retail news in context, analysis with attitude

Published on: May 7, 2010

The Nielsen Company is out with its quarterly Global Consumer Confidence Index, which indicates that “global consumer confidence in the first quarter of 2010 rebounded to reach its highest level since the third quarter of 2007, providing the most definitive sign that the world is beginning to recover from the recession ... As the world’s consumers started to spend again, they drove the global index up to 92 points (100 = average) in the first quarter. This represents a six point increase from six months ago and only two points short of the 94 point index mark in Q3 2007, just prior to the decline into world recession. Consumer confidence hit an all time low of 77 index points in early 2009, following the collapse of the international financial system, before steadily increasing again last year.”

Nielsen says that “consumer confidence rose in 41 of the 55 countries surveyed during the quarter, with India (127 index points), Indonesia (116)and Norway (115) remaining the world’s most confident nations. Meanwhile, Lithuania (46), Croatia (48), and Portugal (51) were the most pessimistic nations. Taiwan (+14 pts), Singapore (+11), Israel (+10), Mexico (+10) and Colombia (+9) were among the highest increases in consumer confidence in Q1, while Greece (-15), in the midst of a financial collapse, recorded the steepest decline.”

One place where confidence is less than buoyant: the United States. “Consumer confidence in the U.S. improved by one index point from 84 to 85, two points off its pre recession consumer confidence index of 83 points in Q1 2008. The highest CCI on record for the U.S. was 108 points in Q3 2006 ... Canadian confidence hit 100, up six points from six months ago.”

“Americans are still extremely cautious about spending given the uncertain nature of the recovery in the U.S. and the continued level of high unemployment. They remain committed to managing controllable costs such as gas and utility bills, and they continue to focus on repairing their balance sheets,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “That said, they are expressing a desire to spend more on discretionary items such as out-of-home entertainment, apparel and vacations—a noticeable shift in this survey. A huge opportunity exists for manufacturers, marketers and retailers who know how to reach the right consumers in the most effective way.”

Published on: May 7, 2010

• The Financial Times reports that Walmart has leased a 75,000 location in Los Angeles that it plans to convert into a “smaller scale version of its successful Supercenter store format ... The test draws on experience with the four 10,000 sq ft Marketside convenience stores it started testing in Arizona in 2008. It has also said it will open more Hispanic-themed versions of its 40,000 sq ft Neighborhood Market stores, under the Supermercado de Walmart banner, after opening two last year.”

The new smaller format will also help Walmart circumvent legislation in some communities that prevent it from opening the mammoth supercenters.

FT also reports that “Eduardo Castro-Wright, the head of Walmart’s US operations, argues that even with more than 3,000 stores, the world’s largest retailer has still not run out of room for expansion in its home market.

“Instead, he says Walmart’s opportunity for sales growth at home exceeds the combined potential of China, Russia and India. He argues Walmart could pick up between $80bn and $100bn in additional sales in markets where it is currently under-represented.”

• The Chicago Tribune reports that Walmart has gotten city approvals necessary to turn its only Chicago store - a 150,000 square foot discount unit - into a superstore selling fresh foods. The retailer reportedly plans to spend as much as $5.4 million on the renovation, which already is underway.

"The rationale for doing it is fairly simple," Jim Hertel, managing partner at Willard Bishop, tells the Tribune. "It drives traffic, and it drives up basket size. You get somebody in there buying food, and they will probably buy consumer electronics or apparel."

The move comes even as Walmart is trying to get the city to allow it to open a second store within the city limits.

Published on: May 7, 2010

The New York Times Upfront, which is a co-venture of the Times and Scholastic magazine, features a debate between US Secretary of Agriculture Tom Vilsack and J. Justin Wilson of the Center for Consumer Freedom about the role of government in dealing with the obesity crisis.

While it might be aimed primarily at young people, it actually is an excellent summation of the two sides’ opinions, and is worth excerpting here.

Tom Vilsack: “Removing unhealthy high-calorie snacks and drinks from schools is an important step toward tackling the nation's childhood obesity epidemic.

“About a third of American children are overweight or obese. Addressing that problem requires changing what kids eat in school, where many kids consume half of their daily calories.

Reforming our school meals program will ensure that all foods served in schools are healthy and nutritious. By setting standards for the food that is served and sold in cafeterias, we can make sure our children have the opportunity for a healthy start in life ... Why is this something the government needs to get involved in? Because the potential impact is enormous. Children who are obese can face lifelong struggles with their weight: 80 percent of teenagers who are obese remain obese as adults. That increases their risk of suffering from certain cancers and chronic diseases like diabetes, heart disease, asthma, and high blood pressure.

“Rebuilding and revitalizing America requires the next generation to be the healthiest and best educated in our history. We won't succeed if our school environments and our students aren't healthy. If we fail to act, today's children may be the first generation to have shorter life expectancies than their parents.”

J. Justin Wilson: “It's not the government's job to make decisions about what we eat and where we eat it. That's why it's a bad idea to ban soda and candy from schools. The problem with government intervention in this area is that it erodes personal responsibility rather than encouraging it ... it's easier to simply assign blame to sugary drinks and snacks, rather than tackling the various roots of the problem.

“It is true that soda and candy are high in calories, but in fact, there isn't any evidence that either directly causes obesity. Why then should soda and candy be singled out from the hundreds of high-calorie and high-fat foods, and banned from schools?

“Instead of banning particular foods and drinks, schools should focus on teaching students to lead active, healthy lives—offering classes on healthy cooking, or gym classes that make it fun to be active. Removing unhealthy choices is no way to teach students how to make healthy ones.”

Published on: May 7, 2010

Reuters reports this morning that “Procter & Gamble Co called reports that its new Pampers with Dry Max cause rashes and other skin irritations ‘completely false’ as it aimed to contain a public relations threat to its biggest diaper innovation in 25 years.

“The world's largest household products company said on Thursday that Pampers has been the subject of ‘completely false rumors fueled by social media’.”

The new diapers currently are the subject of a probe by the U.S. Consumer Product Safety Commission, prompted by consumer complaints.

Published on: May 7, 2010

The Organic Trade Association (OTA) yesterday took note of - and, not surprisingly, endorsed - a letter written by the President’s Cancer Panel to President Obama in which it said that consumers should choose food grown “without pesticides or chemical fertilizers , antibiotics, and growth hormones to help decrease their exposure to environmental chemicals that can increase their risk of contracting cancer.”

“The American people—even before they are born—are bombarded continually with myriad combinations of these dangerous exposures,” the panel wrote in a letter to President Obama. It added. “The Panel urges you most strongly to use the power of your office to remove the carcinogens and other toxins from our food, water, and air that needlessly increase health care costs, cripple our Nation’s productivity, and devastate American lives.”

“Exposure to pesticides can be decreased by choosing, to the extent possible, food grown without pesticides or chemical fertilizers…Similarly, exposure to antibiotics, growth hormones, and toxic run-off from livestock feed lots can be minimized by eating free-range meat raised without these medications,” according to the landmark report, “Reducing Environmental Cancer Risk: What We Can Do Now,” submitted to President Obama by Dr. LaSalle Leffall, Jr., an oncologist and professor of surgery at Howard University, and Dr. Margaret L. Kripke, an immunologist at the M.D. Anderson Cancer Center in Houston.

“Organic production and processing is the only system that uses certification and inspection to verify that these chemicals are not used on the farm all the way to our dinner tables,” said Christine Bushway, Executive Director of the Organic Trade Association (OTA).

Published on: May 7, 2010

Internet Retailer reports that Barnes & Noble has added a component to its frequent shopper program that mimics the Amazon.com Prime program, which provides “free” two-day shipping when you pay $79 a year. The Barnes & Noble program costs $25, is part of the loyalty program that includes discounts and coupons, and will offer “free” three-day shipping on all online orders.

Published on: May 7, 2010

USA Today has an interview with Tracy Mullin, who is retiring after 14 years as president/CEO of the National Retail Federation (NRF). Some excerpts:

• “We used to have our big conventions and all the big regional players would get together and chat. It was all very congenial. They all wanted to learn from one another. You don't really see that anymore because they're all competing for the same consumer dollar. I wouldn't say there is hostility, but in the last 15 or 20 years, it's become a very different environment than it once was.”

• “The story is that Sam Walton, shortly after he built the business, made a pilgrimage to New York to meet with the then-president of the National Retail Merchants Association (now NRF), which primarily represented department stores. He asked if his little company, Wal-Mart, could become a member of NRMA, and he was rejected. They didn't want a discounter there. It was a very homogenous membership. They all saw eye to eye. I don't know what went into the thinking. It was clearly a bad idea.

“They created a competing organization (now known as the Retail Industry Leaders Association, which almost merged with NRF last year). Since the '90s, we have broadened our reach dramatically, so we represent chain restaurants, grocery, pharmacy, Internet and specialty stores. We really do represent the entire breadth and diversity of the industry ... We'll get (Walmart) eventually. It will happen.”

Published on: May 7, 2010

• Reuters Health reports that a new study says that more than half of people who believe they are lactose intolerant in fact are not - “that perceived lactose intolerance may actually not be rooted in a biological inability to absorb the sugar. Of 353 individuals referred to specialists for suspected lactose maldigestion, as many as 189 turned out to absorb the sugar normally, with fewer symptoms than at home.

“It's not entirely clear why people who have no trouble digesting lactose would get symptoms.”

• The Los Angeles Times reports that Ron Burkle’s Yucaipa Cos. is suing Barnes & Noble, “saying the bookseller's shareholder rights plan creates a "slanted playing field" in favor of the controlling Riggio family.

“Yucaipa also charges that Barnes & Noble's board has breached its fiduciary duties, and said it plans to nominate three new directors to challenge the current slate at the company's annual meeting, which will be held by Sept. 30.”

Barnes & Noble responded that the suit is without merit.

Published on: May 7, 2010

• The Wall Street Journal is reporting on rampant speculation that Andy Clarke, the COO at Walmart-owned Asda Group, is likely to be named the company’s new CEO next week, succeeding Andy Bond, who is stepping down to become chairman of the executive board.

Published on: May 7, 2010

On the subject of the vanilla and chocolate flavored toddler formula being manufactured by Mead Johnson that is the subject of some concern that it could contribute to childhood obesity levels, MNB user Joe Brennan wrote:

The key to this question is mothers & fathers making decisions for their own children. Who are these people who sit around and oversee almost every action by companies, institutions & other parents?

Mead- Johnson is not forcing anyone to buy their product. McDonald’s does not have a food army ordering parents to feed Happy Meals to their children. If the problem is childhood obesity, maybe we should look at the lack of childhood exercise. Every day as I drive to work I follow a school bus that stops every 80 feet to pick up 11 to 17 year olds who seem unable to walk to a common bus stop or better yet to the school ½ mile down the street that has sidewalks.

As a grandparent I wonder when I hear that programs on TV have too much sex or violence and parents complain. But ask what parents do about it, they let little Colin & Sarah watch rather than showing the benefits of possibly reading a book., or even changing the channel.

In closing, people have to make their own path, make their own decisions, raise their own children and stop looking for other institutions (schools) , government and other controlling neighborhood busy bodies to direct & run their lives.

I agree that parents need to be the ultimate decision makers for our children; our job, it seems to me, is to raise thoughtful, compassionate, open-minded children who are capable of making good and informed decisions. And we do that by making smart decisions and helping them understand our logic (except on those occasions, of course, when “because I’m the father, that’s why” has to suffice).

To be clear, I’m not sure I called for anybody or anything to take action against Meade Johnson. I just said that this didn’t seem like a very good idea, and that I would not feed such a product to my toddler.

It is, however, worth pointing out that a reality of our technological and information-driven culture is that people have opinions and share them...on Facebook, in chat rooms, or in places like MNB. This isn’t “overseeing actions,” but it is sharing opinions. People used to do it across the back fence, down at the malt shop, or in some other community setting. today, the back fence has been replaced by a computer screen, and communities are far larger and more conversational.

I would be surprised if someone at Mead Johnson did not say during the product development process something along the lines of, “This chocolate formula is going to raise at lot of issues among people concerned about obesity.” Or, maybe they said, “The chocolate formula is going to hit the fan.” Either way, somebody in the company should have flagged the issue and been prepared to engage in the discussion and be part of the debate. They can’t allow the other side to dictate the terms of the discussion. If they were surprised by this, then someone isn’t doing his or her job.

I agree with you. Mead Johnson has a perfect right to make this product, introduce it to the marketplace, and then see if it succeeds or fails. However, just because we can make a product does not mean we should make a product.

The marketplace - which is to say, consumers - will determine the success of this product. They will do it with their dollars, but the simple reality of 2010 commerce is that they also will do it with their voices. Welcome to the new world.

Published on: May 7, 2010

Remember that scene in Broadcast News when the really smart Albert Brooks character feeds information and questions to the dumb news anchor played by William Hurt, and then muses, “I say it here and it comes out there.”

It isn’t exactly the same thing, but that is sort of how we felt last weekend when President Obama spoke at University of Michigan commencement ceremonies, and expressed a sentiment that we’ve been pushing here on MNB for years:

"If you're someone who only reads the editorial page of the New York Times, try glancing at the page of the Wall Street Journal once in awhile. If you're a fan of Glenn Beck or Rush Limbaugh, try reading a few columns on the Huffington Post website. It may make your blood boil; your mind may not often be changed. But the practice of listening to opposing views is essential for effective citizenship. So too is the practice of engaging in different experiences with different kinds of people.

“For four years at Michigan, you have been exposed to diverse thinkers and scholars; professors and students. Do not narrow that broad intellectual exposure just because you're leaving here. Instead, seek to expand it. If you grew up in a big city, spend some time with some who grew up in a rural town. If you find yourself only hanging around with people of your race or your ethnicity or your religion, broaden your circle to include people who've had different backgrounds and life experiences. You'll learn what it's like to walk in someone else's shoes, and in the process, you'll help make this democracy work.”

However one feels about the President and his policies, it is hard to argue with these sentiments. They can be expanded from the political arena to the business and cultural worlds - we become better business people, even better people, by exposing ourselves to different opinions and people, by expanding rather than narrowing our horizons.




Last week, I mentioned in this space that on Saturday Mrs. Content Guy and I would be celebrating our 27th wedding anniversary, and dozens of you were kind enough to send emails a) congratulating us and b) urging me to take her someplace nice because she has to put up with me.

No kidding.

Well, just to reassure you, I did take her someplace nice. A wonderful restaurant on the Rockefeller estate in Pocantico Hills, New York, called Blue Hill at Stone Barns. This was, far more than I even expected, an extraordinary dining experience, because it is not just a place to eat. Blue Hill also is a working farm, has a greenhouse, and is the labor of love of a chef named Dan Barber, who is an almost obsessive believer in local sourcing.

I’ve never been to a restaurant before where the menu only has two choices - a five course meal and a seven course meal. No other options. Essentially, they ask you if there are any foods you are allergic to or hate or cannot eat for medical or religious reasons. (I told them Brussels sprouts fit into the last category, something that won’t surprise longtime MNB readers.) And then, thus informed, they start bringing food - seven courses, mostly foods and combinations I cannot begin to remember (I was concentrating more on Mrs. Content Guy), with flavors and textures that seemed like I was having them for the first time.

At one point, we had this ostrich egg mousse thing, and the waiter brought over an actual egg, which was almost the size of a bowling ball, and explained where the egg had come from (a nearby farm) and how it had been prepared (I can’t honestly replicate the explanation). This was a great example of how information about the product enhanced the eating experience.

The food kept coming. Asparagus wrapped in sesame seeds. Incredible pasta. Ingredients that included melt-in-your-mouth baby lamb, Honeycap mushrooms, and Fiddlehead ferns. Small dishes, but filling, challenging and delightful.

To be sure, this was not an inexpensive evening. It was the most expensive dinner for two that I’ve ever had in my life. But worth it - a once-in-a-lifetime experience that gave us a tangible sense of the potential of great food.




BTW...my wine of the week is the one served with the Blue Hill meal - a 2007 Andre Perret Condrieu, which wasn’t exactly local to New York State, but went perfectly with the various foods - rich and smooth and just wonderful.

Quite a weekend.




Talk about going where few men have gone before.

It was reported this week that when William Shatner became a spokesman for Priceline.com about a decade ago, he asked to be paid largely in stock rather than cash money.

When he started, Priceline stock was going for less than two bucks a share. Yesterday, it closed at more than $233 a share. Shatner’s earnings have been in the area of $600 million.

That’s what I call a successful enterprise.




I love the new Jimmy Buffett album, “Encores,” which is made up of a series of last songs that Buffett performed during his 2008 and 2009 concert tours. Recorded live, mostly acoustic, these songs are sometimes familiar (“Last Mango in Paris”) and often less so (“Big Old Goofy World,” “Growing Older But Not Up”). It is his best album in years - there is something about the energy of a live Buffett album that gives it extra punch. Besides, I went to concerts during both those tours, and so they brought back great memories.

Enjoy.




Finally...

If you are going to be at the Food Marketing Institute (FMI) show in Las Vegas, I hope you’ll stop by and say hi - I’ll be at the MyWebGrocer booth (#2243) on Tuesday afternoon from 2-3:30 pm, and Michael will be there on Wednesday at the same time. Plus, we’ll be wandering the floor both together and separately...Michael will be wearing a suit, and I’ll be in jeans, sneakers and a Hawaiian shirt. As always, we love putting faces and voices with the names and opinions that we exchange on the site and via email, and we hope to see you.




That’s it for this week. Have a great weekend, and I’ll see you Monday from Las Vegas.

Slainte!