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    Published on: April 20, 2010

    by Michael Sansolo

    There are few words that should be more dreaded in business than complacency. For too many of us complacency makes us believe the status quo is the way things are going to be for a long time. Anytime you think you have the status quo figured out, the odds are the status quo is about to change. The only question is when.

    For that reason, this is a story of two stores and a sudden competitive war that has broken out in my neighborhood. But it’s really a larger story of complacency.

    Although I live in a heavily populated suburb, we had the oddity of only one supermarket in a radius of three to five miles--trips that can take 15-20 minutes given our traffic patterns. So our lone store, a relatively undistinguished Giant, had a virtual monopoly. Sadly, it showed.

    The store was limited in size by the shopping center around it, but also seemed limited in creativity by the lack of competition. It wasn’t a terrible store—far from it in fact. But it also did nothing special. Store conditions, lighting, in-stock rates, quality of perishables…virtually everything about the store seemed perfectly average.

    Then the status quo changed.

    About two miles from my home a wooded hillside suddenly sprouted development. Townhouses, high-rises and offices sprung up and a small parcel was designated for retail. Suddenly Harris Teeter began building.

    It was little surprise when Giant responded to the construction with a renovation of the long-neglected store. Colors and lighting were drastically improved. Self-scanning was added, which seemed to have special appeal to the high-tech types in my community. Produce, meat and seafood quality seemed to improve.

    Two weeks ago, Harris Teeter opened and the world changed. The Harris Teeter parking lot was packed to capacity throughout the opening week. Valuable coupons arrived in the mail from both companies as the battle was joined. No doubt, we’re in for quite a period of retail wooing and there’s no telling who will win.

    But in truth, the battle is already over and the status quo lost. A neighbor (knowing my interest in the food industry) breathlessly reported that on the day before Harris Teeter opened, the Giant was dolled up like never before. Samples were plentiful, balloons were distributed to small children and the presence of “suits” was palpable. My neighbor, a life-long resident of the area, couldn’t resist. She walked up to one of the suits and uttered the worst four words a customer can say: “Too little, too late.”

    One day later she pronounced herself a loyal Harris Teeter customer.

    It’s a terrible reminder that complacency is frequently the biggest competitor we all face. It’s complacency that let’s us cling to the status quo and fools us into thinking that the way things are is the way they will always be. It’s complacency that allows us to keep doing things the same way because no one is pushing us to be better. The business world is littered with the remains of once dominant companies who forgot to lead relentlessly when they had the chance.

    Years ago, then-Supervalu Chairman Jeff Noddle gave a speech about the virtue of paranoia. A good businessperson, he said, never rests easy. Rather he or she always worries about the competitor yet to come. In the case of retailers that means over serving their markets, making any potential entrant think twice about even entering. The virtue of paranoia is something too many of us forget.

    And it is something everyone should remember.

    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: April 20, 2010

    The Washington Post reports that the US Food and Drug Administration (FDA) “is planning an unprecedented effort to gradually reduce the salt consumed each day by Americans, saying that less sodium in everything from soup to nuts would prevent thousands of deaths from hypertension and heart disease. The initiative, to be launched this year, would eventually lead to the first legal limits on the amount of salt allowed in food products ... Until now, the government has pushed the food industry to voluntarily reduce salt and tried to educate consumers about the dangers of excessive sodium. But in a study to be released Wednesday, an expert panel convened by the Institute of Medicine concludes that those measures have failed. The panel will recommend that the government take action, according to sources familiar with the findings.

    According to the story, “The government intends to work with the food industry and health experts to reduce sodium gradually over a period of years to adjust the American palate to a less salty diet, according to FDA sources, who spoke on condition of anonymity because the initiative had not been formally announced.”

    Still to be determined is what precisely the salt limits should be, though the story says that any changes will take place in gradual steps over a decade so that consumers hardly are able to notice any taste differential.
    KC's View:
    This, of course, will launch a debate about more than just salt. It will be about the role of government...a particularly contentious subject these days.

    Published on: April 20, 2010

    Forbes has an interesting piece about 10 major retailers - companies that generate as much or more revenue as Kohl's, Gap and Starbucks - that many people simply do not know. Among them:

    Delhaize America with sales of $19.2 billion; HEB, $15 billion; Meijer, $14.3 billion; Giant Eagle, $6.8 billion; and Hy-Vee, $6.2 billion.

    Also of note - the Army Air Force Exchange, ranked fifth on the list with sales of almost $10 billion, and described thus: “Active and retired Army and Air Force personnel get discounts and cheap shipping through this century-old secondary retailer, which sells through catalogs and military base locations. Bigger than A&P, Limited Brands and Nordstrom.”
    KC's View:

    Published on: April 20, 2010

    Last week, MNB took note of an Arizona Daily Star report on a free, public charter school in Tucson called the Children’s Success Academy that has unique food rules - “it bans not only white flour, but refined sugar and anything it defines as processed food.” Only juice that is 100 percent juice is allowed. And, the paper writes, ”Among the ‘no’ foods: flavored yogurt, canned fruit, American cheese, processed meats, white bread, peanut butter made with sugar, and virtually all packaged crackers except Triscuits, because they are baked with whole grain.”

    Now comes word that there are more than 1,000 schools participating in a new Organic Trade Association (OTA) initiative. With its “Organic. Its Worth it in Schools.” initiative, OTA – which represents more than 1,400 organic food and product companies – is calling on teachers, parents, students, educators and others over the next two weeks to vote for their favorite school to win an organic garden complete with seeds, soil and expert gardening support; or a fully stocked vending machine, which can feature organic items like milk, fruit, cheese, yogurt and snacks.

    “We have nearly 1,000 schools participating in our contest, including those from rural towns and urban cities across America,” said Christine Bushway, executive director of OTA. “These schools and hundreds of others work hard to promote healthy food and support the environment. We’re hoping ‘Organic. It’s Worth it in Schools.’ provides them with one more tool to help them along.”
    KC's View:
    I think anything that can be done to eliminate the serving of slop in school is a good thing. And let’s be clear - slop is the polite word for a lot of what gets served there.

    Published on: April 20, 2010

    Reuters reports that Coca-Cola is working with Costco to test a new method of delivering soft drinks to 7-Eleven - moving away from direct-store-delivery (DSD). “Under the test program,” Reuters writes, “drinks will be shipped to a Costco business center, where a third-party logistics company will pick them up and deliver them to a warehouse. Then, when 7-Eleven stores need replenishment, the drinks will ship to the stores with other products as well.”

    The Teamsters labor union is reportedly not happy about the test - which for the moment is only taking place in Southern California - because it feels that a roll-out could results in the elimination of hundreds of union jobs.

    The Coke test happens as the soft drink giant is in the process of acquiring its largest bottler and looks for ways to streamline the supply chain and make it more efficient.
    KC's View:
    The Teamsters are right to be worried. This could presage a big change for Coke if the test proves to be successful.

    But the Teamsters also have to realize that it is not in Coke’s best interests - or even its interests, in the long-term - to be inefficient.

    Published on: April 20, 2010

    Advertising Age reports on how KFC has tried a lot of tactics to re-energize its brand, including “cheap marketing stunts such as moving the secret recipe, taking Colonel Sanders to the U.N. and, most recently, launching the 500-calorie Double Down sandwich, which replaces bread with chicken breasts ... While the series of stunts drove buzz and the introduction of grilled chicken spiked short-term sales, the moves also contributed to a lack of consistent brand positioning and a distraction from KFC's flagship product -- both of which have hurt the chain and allowed competitors to creep in and carve out share.” The story says that KFC’s market share in the fast food chicken segment dropped from 36 percent to 30 percent just last year.

    Lessons could be learned, Ad Age writes, from a chain such as Chick-fil-A, a much-smaller chain that “has built a cult-like following with high-quality sandwiches, better-for-you options, excellent service and clean stores. It now commands 20% of the market with just 1,500 locations. That's less than one-third of KFC's 5,200-store U.S. presence. And Chick-fil-A operates on a six-day week, as its restaurants are closed on Sundays.”
    KC's View:
    I’ve been putting off actually going to a KFC and trying a Double Down. I figure I should refill my Lipitor prescription first, and maybe bring along as stomach pump and maybe a defibrillator. Hard to get all that stuff in the back of my Miata.

    Published on: April 20, 2010

    A Los Angeles district court judged has thrown out singer Carly Simon’s lawsuit against Starbucks.

    Simon sued the coffee company for unspecified damages related to the failure of her last CD, “This Kind Of Love,” in 2008. The album was produced by Starbucks’ Hear Music division, which had turned albums by artists such as Ray Charles into hits. However, shortly after Simon signed her deal with Hear Music, the company reduced its involvement in the music business as it dealt with the erosion of its core business because of economic challenges created by the recession; Simon’s suit charged that not only did the company not pay her an agreed-upon advance, but Starbucks didn’t even initially stock the CD at all of its stores and when it finally did, it was at a discount price that Simon says stigmatized the album.

    The judge said, in essence, that Simon had no claim against Starbucks.
    KC's View:

    Published on: April 20, 2010

    • Three hundred workers at a Mott’s plant in Williamson, New York, reportedly have voted to authorize a strike if ongoing contract negotiations cannot be successfully concluded. The union says that the manufacturers is engaging in unfair labor practices by refusing to bargain.

    Mott’s LLP is a subsidiary of Dr. Pepper Snapple Group.

    Convenience Store News reports that 7-Eleven plans to launch a new private label beer. No name for the new product has yet been disclosed, but it is said to be a premium beer with a budget price.

    • The Wall Street Journal reports that the US Supreme Court has agreed to hear a copyright infringement case brought by the Omega watch company against Costco, which it said had illegally resold luxury timepieces that it had acquired through second-hand sources.

    According to the story, “the case could have considerable implications for discount stores and companies like eBay Inc. (EBAY) and Amazon.com Inc. (AMZN) that facilitate the re-sale of CDs, books, movies and a host of other goods.

    • The Grocery Manufacturers Association (GMA) announced that retired chairman/president/CEO of The Procter & Gamble Company, A.G. Lafley, has been selected to receive the GMA 2010 Hall of Achievement Award. The award will be given to Lafley at GMA’s August executive conference.

    • The Toronto Sun reports that Canadian convenience store giant Alimentation Couche-Tard “is not backing off its plan to purchase the Iowa-based Casey's convenience store chain despite the latter's attempt to block the takeover. Casey's announced recently that it would be using a ‘poison pill’ strategy to stop the purchase by its competitor. The plan would allow Casey's shareholders to buy an extra share at half price for every share that is already owned.”
    KC's View:

    Published on: April 20, 2010

    Joseph Azzolina, Sr., the founder and CEO of New Jersey’s Food Circus Supermarkets, as well as a state senator and representative and a 17-year member of the Food Marketing
    KC's View:
    I asked Michael Sansolo, who knew Joe Azzolina far better than I, to offer some thoughts this morning.

    I was lucky to have known him for nearly 20 years.

    Joe was a straight shooter or more aptly put, he was blunt, but always in a way that could leave you with a smile.  Like so many independents he was firmly linked with his local community, only with a twist most never try.  Joe was endlessly active in New Jersey politics, serving in both the state assembly and state senate and he always urged other retailers to consider taking part in government to bring champions to the issues of retail.  One of his pet projects through the years was bringing the battleship New Jersey to the Garden State where it could be turned into a floating monument.  His campaign to get the ship involved signs on toll booths and special license plates. About 10 years ago, the effort worked and the New Jersey came home.

    I first met Joe in the early 1990s when I interviewed him about his unsuccessful candidacy for US Congress.  Joe loved the article and called my magazine to order a few hundred reprints to use as a mailer.  But, as Joe reminded me constantly, someone made a mistake on the order and sent him thousands of copies, which he tried to give back to me one at a time every chance he could.

    He'll be missed.

    Published on: April 20, 2010

    Alfred S. “Al” Kober, retail director for Certified Angus Beef for the past eight years, and previously the meat director for Clemens Supermarkets, died last Saturday at age 72 after a battle with cancer.
    KC's View:
    It was with great sadness that I learned of Al Kober’s death yesterday. For about as long as I’ve been writing MNB, Al was a friend to me and the site, and a constant email contributor with strong ideas and beliefs. About meat. About food. About retailing. And about much more.

    I did not know Al well. Best I can remember, I only met him in person once, at a meat conference several years ago. But even though we had different life philosophies - Al was a man of intense spirituality and religious belief, and I am not - I looked forward to the emails in which he would offer a Biblical reference or two, and speak about the larger faith-based context in which he saw his earthly life. I could not always post those emails, simply because MNB is not a place where sermons necessarily fit. But we often corresponded beyond what appeared here, and I learned from him ... especially because he kept a sense of humor about my particular brand of secularity. I know he prayed for me, which I appreciated. Still do.

    I’ll miss his emails. I’ll miss his point of view. But I know I’m a better person for having had him as a friend.

    Published on: April 20, 2010

    Yesterday, MNB reported on a Lakeland Ledger story about how Publix Super Markets continues to feel pressure from protesters, organized by the Coalition of Immokalee Workers (CIW) - 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.

    We got the following email, responding to the news story and my commentary, from Maria Brous, director of Media and Community Relations for Publix:

    Good afternoon, KC.

    Thank you for providing your views. While we may not always agree, it always allows for some interesting discussion. After reading today’s opinion, we felt compelled to share our view with you and your readers, in its entirety.

    Initially, the CIW complaints Publix heard about were regarding wages. As a company, we were focused on the issues at hand and recognized that the CIW’s complaints should be addressed with the employers of the workers, not with retailers and their customers. The CIW has changed its focus to human rights issues for their upcoming Spring 2010 campaign. This includes focusing on modern day slavery issues.  As a community partner for nearly 80 years, it would be unconscionable to believe that our company would support a violation of human rights. Publix does not support any human rights violations and believes that our local, state and federal laws would prohibit such despicable behavior. If there are such grievances, we would direct those complaints to the appropriate local, state and federal government agencies.

    The complaints we have heard thus far are:
     
    Workers being paid “virtually the same piece rate as they were in 1978”. Workers have no right to overtime pay.
    Workers have no health insurance, sick leave, paid vacation or pension plans.
    Workers should be paid directly by the farmer as well as supermarket retailers, fast food companies, and others.
    Modern Day Slavery (beatings, no breaks, confinement, etc.)
    Productivity standards too strenuous
    “No right to organize in order to improve these conditions”
     
    However, we encourage the CIW to consider the following facts:

    By law, workers must be paid at least a minimum wage, currently $7.25 per hour. If growers want to pay more per hour, it can be based on pounds picked, or any other non-discriminatory method.
    Minimum wage has significantly changed since 1978, therefore, claims of unchanged work rates since then are unfounded.
    The U.S. Secretary of Labor published prevailing wages of farm workers in Florida at $9.20 per hour.
    Employers should pay wages - not those outside the employment relationship.   Slavery is a criminal offense.
    If productivity standards are too strenuous, farmworkers should work for  another employer.  A shortage of labor will require employers to revise standards or working conditions.   
    Agriculture workers are exempt from the National Labor Relations Act.
     
    We are an associate-owned, Florida based supermarket. Any campaign to support workers should support rather than target the associate owned supermarket. Associate ownership is an important difference between Publix and its competitors. We are consistently recognized as a Great Place to Work. We are unlike any of its competitors with regard to its treatment of employees. This is validated by simply entering any Publix store. So the CIW’s campaign against Publix is one directed at an acknowledged employer of choice and a great place to work. The CIW’s campaign to boycott the purchase of Publix tomatoes ironically hurts Florida farmworkers and the citizens of Florida who will see a withering Florida produce industry.

    The Farmworker Freedom March from Tampa to Lakeland on April 16-18 calls on Publix to “stop turning a blind eye to the human rights crisis in the fields!” Publix is unaware of a single instance of slavery existing in its supply chain. Publix is also unaware of a single instance of payment of less than the required minimum wage.

    The CIW chiefly seeks to stop Publix from doing business with two farms: Pacific Growers and 6L. The CIW seeks to direct Publix to purchase tomatoes from East Coast Growers. Publix has already done exactly that.

    Publix is a company founded and committed to our associates and the communities we serve. For nearly 80 years, we have supported our local communities, the economy, growers and farmers. We have earned the respect of our peers and have been consistently recognized on various “The Best of” lists because of  our values, mission and successful focus of making Publix the retailer of choice for our customers. We would never knowingly disappoint our customers or communities.

    While we hear the concerns of the CIW, they are misdirected. As a community retailer of choice, we are focusing our efforts on making our communities a better place and affecting change in the manner we do best – by supporting local nonprofit organizations who are able to assist the families of Immokalee with food and child care services.

    I hope this note brings some clarity to the issues...


    My inclination is to trust that Publix is doing the right thing in this case - that it has done all the appropriate due diligence and feels that it has made the right decisions. I’ll buy that.

    All I was trying to say - and perhaps I was not clear enough - is that I disagree with the notion that it is not appropriate for retailers to take informed positions in such debates. As a consumer, I want the place where I buy foods to be informed and concerned about how those products are sourced.

    In this case, it seems to me, Publix is taking an informed position. It may not be the position that the CIW wants it to take, and it may have to endure the slings and arrows of organized protestors, but it is a clearly reasoned and stated position.
    KC's View:

    Published on: April 20, 2010

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    KC's View: