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    Published on: April 14, 2010

    The New York Post reports that the pricing profiles at Whole Foods and Walmart are a little bit closer than the latter, at least, would like you to think.

    According to the story, “Wal-Mart, despite launching an aggressive marketing campaign this month touting its price cuts, or ‘rollbacks,’ on supermarket items, has actually raised its prices on food by 2.3 percent since February, according to a new study by JPMorgan Securities. Meanwhile, Whole Foods has stuck with a price-cutting strategy, lowering its prices by about five percentage points since December vs. mainstream grocers like Kroger and Safeway, the study found.”

    JPMorgan analyst Charles Grom says that Walmart's discounting thus far has been more hype than reality, and that “in spite of all the visual signs. . . the average price in our 31-item basket (entirely food/consumables) actually increased.”

    The Post writes that “Wal-Mart spokeswoman Linda Blakley didn't directly respond to the study's conclusion that the giant discounter's food prices have increased lately. This month, Wal-Mart is ‘adding new rollbacks and deeper price cuts,’ she said. ‘We've stepped it up where our customers need us to -- with the basics of consumables and food’.”
    KC's View:
    There are a lot of people who would suggest that Walmart’s low price image is precisely that - image, and not nearly as rooted in fact as it would have people think.

    I’m not sure I buy that. it sounds to me like a kind of wishful thinking.

    But stories and studies like these certainly don’t help, and they imply that Walmart may be managing more for Wall Street than Main Street. Which it cannot afford to do.

    Published on: April 14, 2010

    Caribou Coffee, the second-biggest gourmet coffee retailer in the nation, announced yesterday that it is the first major U.S. coffeehouse committing to 100 percent Rainforest Alliance certification for all of its coffees by the end of 2011. This certification is awarded to farms that ensure that the environment and wildlife are protected; workers receive decent wages and improved working and living conditions; workers and their families have access to education, medical care and clean water; and coffee is harvested and processed responsibly.

    “Caribou Coffee recognizes that a good cup of coffee goes beyond taste — it starts with farming practices that are environmentally and socially responsible,” said Chad Trewick, Caribou’s senior director of coffee and tea. “One hundred percent certification is a very aggressive goal but one that we’re proud to set.  We’re helping ensure that our customers get premium coffee and our sourcing partners benefit environmentally, socially and economically.”

    Rainforest Alliance certification is considered to be the most comprehensive sustainability certification developed to date, and is managed by the Sustainable Agriculture Network (SAN) — a coalition of independent, nonprofit conservation groups.  The certification is built on three pillars of sustainability — environmental, social and economic — and works by setting standards to guide growers and farm operations of all sizes to true sustainable agriculture practices.
    KC's View:
    As usual, I need to make full disclosure here - that Caribou is a valued sponsor of MNB, but that I decided to post this story today because I would have written it even the company were not a sponsor. (My attitude is simple. Why penalize a sponsor like Caribou for what I see as its exceptional good taste in websites?)

    Getting back to business...

    I firmly believe that in the long run, pursuing goals like Rainforest Alliance certification is good business. Sustainability is by its very definition a smart strategy, and smart consumers will respect this approach to commerce.

    Published on: April 14, 2010

    The Nielsen Company is out with a report on the resurgence in coupon usage, owing to the financial pressures created by the “Great Recession” of 2009-2009, pulling together research from a variety of sources. Some excerpts:

    • “Inmar reports that coupon redemptions grew by 27% as Americans searched for ways to cut household costs and get more for their money. NCH Marketing Services claimed 2009 coupon redemption levels ‘achieved the second highest year-over-year growth ever recorded’.”
    • “While newspaper inserts are still the primary method of coupon distribution (89%) and redemption (53%), Internet redemption growth has skyrocketed, rising 263% in 2009.”

    • “While clipping continues to be a primary means of distribution, manufacturers and retailers launched new ways to get coupons into consumers’ hands such as printable coupons on the Internet, in-store kiosks and discounts linked to frequent shopper cards via smartphones and computers, negating the need for a paper coupon at all. In short, it is easier than ever to distribute and use coupons, and this convenience is also a key driver of redemption growth.”

    • “Inmar reports that the majority of coupons were redeemed at conventional grocery stores (65%), but all classes of trade - dollar stores, mass merchandisers, convenience stores, military commissaries and drug stores posted double-digit redemption growth.”

    • “All told, 83% of units purchased with manufacturer coupons in 2009 were done so by just 22% of households. Coupon enthusiasts - the heaviest users - accounted for 65% of manufacturer coupon unit purchases and 18% of all unit purchases in 2009. They drove a disproportionate amount of sales and sales growth - shopping more frequently, making 1.7 more trips than non users and buying more (a rate 1.8 times greater annually). While some might think that ‘crazed coupon clippers’ are only interested in a good deal, these findings suggests real benefits to manufacturers and retailers deploying coupons in their marketing mix.”

    Looking to the future, Todd Hale, Nielsen’s senior vice president of consumer and shopper insights, writes, “As the economy improves, will consumers continue to use coupons? With the economic recovery taking hold slowly and without significant employment growth, expect coupon use to continue. As long as Americans feel unsure about their personal finances or confident about their jobs, they are going to continue to look at ways to save and get the most for their money.”
    KC's View:
    This lack of confidence is likely to persist, because even as some measures of the economy seem to improve (like the stock market and the profits at major banks), it is going to take years for things to improve for many people.

    I wonder, however, if the companies seeing an improvement in coupon usage are planning now for that inevitable time - maybe years from now - when prosperity returns and people are less coupon-driven. Is there a way to rejigger the whole coupon business to keep it relevant? I have no idea...but it always seems to me that it makes sense to plan for the next big turn, rather than enjoying the fruits of the moment.

    Published on: April 14, 2010

    MNB has reported on the decision by Spirit Airlines to begin charging for carry-on luggage that has to go in the overhead bins, and the reaction in the media, among consumers, and in the MNB community. To say the least, it has been a spirited discussion - focusing largely on short-term tactics vs. long-term strategy and the business/marketing implications of decisions like these.

    One MNB user yesterday passed along a new email that has been sent to Spirit customers by Ben Baldanza, the airline’s president/CEO, which seems to suggest that the new fee is designed to save fliers money. Here is what the email says:

    We have all seen how  carry-on baggage has gotten out of control. Longer security lines and boarding process, injuries due to overcrowded overhead bins, delayed flights and passenger frustration has become commonplace. At Spirit, we are  always looking for new ways to save you money and improve the customer  experience.  We recently announced our latest innovation, which is designed to relieve the carry-on crisis, saving you time and money.

    Our solution to the  carry-on crisis:

    Lowered fares
    Lower checked bag fees
    Give everyone a free personal item  allowance
    Allow customers to carry on an  additional bag for a fee and give them priority boarding so they have time and  space to stow their extra bag.

    Everyone Wins!

    We expect total prices to be lower
    Security lines will move faster
    The boarding process will be  smoother
    Deplaning will be faster
    Passenger and employee safety is  improved with less over-stuffed bins

    The email goes on to explain that people can bring on laptop bags, briefcases and handbags for free as long as they fit under the seat in front of them. The carry-on fees are lower for people who are members of the frequent flier program, and cheaper for people who pay them online in advance; do it at the gate, and the fees are higher...and, Baldanza chides, “is not preferred since it will slow  the boarding process.” The goal, he writes, is “Happier customers that pay less!”
    KC's View:
    Forgive me, but this strikes me as self-rationalizing nonsense. I’m not buying it for a second. They ought to be honest, and say that this is a way of generating incremental income. Because that’s what Southwest is going to say about the move when it comes up with the inevitable scathing commercials criticizing the likes of Spirit and promoting its own, superior approach.

    Of course, rationalizations are necessary, even if they are delusional. Remember what Jeff Goldblum says about how important they are in The Big Chill.

    Just as a matter of interest...I saw a story the other day saying that Ryanair, a budget carrier based in Ireland, is annoyed at Boeing because the aircraft builder won’t eliminate some toilets and put in more seats. Ryanair is the same airline that continues to consider putting in pay toilets on its planes.

    Speaking as a middle aged man, I generally think that most airplanes don;t have enough accessible bathrooms as it is. Ryanair may be eliminating a complete demographic from its customer base through all its machinations.

    Published on: April 14, 2010

    As Great Britain enters a general election cycle, Marketing Week reports that Walmart-owned Asda Group is asking so-called “Asda mums” to blog on its website about politics and the election, sharing “what they think about the election and the issues that matter most to them and their families, to compare to what politicians are saying.”

    On its website, Asda says:

    “We’re not interested in the party politics of the election and we won’t take sides. What we’re interested in is what’s happening in Asda mums’ lives and how well the politicians are engaging with real people throughout the campaign.”

    The story also says that Asda will host online Q&A sessions with politicians from all the parties.
    KC's View:
    Dangerous territory for a retailer, I think. Maybe Asda can navigate the political minefield, but this is a risky endeavor.

    Published on: April 14, 2010

    The Chicago Sun-Times reports that Working Mother magazine has recognized McDonald’s on its first-ever list of “best companies for hourly workers.”

    Among the innovations cited:

    • “Hourly workers at McDonald's USA corporate operations who become pregnant can take at least 12 job-guaranteed weeks off and get 50 percent of their pay, and they're eligible for 10 percent discounts at national child-care chains.”

    • “Those who work at least 20 hours weekly get medical, dental and vision insurance, and free physicals, well-baby care and vaccinations are available under the plan, the magazine said. Those workers also can apply for the company's 401(k), profit-sharing and stock programs.”

    • “Kids of McDonald's employees can apply for $5,000 college scholarships, and mentoring and classroom training are available. Workers interested in leadership can take restaurant management coursework or earn an associate's degree through the company's Hamburger University.”

    The innovations, which also include “an eight-week paid sabbatical program for employees every 10 years,” apply to employees of McDonald’s corporate stores. The Sun Times notes that 90 percent of McDonald’s 100,000 employees are paid by the hour.
    KC's View:
    These are some extraordinary benefits and policies ...and it is important to realize that many retailers will be competing for the same hourly employees. McDonald’s is not making it any easier on the companies competing for those folks.

    Published on: April 14, 2010

    USA Today reports that an audit by the US Department of Agriculture (USDA) Office of Inspector General maintains that “beef containing harmful pesticides, veterinary antibiotics and heavy metals is being sold
    to the public because federal agencies have failed to set limits for the contaminants or adequately test for them,” and that “the health effects on people who eat such meat are a ‘growing concern’.”

    The USDA's Food Safety and Inspection Service (FSIS) reportedly “has agreed with the inspector general on ‘corrective actions’ and will work with the FDA and EPA ‘to prevent residues or contaminants from entering into commerce’.”

    However, the paper also reports that “even when the inspection service does identify a lot of beef with high levels of pesticide or antibiotics, it often is powerless to stop the distribution of that meat because there is no legal limit for those contaminants.”

    Meghan Pusey, a spokeswoman for the National Cattlemen's Beef
    Association, tells USA Today: "Beef farmers and ranchers pride themselves on producing a safe and wholesome product, and anything less is unacceptable. We remain committed to working with industry and government partners to eliminate rare safety incidences from a meat supply that is extraordinarily safe by any nation's standards."
    KC's View:
    Why am I not feeling reassured?

    Published on: April 14, 2010

    The Los Angeles Times reports this morning that “sticker shock is arriving at a supermarket meat case near you, as cattle, hog and poultry prices soar in speculator-influenced commodity markets ... Given the recent strength in retail sales overall, U.S. consumers may be willing to pay a little more for their animal protein. But that's no sure thing, and some farmers worry about the steeper price tags on tenderloins and spare ribs while the unemployment rate is at 9.7%.”
    KC's View:
    Contaminated, and high priced? Yikes. Pass the tofu.

    Published on: April 14, 2010

    Reuters reports that Walmart plans to export hundreds of millions of dollars worth of products from India, making that country a major sourcing hub for the company.
    KC's View:
    I know that one thing has nothing to do with the other, but announcements like this tend to undercut the whole “let us build more stores in Chicago to create more jobs” argument.

    Published on: April 14, 2010

    Advertising Age reports that McDonald’s has hired its first director of social media, Rick Wion, who actually has been doing the job on an outsourcing basis since 2006.

    According to the story, Wion has three marching orders: “using social media to build the business, manage customer problems, and beef up outreach to target groups such as mommy bloggers.”
    KC's View:

    Published on: April 14, 2010

    Jack H. Brown, the chairman/CEO of Stater Bros. Markets in California, has been honored by the Congressional Medal of Honor Society for his years of contributions to the Congressional Medal of Honor Society and for his dedication to promoting and perpetuating the principles upon which our nation was founded. The Congressional Medal of Honor Society is comprised of only those Americans who have received our Nation's Highest Award for Heroism under fire while risking their lives in action against our enemies.

    The award was presented on March 1 by five Medal of Honor Recipients:  John F. Baker Jr., Harvey C. Barnum Jr., Ronald E. Ray, James A. Taylor, and Jay R. Vargas, who have all known Brown personally for many years. Brown is a Navy Veteran, having served with the Pacific Fleet during the Vietnam era.  He has been at the helm of Stater Bros. Markets for the past 29 years.

    Brown said, "I have been honored in my career by receiving several special awards but none were presented by five Medal of Honor Recipients and from an organization that I so respect and admire…the Congressional Medal of Honor Society.  Those who wear the … 'Medal of Honor' …are truly America's finest."
    KC's View:

    Published on: April 14, 2010

    CBS News reports that a New Jersey Whole Foods has been victimized in the same way that a Walmart in the state recently was - teenagers managed to access the store’s public address system and announce that “all blacks should leave the store.”

    Police say that the situation is a “copycat” scenario, and the teens are been arrested and charged with bias intimidation and harassment.
    KC's View:
    What the hell is wrong with these people? Who are their parents? Have they never been taught anything about decency and values?

    On the other hand, maybe they have been indoctrinated in certain values - and they are evident in the filth coming out of these kids’ mouths.

    Published on: April 14, 2010

    Food Safety News reports that Sen. Kirsten Gillibrand (D-New York) and Rep. Nydia Velazquez (D-New York) have “introduced legislation to combat 'food deserts' prevalent throughout urban and rural communities across the United States ... the legislation, entitled the Healthy Food Financing Initiative, would provide start-up grant and loan investments in some of the most marginalized communities in order to expand access to fresh food and create sustainable, well-paying jobs.”

    • The Grand Rapids Press reports that “Meijer's latest pharmacy freebie is drawing praise from the medical community. The retailer is dispensing free doses of the most commonly-prescribed generic medications to treat Type 2 diabetes.Obtaining the immediate release form of metformin -- available in 100 tablets of 500mg, 850mg and 1,000mg -- will require a prescription.

    The drug retails for $14-$42 for a month's supply, depending on the dosage prescribed, said Frank Guglielmi, spokesman for the Walker-based supercenter chain that has 191 stores across five states.”

    • The Boston Globe this morning reports that Ahold-owned Stop & Shop “is meeting with employees today to update them on reorganization plans that will include consolidating some jobs and transferring positions to Carlisle, Pennsylvania ... No details are available yet on how many positions will be cut or moved to Pennsylvania, where the parent company Ahold USA is based.”

    Dow Jones reports that even as Ahold looks for new growth opportunities in the US to build on its recent acquisition of Ukrop’s, the Netherlands-based company also is planning to enter the Belgium market using its Albert Heijn banner.

    “We are looking if we can push over the border and use the logistic strength of our Dutch operation," CEO John Rishton told the company’s annual shareholder meeting.
    KC's View:

    Published on: April 14, 2010

    ...will return.
    KC's View: