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    Published on: April 19, 2010

    The Sacramento Bee reports that Raley’s laid off 153 headquarters employees on Friday, just a week after it eliminated the jobs of five senior executives.

    "This was the final step in a process that was necessary for us to compete in this new world," said CEO Michael Teel, noting that the retailer had become top-heavy. Teel said that planned expansion caused the company to build staffing levels, but that the combination of economic decline and toughened competition meant that tough decisions had to be made.

    According to the story, “to comply with federal WARN Act guidelines that require notifications in advance of large job cuts, Raley's is placing the 153 workers on a fully paid leave of absence for 60 days. After that, they'll be eligible for severance payments of one week of pay for each year of service, with a 26-week cap.”

    Employees were informed of the moves on Friday, and terminated staffers were allowed to gather their personal belongings and then leave the premises. The headquarters building was then closed at 1 pm “and all employees were given the rest of the day off. That was to give them time to absorb the changes at the company, the CEO said.”
    KC's View:
    Maybe not the final step. It all depends on how compelling a store experience the company offers to consumers.

    Raley’s may be able to be more competitive because of these changes, or it may just be setting itself up for the moment when it will accept a buyout offer from some bigger chain. There is a lot of betting out there that the latter is the more likely scenario...but it is not inevitable. It all depends on execution.

    Published on: April 19, 2010

    The Lakeland Ledger reports that Publix Super Markets continues to feel pressure from protesters who want the retailer to spend an extra penny per pound for tomatoes it buys and not to do business with suppliers that they say are abusing and underpaying workers.

    Yesterday, at the climax of a three-day series of marches and protests, “The line of protesting marchers stretched for several city blocks, halting traffic along South Florida Avenue for a brief time,” the Ledger writes. “Lakeland police officers escorted the group for safety.

    “The Coalition of Immokalee Workers (CIW) has said it wants Lakeland-based Publix and other food retailers to pay an additional penny per pound for tomatoes from Florida and to break ties with suppliers who abuse workers.
    “Publix officials said Sunday that if Florida's tomato workers want higher wages, they need to talk to the suppliers.”
    KC's View:
    These protests have been ongoing for more than six months, and neither side appears as if they are willing to budge. That’s a shame.

    When we first reported on this conflict back in November, I wrote that while I’m not ready to pass judgment on the CIW complaint, as a consumer I actually believe that it is well within the purview of a retailer to take sides in such cases. If the CIW is correct in its assertions, then Publix should stand up and be on the side of the farmworkers. If the CIW is not, then Publix should say so and why. As a consumer, I want to know where my retailer stands on such issues. I do not think I am alone on this.

    Published on: April 19, 2010

    The Chicago Tribune reports how how a variety of companies are reformulating products using real sugar, replacing the high fructose corn syrup (HFCS) that used to be the sweetener of choice. At issue is whether HFCS contributes to the nation’s obesity epidemic, a notion that has been reinforced by a study conducted by Princeton University researchers.

    “The study's much-debated details hardly matter,” the Tribune reports. “Whatever the facts, the lobbyists at the Corn Refiners Association don't stand a chance in the credibility contest against Princeton, which is bad news for Midwest syrup-makers such as Archer Daniels Midland Co., Cargill Inc. and Corn Products International Inc.”

    Ultimately, the story notes, the issue may be moot, since companies are spending a lot of time and money are looking for what PepsiCo CEO Indra Nooyi calls “a zero-calorie sweetener breakthrough” that will render both sugar and HFCS obsolete.
    KC's View:

    Published on: April 19, 2010

    The Los Angeles Times reports that there is a new trend affecting the restaurant industry: “Taking a cue from Twitter and Facebook cultures, serious foodies and casual consumers alike are using digital technology to document each bite, then sharing or swapping the pictures online.

    “Chefs call them the food paparazzi, and these days, no morsel is too minor.

    “Flickr, the photo-sharing website, has seen the number of pictures tagged as ‘food’ jump from about half a million in 2008 to more than 6 million today, according to company officials. In the group ‘I Ate This’ on Flickr's site, nearly 20,000 people have uploaded more than 307,000 images of their latest meals, from a 7-Eleven hot dog smeared with mustard to the butter dish at the Michelin three-star restaurant French Laundry in Yountville, Calif.”

    There is, of course, a downside: “Maitre d's regularly face diners demanding to be moved away from camera flashes and the sound of firing shutters,” the Times writes. “Waiters find themselves tongue-tied as customers thrust voice recorders at them to capture a recitation of each course. Some chefs have had enough.

    “Chef Grant Achatz allows only non-flash photography in his tony Chicago restaurant, Alinea. He, like many chefs, finds himself torn between being flattered by the public's enthusiasm and aggravated over the effect the picture-taking is having on the restaurant's operations.”
    KC's View:
    This may be my favorite paragraph from the story: “Camera manufacturers are joining the trend. Nikon, Olympus and Sony sell cameras that offer ‘cuisine’ or ‘food’ settings, which adjust to enhance colors and textures on close-ups.”

    Go figure.

    It may be annoying, but engagement is important in such situations...because the criticism, observations and discussion is going to take place anyway. To fight it is to appear anti-transparency, which nobody can afford.

    Today it is restaurants. Tomorrow it will be supermarkets. Get ready now.

    Published on: April 19, 2010

    Five major US airlines - American, Delta, United, US Airways and JetBlue - reportedly have reassured Sen. Charles Schumer (D-New York) that they will not assess fees for carry-on bags, there therefore not follow the lead of Spirit Airlines, which plans to charge up to $45 apiece for bags put into overhead bins.
    KC's View:
    However, the story in the Detroit Free Press notes that the promise is not absolute, and there could be room for the airlines to change their minds - especially in financial pressures create an environment in which they need to generate incremental revenue. That could happen sooner rather than later, since the airlines are about to start filing quarterly revenue and profit statements...which are expected to be printed in a lot of red ink because of high fuel prices and February snowstorms that affected air travel. (The current volcano eruptions in Iceland, shutting down air travel to and around much of western Europe and reportedly costing the industry as much as $250 million a day, won’t help.)

    Look, the real issue here isn’t being charged a fair price for an airline ticket. It is charging one price for a ticket and then adding on so many surcharges that it becomes ridiculous ... charging for things that seem like they ought to be part of the basic cost ... and then using rationalizations that can be easily picked apart with just a minimum of logic. It would be like going to the supermarket and being charged extra for the use of a shopping cart, and graded fees based on how close your parking space is to the front door.

    Published on: April 19, 2010

    Bloomberg reports that Walmart CFO said last week that the retailer may use acquisitions to get into markets where it does not yet have a presence, even as it continues to expand in markets where it already operates by building new stores.
    KC's View:

    Published on: April 19, 2010

    Crain’s Chicago Business reports that CVS Caremark “is fending off allegations that it bilked the state of Illinois out of tens of millions of dollars, just as the pharmacy-benefits giant vies for a huge contract to manage prescription drugs for the city of Chicago and other local government agencies.

    “An ongoing whistleblower lawsuit against the Rhode Island-based firm says the alleged fraud took place from 2002 to 2005, when CVS Caremark handled prescription-drug benefits for 400,000 Illinois workers, retirees and their families.” Among the charges are that CVS employees violated the law by removing labels from returned prescriptions and then resold them, and that the company “fraudulently called state workers’ physicians’ offices and changed their prescriptions — switching from a brand-name drug to a generic, for example — in order to cut costs.”

    CVS lost its bid to get the case dismissed on the grounds that the allegations were not specific enough, and continues to maintain its innocence in the case.
    KC's View:

    Published on: April 19, 2010

    MarketWatch reports on improved performance by Kmart, the 1,300-store chain that “has generated two straight quarters of positive U.S. same-store sales, putting an end to 14 quarters of declines. The company's fourth-quarter profit was its biggest in three years.”

    "There's a genuine confidence that we are on the right track, reconnecting with the basic customer and building a base that perhaps wasn't there before," Kmart's Chief Marketing Officer Mark Snyder tells MarketWatch. "We are demonstrating relevance."

    Among the reasons for Kmart’s improved fortunes - a strong focus on value that has had resonance during recessionary times, and a better fashion sense that has made the selection more attractive to shoppers.
    KC's View:

    Published on: April 19, 2010

    Reuters reports on new numbers generated by the US Centers for Disease Control and Prevention (CDC) suggesting that “cases of six common food poisoning agents have dropped sharply since the U.S. government started to monitor them closely in the 1990s.” Campylobacter, Listeria, Salmonella, Shiga toxin-producing Escherichia coli (STEC) O157, Shigella, and Yersinia have all declined, the CDC says.

    "Overall, this year's report indicates that there have been reductions in illness due to many of these pathogens ... over the past 15 years," the CDC’s Dr. Chris Braden said, noting that “most of the reductions came soon after the system was put into place and rates have been stable in more recent years,” according to the story.
    KC's View:

    Published on: April 19, 2010

    Business Week reports that Peter Brabeck-Letmathe, the chairman of Nestle SA, said last week that there are a number of countries around the world and even in Europe that have tax laws that are more lenient and advantageous than those of Switzerland, the longtime home of the CPG company.

    According to the story, “Switzerland has managed to attract numerous international companies by only taxing earnings made inside the country and offering tax breaks for high-flying foreigners who relocate there. But that advantage is slowing eroding as other European nations such as the Netherlands, Belgium, Britain and France offer similar deals to lure big companies to their shores.”

    The statement is not seen as the precursor of a move by Switzerland’s biggest public company, but rather a warning that a growing anti-corporate environment in Switzerland could have long-term implications.
    KC's View:

    Published on: April 19, 2010

    • The Kroger Co. has named Bryan Kaltenbach, most recently senior vice president of Sales and Marketing for its Food 4 Less division, to be the new president of Food 4 Less, effective immediately.

    • The Kroger Co. has named Michael J. Stoll, the company’s vice president of corporate benefits to be CEO of its in-store health care subsidiary The Little Clinic.

    • Unilever named Eugenio Minvielle, who has been serving as Nestle's president in France, to be its new exec VP-North America.
    KC's View:

    Published on: April 19, 2010

    MNB reported last week on a statement released by the Food Marketing Institute (FMI) objecting to new swipe fees for PIN-based debit cards being assessed by Visa.

    One MNB user wrote:

    Most interesting that government interference in swipe fees is welcomed by FMI and other groups but in Health, Food Safety etc the free market should dictate. I fully agree with FMI’s stance vis a vis VISA but consistency would also be welcome.

    I get your point. But let’s face it. We all welcome government interference in areas where said interference works in our favor. And we hate it when the government interferes in a way that seems to hurt us. The problem is that we don’t all agree on what interference is positive and which is negative, and it is from this disagreement that we get political debate and elections.

    The problem is that some political debate descends into hate speech.

    I like MNB user Sue DeRemer’s response to this story:

    The government really really really needs to let Wal-Mart create a bank. 

    She’s right. That would change the essential nature of financial services competition.




    On the subject of the carry-on bag experience, and the new charges being levied by Spirit Airlines, we continue to get email ... much of it related to the threat of legislation that would prevent such fees.

    One MNB user wrote:

    Just another example (one of many) where I can safely say that I don't need Chuck Schumer or Amy Klobuchar to "take care of me" or "protect me" with mindless legislation. The market will take care of this issue. AND if they do succeed in passing tax legislation on this who do they think will end up paying the tax? Get real.

    I agree.

    So did MNB user Craig Shafer:

    Our legislators should be focusing on finding ways to reduce our deficit and create new jobs.  Our government is not needed in this instance.  They should allow marketplace to do what it does best- punish dumb pricing policies with lower consumer demand!

    Still another MNB user chimed in:

    It is none of the Government’s business!.  That’s the problem we have now. Government institutes laws on a whim and doesn’t let the market correct the problem.  If people don’t like the policy, don’t fly the airline.  It’s that simple.  The airline will wake up or go belly up.  Way too much Government interference in the free enterprise system.

    MNB user J. Schindler wrote:

    These are the same legislators that claim they just do not have time to address legislation to address the 2010 estate tax repeal, a repeal that we all know is going to be retroactively repealed itself.  In the interim this is causing many people a lot of uncertainty and distress, particularly the Administrators of estates of people who have died in 2010.   Is it any wonder than so many of us absolutely loathe Congress.

    Another MNB user wrote:

    You have GOT to be kidding me.  This is just getting ridiculous with our government.  You are exactly right when you say that these fees should be handled by the market!! (As should everything else in my opinion...)  But anyway, please government, let consumers= make decisions for themselves!!!  Let us decide if the fees are worth it or not by our behavior!! Trust me government, we are capable of making that decision!  I find it insulting that the government thinks it has to do everything for us and control our lives and our businesses to this extent.  Let businesses try things and let consumers determine the success, or failure!  Please!!! aghhh!!  This legislation is the opposite of freedom.  I think the fee's are ridiculous too, but i have sooo much more faith in the market handling this than the govt.

    While I think that a good argument can be made that Congress should simply let the market deal with the carry-on baggage fees - and in fact made that argument last week - it also is possible that every airline could decide to impose the same fee, which would actually make it impossible for any of us to choose to fly airlines without such fees. Not sure how you avoid that, but it is at least a possibility.

    I will challenge you on two statements that you made. One is that “everything” should be handled by market forces rather than by legislation, and the other is the implication that this speculated-about legislation is “the opposite of freedom.” Both statements strike me as hyperbole.

    There are things that government needs to do simply because market forces sometimes do lead to consumer abuses and the violation of basic human freedoms. (If a bus company decided to make black people sit at the back of the bus, do we let market forces address this obvious inequity? I think not. And legislation can be misguided and unnecessary without being un-American or a “violation of freedom.” People like to throw those words around these days, and what worries me is that they will become so commoditized that we won;t recognize a real violation when we are threatened with one.

    MNB user Jackie Lembke wrote:

    I recently started traveling a lot more than I used to. All business trips, none of which allow me to fly in and out on the same day, more because of my originating flight than actual business time. I check any bag that is bigger than the limited carry-on, but I also try and limit the amount I pack except for extended trips to only carry-on bags. Because I fly mostly commuter flights, rarely does my carry-on fit in the overhead bins and I graciously request a valet tag for my carry-on, when I have flown in bigger planes my bag fits nicely in the overhead bin without mashing. I am resigned to the fact that boarding the plane is much like standing in line at the amusement park, a lot of waiting for the thrill of fitting into a confined space for a period of time (hopefully without free-falling of going upside down). What is the hurry to get seated? I say take your time, enjoy the chance to stretch your legs, it isn’t like your seat will be gone if you’re not the first in line.

    The hurry is often to get to one’s seat before the precious overhead space over aisle nine is taken by some clown who has a seat in row 23. I hate those guys.




    On another subject, a brief piece I wrote on Friday about Air Force recruits going off to basic training in Texas, one MNB user wrote:

    I was almost moved to tears reading your story about the new recruits and the individual on his way to rehabilitation. What I kept think was, after their valiant and heroic service to our country and the sacrifices of their family…we virtually abandon them. We sometimes repossess their belongings and homes while they are away serving their country, we leave them to solve their own war related mental and physical illnesses. And, worst of all, sometimes we put their lives on the line for political motivations not related to the security of our country. They deserve more…much more.

    And another MNB user wrote:

    Your comments on the military-bound young people brought tears to my eyes.  You see, about 11 years ago, my son was one of those enthusiastic young people heading to San Antonio to begin a life in the Air Force.  He is still in the service and loves the life he has there.  He encourages others to seek this as a way of life because of the adventures he has had, the sights he has seen, the people he has met (including the oldest non commissioned officer in the service and several medal of honor winners).  He has flourished here and I can not be more proud of him.  He just re-enlisted and plans to make this his career, his life.

    It definitely takes a special type of person to go into military life and stay there.  Not everyone makes the cut, but, should they do so, they are never the same.

    If you ever have a chance to attend the graduation ceremonies in San Antonio, do so.  It is the most patriotic thing that I have ever seen in my life.  More so then any 4th of July picnic, inauguration, monument, etc. that I have seen.
    KC's View: