shopping frequency and spending levels,” and “offer value and low prices, but more important, stake a claim to at least one or two points of differentiation to maintain a competitive advantage.”

    Most retailers have found ways to offer low prices, or at least the illusion of low prices. The other points of differentiation are harder to achieve...but in the long run, I believe, will be far more important to sustainable success.

    Published on: April 1, 2010

    Wakefern Food Corp. announced that it will now include grocery products and consumer-packaged goods in its wholesale agreement with New York City-based Gristedes Markets. Since 2008, Wakefern has worked closely with Gristedes to provide the 33-store chain with its ShopRite private label brand, as well as health and beauty aids, dairy, frozen and specialty grocery product offerings.

    “Expanding upon our existing agreement with Gristedes represents the steady growth of our wholesale business,” said Joseph Colalillo, chairman and CEO of Wakefern Food Corp. “Leveraging Wakefern’s buying power and expertise in procurement, as well as the company’s full range of brands, products and services, results in a significant point of differentiation for our customers.”

    In 2007, Wakefern expanded its business to include wholesale sales to other retailers, taking the company beyond its traditional Northeastern market. Wakefern creates wholesale programs and store-specific solutions that provide a diverse mix of product offerings and retail strategies to address the needs of any customer.
    KC's View:
    Gristedes may be a famous old retailing name, but at this point there is so much dust on it that the history has to be almost irrelevant to most of the customers who live in its marketing areas. I walk into a Gristedes store, and my first impulse is to look around for my grandmother...and she’s been dead for two decades.

    It’d be a lot more interesting retailer if the stores were sold to Wakefern’s independent ShopRite retailers and operated more aggressively and, well, independently.

    Published on: April 1, 2010

    The New York Times reports that finding local seafood in Florida is a lot tougher than it used to be:

    “Florida, from sea to plate, just is not the seafood buffet it once was. Reeling from a record, fish-killing cold snap and tougher federal limits on what can be caught, commercial fishermen and charter-boat captains are struggling. Distributors and restaurants are relying more and more on imported seafood - some of it clearly labeled, a lot of it not.

    “Federal fisheries managers say that a law reauthorized by Congress in 2006 now requires them to take more aggressive action against overfishing. They cut back the legal catch for some kinds of snapper last year, and 11 species of grouper are now off limits from January through April on the Atlantic coast. It is the longest ban on record for grouper and the first to include both commercial and recreational fleets.”

    The regulations have created a kind of “sea party” movement in Florida, where fisherman want the government to increase the levels to which they can fish, and they question studies that suggest that the world’s oceans are being over-fished to the point where some species may become scarce.
    KC's View:
    I remember the first time I took note here of a study suggesting that the world’s oceans actually were running low on certain fish. There were a bunch of emails asking if this were some kind of April Fool’s joke (even though it wasn’t April), and people seemed generally skeptical.

    Since then, however, there have been numerous studies reinforcing the premise that we have to be careful about overfishing, or risk serious consequences.

    Now, to be honest, I tend to believe in these kinds of studies. I get a lot of irritated emails when I say this, but I do think we have the responsibility to treat the planet as a fragile place and to be measured in how we exploit its natural resources.

    That said, I am sympathetic to the fishermen’s plight. This is their livelihood, the way they support their families, and putting limits on them has consequences. (If someone told me I could only use 2,000 words a day and only three days a week, I’d have a problem with that. Then again, at worst my words are only intellectual pollutants...at least, that’s what some people think.) I’d like to think that the federal government could take a reasoned and compassionate approach to their problem - not a knee-jerk reaction in either way - but I’m not sure that’s possible anymore.

    Here’s what I have a real problem with. The Times notes that some restaurants are selling some fish as “local,” even though they are from Vietnam or other far-off lands, on the theory that the distributor from which they buy the fish are local. This is nonsense, and ought to be stopped.

    Published on: April 1, 2010

    Valassis, the marketing services company, is out with a new study saying that “current economic conditions are leading 94% of those surveyed to use consumer package good (CPG) coupons at least once in the past year, and 77% with regularity. In fact, 30% said they used more coupons in 2009 than in the past, leading to $800 million more being saved with CPG coupons compared to the prior year.”

    Other results from the study:

    • “31% are more careful about remembering to bring coupons to the store - 74% expect this behavior to continue.”

    • “25% are clipping more coupons than before - 72% expect this habit to continue;
    6% are clipping coupons, which they never did before - 58% expect to continue clipping coupons in the future.”

    • “3% have joined coupon clubs or attended meetings about coupons - 50% expect to be involved in such activities in the future.”
    KC's View:

    Published on: April 1, 2010

    • The Richmond Times Dispatch reports that Ahold-owned Martin's Food Markets “will introduce a new gasoline program, longer store hours and a Bonuscards loyalty-card program in the next several weeks as the chain transform the Ukrop's stores to its own nameplate. The changes, some of which were announced in a letter to customers, will take place during the next six weeks.”

    • Sprouts Farmers Market, which seems to be carving out a strong niche by offering what it calls “right-from-the-earth foods at down-to-earth prices,” opened its third San Diego location yesterday. The company now has a total of 12 California stores, and also has units in Arizona,Texas and Colorado.

    • The Vancouver Sun reports that the Canadian Council of Grocery Distributors has offered a $10,000 reward for information leading to the arrest of people responsible for known instances of food tampering. According to the story, Safeway said this week that “it had seen a case of metal objects inserted into their food.”
    KC's View:

    Published on: April 1, 2010

    • James W. Nolan, the executive vice president and CEO of Sara Lee’s North American Fresh Bakery unit, has resigned to pursue another, as-yet unnamed professional opportunity. The company said it is seeking a replacement.
    KC's View:

    Published on: April 1, 2010

    ...will return next week.
    KC's View:

    Published on: April 1, 2010

    Got a bunch of email yesterday about Supervalu;’s decision to sue various chocolate product manufacturers for price fixing.

    One MNB user wrote:

    Supervalu has little room to sue for any thing.

    Over the years they have deducted from vendor invoices for off invoice allowances outside of the area where they compete, requiring volume discounts without any commitment to case goals(kick backs), warehouse damage without any proof of damage nor allowing vendor inspection, and many more high handed actions that made doing business with SV as close to
    dealing with an extortionist as was possible.

    The vendors needed them to get their product to the stores but it was always an adventure. They did have some fine people at all levels who needed their jobs and they had to follow the orders from corporate.

    If I was the chocolate companies I would stop shipping SV at once and see how long the lawsuit would last. If the consumer can not get his/her M&M'S or Hershey Bars at the Albertson's they will find it at the Kroger down the street.

    It is too bad they did not file in February when the vendors could refuse to supply for
    Easter.


    Another MNB user wrote:

    The story keeps going on. Remember when Fleming alienated all of its suppliers and when they needed help nobody was there. Keep watching this - it is to similar and could be the downfall of Supervalu.

    Still another MNB user wrote:

    The pure desperation of SUPERVALU to "clean" up it's unbalanced Balance Sheet by suing chocolate companies on grounds of "price fixing" is preposterous. Is Mr. Herkert's former employer, the Behemoth, joining in for a class action party? I haven't heard, but when you start lifting the cushions under the couch to find change, you're in trouble! Get out of the retail business!

    NO company would touch Albertson's four years ago; but somehow some lowly Midwest grocery wholesaler believed it could run a $44B conglomerate run into the ground by a greedy ex GE chief and his cohorts!


    And, from another MNB user:

    If Supervalu wins, are they going to pass the monies back to their customers? ...What a waste of time, effort, energy and ... dollars in this frivolous lawsuit.




    I was criticized yesterday by MNB user Harry Hamil for being too pro-Walmart, which led one MNB user to write:

    As a long time reader of MNB I am not sure were Harry is coming from.  Over the years you have had more negatives than positives to say and point out about Wal-Mart.  As with all of us retailers he has also marveled at the efficient and effective machine called Wal-Mart.  But for years you has been very vocal about the consequences of Wal-Mart going into a community and the so called ‘Wal-Mart Effect’.  I guess that I must not have read the same stories as Harry.




    We reported yesterday on the death of Jaimie Escalante, the teacher who inspired the movie Stand And Deliver.

    It prompted MNB user Larry Chatterton to write:

    It is the awareness of events like the passing of Jaimie Escalante and your comments about it that keep me coming back and reading MNB.
     
    You are absolutely correct in the fact that as a society we have become lazy and look for ways to make things comfortable instead of raising the bar and getting better.  People like Jaimie Escalante are the islands of hope in this great land of America.  A person from humble means that expects great things from him/her self and from others as well.  The article called him a maverick.  We need more mavericks like this today.
     
    Thank you sharing this.  I think I know what movie I am going to watch this weekend.


    And MNB user Jackie Lembke wrote:

    He didn’t teach just math, he taught his students how to learn and apply that learning to every aspect of their lives. Whether school is 4 days a week or minus a year, the greatest thing that can be taught is how to learn. With that knowledge great things can be accomplished...
    KC's View:

    Published on: April 1, 2010

    Just a few notes for a Thursday “OffBeat”...

    I haven’t had a chance to read all the reviews yet, but the overwhelming feeling out there based on the headlines I’ve seen seems to be that Apple’s new iPad is going to be a big hit. Not everybody is going to like it, of course. But so far, the reviews look good.

    Though I am both an acolyte and a advocate for pretty much all things Apple, I’m not sure I will be rushing out to buy one. My sense on such things is that it makes sense to hold back a bit and assess...and buy the second iteration, once the kinks have been worked out and it is easier to figure out which version is most appropriate for my purposes.

    That said, it is entirely possible that the first time I hold one in my hands - and this could take awhile, since the local Apple Stores are likely to be mobbed for weeks - all my resolve could melt away.

    Which demonstrates how an innovative product and a great retailing environment can team up to influence consumer behavior.




    BTW...check out Apple’s video tour of the iPad: Click here.








    Not sure what is going on with San Antonio, but the Texas city suddenly seems to be all the rage. Not only was the terrific Symphony IRI Group 2010 Summit there just a couple of weeks ago, but the upcoming Fresh Forum, sponsored by Retail Connections, is scheduled to take place later this month ... and I’m doing the keynote at the opening night barbecue dinner. How cool is that! (Full disclosure: Fresh Forum is a sponsor. See their tile ad on the right hand side of the page.)

    I hadn’t been to San Antonio in more than a decade, so this is a nice turn of events. And here’s the bonus. After I mentioned that I’d only been in San Antonio for about 18 hours for the IRI event, I got a bunch of emails from MNB readers there asking if I’d arrange a casual get-together during my next visit...which I am happy to do. If anyone has any suggestions, let me know...because I’m always up for it.




    I’m usually on the road, leaving my wife and daughter at home, but for a series of complicated reasons I’ve been the one home alone (with the dog and bird) this week while Mrs. Content Guy and the Content Daughter have been away. What this has meant is that I’ve been eating a lot of fish - Sunday it was Caribbean shrimp with pasta, Monday is was barbecued salmon with brown rice, and Tuesday it was Cajun catfish with brown rice.

    And I’ve been working my way slowly through a wonderful wine - the 2008 Laxas Albarino from Spain...which has seemed to go nicely with all of the above. I recommend it highly. (It goes for under $20.)




    I cannot, in all good conscience, highly recommend Hot Tub Time Machine. There were a lot of movies I could have seen this week, but I found the title to be irresistible. (The world may be split between people who think the title is stupid and those who think it is wonderful. Count me among the latter.) Plus, I’m a huge John Cusack fan.

    I cannot recommend it, though, because Hot Tub Time Machine is profane, vulgar, rude, excessive, and has enough f-bombs for about a thousand vice presidential press conferences. (It makes The Hangover look like Shakespeare.)

    It also is very, very funny. Not all the time, but enough to keep me laughing for most of the movie. The premise: three guys who are unhappy with their lives to varying degrees are transported back to the eighties by a magical hot tub (okay, it’s a stretch...but no more improbable than using a DeLorean). There, everyone sees them as their younger selves, and they have to face the enormous gap between what they wanted to be and how they ended up.

    That’s a far more serious description of the movie than it deserves - the premise serves as an excuse to show and satirize drugs, sex, rock and roll, bad hair, worse clothes, and incredibly large mobile phones. Cusack is fine, as is Craig Robinson, but the real revelation is Rob Corddry, who creates an amazingly consistent and specific portrait of depravity and who drives the movie forward even as his life is going off the rails.

    As I say, I cannot recommend Hot Tub Time Machine - unless you are in the mood for a movie that is profane, vulgar, rude, excessive, and very funny.
    KC's View:

    Published on: April 1, 2010

    Tomorrow is Good Friday, and MNB will be taking the day off. We’ll be back Monday...and hope you have a great weekend.

    Slainte!
    KC's View: