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    Published on: April 22, 2010

    Now available on iTunes…

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    Hi, I’m Kevin Coupe. This is MNB Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.

    Want to know how to reach the next generation of consumers?

    You don’t have to go any farther than new numbers generated by the Pew Research Center's Internet & American Life Project, and reported by Fast Company, about how young people communicate.

    Get a load of this:

    • “The average teen texter exchanges 1,500 texts each month, with an average of 50 per day.”

    • “Girls are more voracious texters than boys, sending an average of 80 messages a day compared to boys' 30.”

    • “Older girls (14-17) can get through 100 texts a day, or 3,000 a month.”

    • “21% of teenagers access the Internet only from their cell phones.”

    “65% of teens at schools where phones are routinely banned bring their mobiles to school every day, with 58% having sent a text message during class.”

    Among other things, this explains our monthly cell phone bill...

    We all know that there are dangers and downsides to this trend. We parents have a right to be concerned about how and what kids are accessing from their cell phones. In our household, we maintain a policy of trust...but verify.

    But here’s the marketing point. Is your company engaged with texting technology, working to figure out how to use it to reach current shoppers and appeal to potential customers? If not, you should be...or you risk obsolescence and irrelevance...and it will happen sooner than you think.

    Two questions often emerge after pronouncements like this one.

    One, what is the ROI? My response to this is that it may be too early to know...but that it does not matter. Miss this trend, and it could be an enormous lost opportunity.

    Two, is is better to wait and invest in the next technology innovation? This strikes me as silly. By its very nature, every technological innovation is doomed to inevitable obsolescence...but every technological innovation also is built on the shoulders of the ones that came before it. You apply what you learned from this one to the next one...and the next one...and so on.

    Finally, I run into people who think the whole texting phenomenon is the beginning of the end of western civilization. I don’t think so, but even if you think so, you still have to embrace and utilize this technology. It is where the customer is, it is where the marketing world is.

    Denial isn’t an option.

    For MNB Radio, I’m Kevin Coupe.
    KC's View:

    Published on: April 22, 2010

    Shelley Broader, the former Hannaford Bros. executive who later became the president/COO of Delhaize-owned Sweetbay Supermarkets, where she engineered and oversaw that chain’s conversion from its old Kash ‘n Karry banner, has been named senior vice president of Walmart’s Sam’s Club South Division.

    Broader left Sweetbay to become president/COO of Michael’s. She left the craft chain shortly after its CEO, Brian Cornell, departed to become CEO of Sam’s Club.
    KC's View:
    This, IMHO, is an enormous “get” for Walmart. They don;t come any smarter than Shelley Broader...and she brings an enormous passion for food retailing to the Bentonville Behemoth. Smart hire by Walmart...and I suspect she could have a significant impact on the company’s food business for a long time.

    Published on: April 22, 2010

    The Los Angeles Times reports on research done in Washington State about the effectiveness of restaurant menu labeling of fat and calorie counts in helping people make more nutritious choices.

    According to the story, “Six full-service, casual restaurants in Pierce County, Wash., participated in the study, adding nutritional information to their menus for a month. Researchers from the Tacoma-Pierce County Health Department noted what diners ordered for a month before the labeling and a month after to see if listing calories, fat, sodium and carbohydrates made any difference in what patrons ordered for lunch and dinner entrees. During the labeling period, diners were also given a brief questionnaire asking if they noticed the nutritional information, how well they understood the numbers and if they ordered differently because of the information.”

    Some 16,000 people participated in the study, which revealed that “71% of patrons noticed the nutritional information, and of those 80% looked at the key to understand what the numbers meant. The vast majority (96%) who looked at the key felt they understood it well enough to point out more healthful items. But only 59% of those who saw and comprehended the information made a decision based on it.

    “Also, only 20% of diners chose a lower calorie entree because of the nutritional information. Researchers calculated that for every 100 entrees purchased when nutritional labeling was in place, only 20 people ordered ones lower in calories. To account for the decrease of 1,500 calories total, each of those people ordered about 75 fewer calories than before menu labeling appeared.”

    In other words, the answer to the question - do people change their eating habits based on calorie and fat counts listed on restaurant menus? - is a resounding “sometimes” and “maybe.”
    KC's View:
    All I know is that calorie count info in restaurants has an enormous impact on what I order. Sometimes I hate the knowledge, because, as well all know, ignorance can be bliss. And sometimes I ignore it because I have a craving (and then I feel guilty about the indulgence). But I love having the information available.

    Published on: April 22, 2010

    Reuters reports that Target Corp. has decided to no longer issue a Visa-branded Target credit card that can be used at virtually every retailer, but instead will begin issuing a Target credit card that can only be used at Target.

    Target says that experience shows that it “will have to fund fewer receivables as a result of the move,” while at the same time it has found that its customers spend more money at Target with Target credit cards than with Target/Visa cards.
    KC's View:

    Published on: April 22, 2010

    The National Grocers Association (NGA) has hired Peter Larkin to succeed Tom Zaucha as the trade association’s CEO. Larkin, who has been running his own California-based public affairs consultancy, previously was CEO of the California Grocers Association (CGA), and is a former senior executive with the Food Marketing Institute (FMI).

    NGA is hoping that the second time is a charm with its efforts to find a replacement for Zaucha. Mike Jackson, the former Supervalu executive, was hired late last year to take the job but changed his mind “for personal reasons,” which started the search process up all over again.
    KC's View:

    Published on: April 22, 2010

    Wine Spectator reports on a 10-year study done by the Australian Wine Research Institute (AWRI) that demonstrated clearly that screw cap closures on wine bottles are clearly superior to virtually every kind of cork when it comes to preventing cork taint, oxidation and other problems while maintaining freshness and taste.

    The decade-long test, says Peter Godden, group manager at the AWRI, provided beyond a doubt that “most of the wines sealed with closures other than screw cap were completely undrinkable."
    KC's View:
    I need to step away from my laptop. My tears are likely to short out the keyboard.

    (Full disclosure. I stole the “Cork-Screwed” phrase from the Wine Spectator headline. It was too good to pass up.)

    Published on: April 22, 2010

    Marketing Daily reports on a new study by a company called Q Interactive saying that when presented with a targeted ad, 65 percent of more than 1,800 women said that their response was, "Cool! How did they know I wanted this?"

    In addition, the story says, “88% of them said the wished brands they trusted sent tailored offers ... To develop these relationships, 58% of the survey respondents encouraged brands to give them something first, while 19% wanted brands to get to know them better and 17% wanted the brands to tell them something valuable.”
    KC's View:

    Published on: April 22, 2010

    USA Today reports that “overall spending in the green marketplace is tough to measure because there are so many products and so many terms that fit the description. Yet, sales in the healthy product market, which includes green products as well as those promoting personal health or benefiting the environment, totaled $722 billion in 2009, up 41% from 2004, according to Mintel International Group. The market is expected to hit $992 billion by 2014 ... More than half of consumers say they would pay more for a product if they knew it was better for the environment, according to a national poll conducted this month by ad agency Venables Bell & Partners.”

    However, as the story notes, there are plenty of “overhyped and overpriced” products that say they are green but really aren’t, and that muddle up the marketplace making it harder for green-inclined consumers to make impactful choices.
    KC's View:
    It probably is a business that most retailers don’t want to get into, but it seems to me that there is a opportunity here for savvy marketers to take it upon themselves to weed out these so-called “greenwashed” products. If a store can say that it is taking the initiative to separate the wheat from the chaff, it conceivably could create a greater level of trust among its shoppers, developing a tangible sense of community.

    Published on: April 22, 2010

    USA Today reports on what it says is proof positive that people are becoming far more price conscious when it comes to buying food:

    • “Whole Foods, the upscale grocer, now loudly touts weekly sales.”

    • “Starbucks, home to the $4 caramel macchiato, now also boasts brewed coffee for about $1.50.”

    • “Morton's steakhouse now sells three mini-burgers at its bar for $5.”

    More evidence: “Three years ago, 48% of consumers bought most products on sale. Today, it's 53%, says NPD Group, a retail market researcher. Last year, nearly seven in
    10 consumers shopped in a discount, big-volume or off-price store, compared with five in 10 three years ago, NPD says.”
    KC's View:
    Wait a minute. Morton’s sells three mini-burgers for $5?

    I know where I’m going for lunch one of these days...

    Seriously, though...while the USA Today story would seem to be a restatement of the obvious, in fact it is...well, a restatement of the obvious.

    What is not so obvious is the long-term implication. Clearly this recession is going to have a hangover. Many people will be operating out of a recessionary mindset long after the recession is over. (Not everyone, though. There will be Goldman Sachs execs who will be trying to figure out how to spend their seven and eight figure bonuses even as the nation tries to dig out of a 10 percent unemployment hole. C’est la vie.

    I continue to believe that while price will remain important, the real winners in the long term will be the retailers that have something else to offer ... some sort of differential advantage beyond a sharp price.

    Published on: April 22, 2010

    • Skogen’s Festival Foods announced that in August it will begin using the NuVal Nutritional Scoring System at its 13 Wisconsin stores.

    NuVal’s scoring system gives all foods a score from 1 to 100; the higher the score, the higher the food’s overall nutrition. All NuVal scores are provided on the supermarket shelf, making it easy for consumers to compare at a glance the overall nutrition of the foods they buy.

    • The Seattle Times reports that Amazon.com is locked in a battle with the North Carolina Department of Revenue, which it says “ is demanding the name and address ... of virtually every North Carolina resident who has purchased anything from Amazon since 2003, along with records of what each customer purchased and how much they paid.”

    According to the story, “Amazon says the collection effort would have a chilling effect on people's willingness to buy controversial books, music and movies, and should be declared unconstitutional.” But the state says it is only interested in finding out if Amazon is charging a state sales tax for products sold by North Carolina affiliates - part of an overall effort to increase revenue by pushing for the collection of online sales taxes.

    • The Chicago Sun Times reports this morning that Wrigley is getting rid of the foil that it has used for a century to wrap some of its chewing gum brands, replacing it with paper for five brands - Juicy Fruit, Doublemint, Wrigley's Spearmint, Winterfresh and Big Red.

    The company says that the switch will save it 13 percent on wrapping, but won;t affect the taste of the gum.
    KC's View:

    Published on: April 22, 2010

    • Patti Olenick, a former long-time state environmental official, has joined Weis Markets as the company’s first ever sustainability specialist. Olenick, formerly with the Pennsylvania Department of Environmental Protection, will help the company develop its sustainability and environmental responsibility programs.

    Weis Markets also announced that it has named Regina Tator, former director of corporate brands at Price Chopper, and Greg Oldright, Weis’s sales manager, to be Directors of Center Store Sales.

    In addition, Bruno Garisto, the Director of Center Store Sales and Merchandising at Weis, has been named Director of Private Brands.
    KC's View:

    Published on: April 22, 2010

    Yesterday, MNB took note of a The Wall Street Journal report saying that Supervalu “says it has reduced items in 10 major food categories by 20%, a move intended to leverage lower costs with suppliers and free up shelf space for the grocer's private-label products.

    CEO Craig Herkert told analysts yesterday, “The stuff we took out still positions us to be a leader in assortment and variety ... We were simply so over-assorted before."

    The company also said that it was eliminating “26 general merchandising categories such as automotive accessories and fragrances.”

    My comment:

    I’m a big believer in the notion that most categories in the store are over-assorted, and that private brand emphasis makes sense as companies look to create a stronger sense of what their banners represent ... assuming that the companies actually know what they stand for, and what their differential advantage is. (And in most cases, I think it has to go beyond “we’re cheaper.” Not all cases. But most.)

    That said, is it just me, or does the Supervalu/Herkert approach sound a little similar to the strategy that Walmart embarked upon, and then had to back off from, because it found that its SKU choices were actually causing some customers to shop elsewhere?


    We got lots of reaction to this piece. One MNB user wrote:

    No, it is not you. If SKU rationalization is done simply on overall sales and vendor funds available, it has left the customer out of the equation. True rationalization looks at who is buying each item within a category, and what else that customer is buying. Items that are at a secondary and tertiary level in overall sales may be items that are purchased by your most loyal customers. Eliminate their favorite items and you send them, and their total basket,  away.

    Which is, if I understand the situation correctly, what happened to Walmart and why it adjusted its program.

    Another MNB user wrote:

    The real reason Supervalu’s stores were overloaded on SKUs was their policy on filling the slotting bucket. On several occasion they would authorize more items than they could get on a shelf and therefore had to remove SKUs that should not have been removed. This policy was a holdover from the Albertson’s strategy.  They cannot compete on price because they continue to require slotting and lump sum ad fees while their competitors put their funds against price point in ads.

    Interesting.

    And another MNB user - who works for a manufacturer doing business with Supervalu - chimed in:

    We are currently participating (not voluntarily by any means) in the above project as one of SV’s branded and p/l suppliers.  They want to go from 3 brands to 2 brands (one of which will be the private label).  So, two national brands will duke it out for the one remaining slot.  Kevin, how many guesses would you like as to how the “winner” will be picked?  There is an electronic form we will fill out w/cells beside such labels as “merchandising fund”, “ad fund”, “new item fund”, you get the drift.  Nothing about product mix, quality, service, market ranking, nope.  Just fill out the moneys available form and email it in.

    Walmart did some retrenching which it came to regret.  At the time, we lost 2 of our 7 SKU’s in WM.  This year, they put them back in.  While we took the hit while they were out, there was zero cost to get them back in.  Zero.  They simply redid the modular and started reordering.  And other retailers still wonder how suppliers can offer WM lower costs and still make more profit while doing so.


    Still another MNB user wrote:

    It appears to me that both Supervalu and Walmart  are making decisions for customers that they shouldn’t make. It’s okay to tweak things some  and add more private label offerings, but what both companies are doing is major revamping. Both companies act like they know more than the customer. BIG mistake.  Apparently neither has learned from the Randalls/ Tom Thumb/ Dominicks fiasco from several years ago when Safeway acted in this same way.

    In fact, I did not receive one email defending the Supervalu initiative as being a good idea done for the right reasons. Not one.

    Rather, the general consensus seemed to be that it is an ill-conceived idea that has more to do with using leverage to generate higher slotting fees and promotional allowances than it does with creating a compelling in-store shopping environment.
    KC's View: