retail news in context, analysis with attitude

Published on: May 10, 2010

The New York Times reports that Verizon - described as the “dominant local phone company” in New York State - has asked regulators for permission to stop delivering the White Pages telephone book to all of its customers in the state, but instead to only send them - either in book form or on CD - to customers who request them. Such a move would save an estimated 5,000 tons of paper on an annual basis.

The reason is simple. More and more, people are using their computers - desktops, laptops and smart phones -

According to the story, “Verizon has a similar request before regulators in New Jersey ... In some states, including Florida, Ohio, Oklahoma and Georgia, AT&T has already received approval to stop delivering White Pages to all residents.” However, in North Carolina AT&T has withdrawn its similar proposal “after advocates for the elderly complained that some people might lose contact with friends and neighbors if they did not receive updated directories.”

For the moment, mass distributions Yellow Pages and the business White Pages appears safe, because both books feature display advertising that makes money for the publishers.

Published on: May 10, 2010

Tops Friendly Markets announced that its Quality Markets, P&C and BiLo stores - part of its acquisition of a majority of Penn Traffic’s assets - will soon boast the Tops Friendly Markets name.

According to the company, “the re-branding will be phased in through the end of 2010 as part of a two-year, $90 million store capital improvement program that will upgrade the shopping experience for Tops store customers.”

“After a thorough evaluation, which included consumer market research, it was determined that our customers would best be served by having all these stores under the one Tops Friendly Markets brand banner,” said Frank Curci, Tops’ president/CEO. “With a multi-million dollar capital improvement program scheduled for these stores, in addition to offering a greater variety and selection of grocery products and services, customers can look forward to a more enhanced store shopping experience under the Tops name.”

Published on: May 10, 2010

The Richmond Times Dispatch writes that “a war is brewing among competing grocers in the Richmond area, and the winner is likely to be customers ... The war will be fought among grocery heavyweights including Food Lion, Kroger, Wal-Mart and Martin's Food Markets as well as smaller supermarket retailers as they vie for a piece of the nearly $3.07 billion that Richmond-area shoppers spent on food last year.”

The war has been precipitated, of course, by the $140 million acquisition of Ukrop’s by Ahold, which is converting the once-iconic independent stores to its Martin’s banner.

“To try to gain the upper hand, chains are making significant investments in their stores,” the Times Dispatch writes. “Food Lion, which remodeled some of its stores two years ago, will begin remodeling several others later this year and continue to lower prices as part of a new nationwide pricing strategy ... To push the pricing change, Food Lion initiated an ad campaign last month starring Cathy Green, its president, that it says reinforces the company's long-standing history of low prices.”


In addition, “Kroger is remodeling and expanding several stores, will open its largest area store later this year, and is in the process of adding fuel stations to some of its locations. And Kroger has started taking groceries to customers' vehicles -- imitating to some degree a service that Ukrop's had offered for decades.

“Newcomer Martin's tonight begins the final phase of its multimillion-dollar renovation program of the 25 Ukrop's stores. The last four Ukrop's stores close tonight and reopen May 17 as Martin's.”

Published on: May 10, 2010

The Wall Street Journal reports that Ron Marshall, the new CEO of the Great Atlantic & Pacific Tea Co. (A&P), told analysts last week that he will be “broadening price cuts, establishing stronger identities for each of its banners and stripping overlapping costs out of its supply chain,” and said that “Great Atlantic's poor results stem from more than the weak economy, which has caused supermarkets to struggle as consumers cut back on their purchases.”

Marshall said, “We face issues that are systemic, deep and profound, and must be addressed before we can achieve the success that our shareholders and associates deserve.”

Published on: May 10, 2010

Crain’s Chicago Business reports that Roundy’s has found a third location in the Chicago area for its new Mariano’s Fresh Market concept - in the Ravenswood area of Chicago’s north side.

Two previous locations for the format - named after company chairman Robert Mariano - have been set in Arlington Heights, scheduled to open this summer, and the Lakeshore East section of the city, slated for a 2011 opening.

Published on: May 10, 2010

The Denver Post has a fascinating story on what it says is a significant problem in its region - closed supermarkets that are leaving entire neighborhoods without food shopping options, a problem that local activists are trying to address through a variety of means.

Here is how the paper defines then problem (and a well-written lead it is):

“They're easy enough to spot all over town: The shuttered Safeways, with their swooping 1960s architecture; the converted former stores of chains long gone; the old Cub Foods stores. Some of them sit empty and crumbling, like the discarded husks of some lumbering animal.

“Others have been squeezed into new roles: stuffed with auto parts or office supplies or even church pews. A few of the ex-supermarkets are in suburbs and beyond. But most sit boarded up and graffiti-scrawled in the urban pockets that need grocery stores most.

Neighborhoods rise and fall. The kids grow up, the factory shuts down, the middle class moves on. So, too, the grocery stores that feed it.

Efforts to lure those groceries back are slowly gaining momentum, activists say. But to really succeed, to really get fresh, healthy food into nutrition-neglected neighborhoods labeled food deserts, will take leadership, creativity, a hefty helping of smaller-scale, smaller-volume stores, and an economic incentive or two.”

Among the concerns that retailers seem to have are those about security, the availability of a dependable workforce, and enough customer traffic to justify the opening of a new store. One company is identified as seeing opportunity where others see challenges: Supervalu, which has a number of Save-A-Lot limited assortment stores in the city’s tougher neighborhoods.

Published on: May 10, 2010

The Asheville Citizen-Times reports that Whole Foods is acquiring the two-store Greenlife Grocery chain, which operates stores in Asheville and Chattanooga, Tennessee. The deal is scheduled to close before the end of the month.

According to the story, “Some Greenlife customers said they are worried that becoming part of a larger corporation will change some of the things” they like about Greenlife, but Whole Foods says that it will “retain the individuality” of the Greenlife stores.

Published on: May 10, 2010

• Wal-Mart de Mexico has announced that 348 of its stores and restaurants in Mexico will be operated using wind-generated energy, which puts the retailer well along the way of achieving its goal of having 100 percent of its operations in Mexico using wind energy by 2015.

Published on: May 10, 2010

The Washington Post reports that as of last week “The Social Safeway is back! After a year of remodeling, during which the city's elite had to buy their artisan breads and imported olives at Whole Foods, Trader Joe's, Giant and Dean & DeLuca, one of the District's most famous supermarkets is roomier, greener, foodier ... Since the '70s, Washingtonians have dubbed this see-and-be-seen landmark the chain's most social store, where singles on the prowl could pick up each other along with their Belgian endive.”

The Post goes on, “The company saw fit to throw a red-carpet celebration worthy of a state dinner, with a publicity budget that apparently rivals that of ‘Avatar.’ Glossy silver tri-fold invitations went out to 2,000 Important People. After all, this is the District's first 24-hour full-service grocery ... The 650 guests -- a who's who of U.S. senators and representatives, lobbyists, television commentators and publishing executives -- mingled in sequined ball gowns, black cocktail dresses and linen suits.”

Published on: May 10, 2010

• Winn-Dixie has implemented a "Neighbors Helping Neighbors" program, which allows shoppers who want to help Louisiana fishermen affected by the massive oil spill off the Gulf Coast to do so when they buy groceries at any of 36 area Winn-Dixie Stores. Cashiers will scan a special Neighbors Helping Neighbors bar code, which automatically adds the amount designated by the customer to the total bill.

• In Seattle, KING 5 News reports that the Center for Science in the Public Interest (CSPI) “is threatening to sue Safeway supermarkets over the way it notifies customers about product recalls.

“CSPI says Safeway should use information from its ‘club card’ program to alert customers to health hazards posed by problem products ... Safeway appears to be one of the few major supermarket chains in the Northwest that doesn't use customer information to notify them about product recalls. Representatives from Albertsons, QFC, Fred Meyer and Costco all tell KING 5 News that they employ automated systems that detect which customers have purchased the specific product in question, and then calls them directly, sends them an e-mail or mails letter to their home ... CSPI is giving Safeway 30 days to make the changes or it will file suit, claiming a violation of consumer protection laws in several states where the company operates.”

• At it’s 89th Annual Convention in Palm Desert, California the Western Association of Food Chains (WAFC) elected officers for the 2010-2011 year, naming Karl Schroeder, President of Safeway’s Northern California Division as its president. WAFC’s new vice president is Lynn Gust, Executive Vice President, Merchandising and Advertising, Fred Meyer; the new treasurer is Mike Stigers, President, CEO, PW Markets; and the secretary is Sue Klug, President, Albertsons Southern California Division.

Having founded the Food Industry Management Program at the University of Southern California in 1958, and subsequently the Food Industry Executive Program, WAFC notes that “continues to develop and promote advanced educational opportunities for food industry employees. The WAFC’s ‘Retail Management Certificate’ 10 course curriculum is currently offered by over 130 community colleges and online. Additionally, the WAFC supports the Food Industry Leadership Center at Portland State University, the Western Collegiate Food Marketing Competition and numerous scholarships to Universities throughout the West.

Published on: May 10, 2010

Lena Horne, the singer and actress who also was a civil rights advocate and a groundbreaking black female superstar, died last night in New York City. She was 92.

Published on: May 10, 2010

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 pm, and Michael Sansolo 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.

Published on: May 10, 2010

Last week, we had a story about 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. This concern is being expressed perhaps most vociferously in various social media venues, and my position - putting the wisdom of sweetened toddler formula aside - is that companies need understand and embrace social media as a way of disseminating their messages...because that, most assuredly, is what critics will do.

Interestingly, this same theme was sounded in a different story - about Procter & Gamble facing criticisms in social media and on the internet because of complaints that its new diaper line is causing rashes in babies. Again, without passing judgement on the complaints, I pointed out that P&G seemed to be complaining that social media is the problem, which is the wrong way to go in my not-so-humble opinion.

Lots of email on this subject...

One MNB user wrote:

I think that your argument that P&G is wrong in re: social media is incorrect. The internet has become a “social media” and although I cannot comment on the validity of the “rash” if P&G is correct that it is not a problem with their product then they are 100% correct. This is the new “PROBLEM” and it is a BIG problem. With more and more people using the internet for information and “believing on first site” businesses will become helpless as they will not be believed any more than government will be believed.  People have no way of verifying “net” information any more than newspaper information in the past.

Business and government have created the problem for themselves since they have been lying to the public forever. Nonetheless on those rare occasions where they (b and g) are being accurate they are still helpless against the social media. All one need do is read a few blogs on each side of any subject. Most people do not have the time.

In the end, the social media will cancel itself out and people will go back to believing only through their own experience or trusted friends.

Let me put this as gently as I can.

If you believe that social media is going to go away as a force, then I suggest you take that nest egg and invest it in a buggy whip factory.

MNB user Dave Vosteen wrote:

I know you will never respond to my input. Partly because I am a conservative who believes in people staying out of my life and how I raise my children. You are completely wrong on this issue. There should not even be a conversation about it. Any manufacturer can make anything they want. If you don’t like it don’t buy it. Either way people should shut up and quit whining.

I am happy to both post and respond to your input.  I am a little surprised by it, for several reasons.

One, I ran an email last Friday that made your precise point....and I said in my response to that email, the following:

•  "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."

•  "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."

I may have put it in somewhat different words than you did, but I certainly wasn't disagreeing with you.

Where we differ is when you say "there should not even be a conversation about it" and "people should shut up and quit whining."  First of all, if people stop having conversations about this kind of stuff, I'm out of business.  So for selfish reasons, I hope we keep talking. (Besides, on some issue people might want you to shut, up, and I'll also defend your right to be heard.)  Furthermore, it simply is not practical in this day and age to expect that people are not going to use the tools at their disposal - especially the one on which you reading me right now - to express themselves and try to shape people's opinions on virtually everything.  That's simply not the world we live in.

Finally, I'm sorry you believe that you will not be given a chance to express your opinions on MNB because you are "a conservative who believes in people staying out of my life and how I raise my children."  Because in saying so, you misread my personal views, my politics and, perhaps most importantly, my vision of what MNB is supposed to be all about.

Another MNB user commented:

It really bugs me when people imply that voicing an opinion that something is “wrong” is tantamount to endorsing a legal ban. 
 
You irk me regularly, but sometimes you are quite reasonable (when you see things MY way, of course).

Irking people is what I do for a living. Thanks for the compliment.

Another MNB user wrote:

Having read your articles for almost (if not) 10 years now, I find your stance on this topic interesting.

You have swallowed the Social Media pill - Guilty, until proven innocent.

You failed to mention that you have a child affected by these nappies - or you've sided with social media, because people wouldn't lie.  You're not alone in your stance, and there may very well be people who are affected by the nappy.  But sometimes, people just love to stick the boot in, whilst the body is down.  With social media, a lot of boots can come out of the woodwork, and sometimes there is no body, just boots.

Not at all.  I'm just saying that social media is a reality, and companies have to be prepared to deal with it - you cannot afford to ignore the guy with a bullhorn, or to look like you are ignoring a problem that the guy with a bullhorn is shouting about.

As for the veracity of the people complaining....I have no dog in this hunt, and I’m way too old to have children wearing nappies. I don’t accept anything on faith...but I also don’t discount the possibility that they may have a real complaint.

Whether the complaints are real or fabricated, it is critical for companies to a) take them seriously, and b) embrace the media venues in which they are being aired to the extent that it is possible to answer criticisms in an effective way.




MNB shared a debate that took place on the New York Times website 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, especially when it comes to what is in the lunches served in schools.

MNB user Steve Cook weighed in:

I just don't get it. If we all just sit around on our butts and eat, the government will pass enough restrictions to make us healthy again! You can't legislate common sense(most legislators don't have any). People need to get off the couch and get  active, go outside and take your child with you. Maybe I'm too simplistic, but I think it would solve a lot of the problems today.

Another MNB user wrote:

It would be interesting to see if obesity levels do indeed go down after the Coke and Frito machines are removed. I suspect not. There have been numerous studies leading to the conclusion that kids get fat because parents don’t provide proper meals or lifestyle guidance . Those old stories about mom guarding the cookie jar and making kids to go out and play had a point. I believe that kids who eat dinner with their parents at night are less likely to be obese than their friends who eat dinner in front of the TV. If parents in the community don’t want vending machines in the school, then they can impose their will through the school board. The mechanisms exist, people have to stir themselves out of their torpor to make them work.  The alternative of an army of $ 90,000 ( with benefits and retirement) a year food police is far less preferable and simply lets mom and dad off the hook.

Another MNB user wrote:

Schools are government financed and government territory and they should rule what happens on that territory. Back in my day over 50 years ago we did not have any vending machines in schools. There was a little store next to the school where one could buy all the bad stuff one wanted. I never went in there.

Never? Did you get beaten up a lot?

As far as I am concerned, it is phrases like “I never went in there” that can create an unhealthy attitude toward food.

There is plenty of room in life for indulgence. It just seems to me that it is important to find a balance.

Isn’t there a Jimmy Buffett line about a little sin being good for the soul?




We also had a discussion on MNB last week about the meaning of “conventional” when it comes to retail formats...a discussion that MNB user Art Turock wanted to get in on:

Loved your commentary today. The whole notion of treating "conventional supermarkets" as a category to benchmark is so often reasoning used to avoid the risks of bold innovation and a misunderstanding of what "Differentiation" means.

Differentiation involves developing a distinctive value proposition that "locks in" target customers and "locks out" competitors.

Differentiation means standing out unquestionably as best by comparison for your target customers By definition, differentiation involves losing customers. A retailer decide what customer segments and needs to serve brilliantly, which means other customers may choose to shop elsewhere. But the customers you serve brilliantly are locked in-- often as lifetime customers.

Differentiation also means making your innovation hard to copy by competitors. Trying to confine innovation within the conventional supermarket category amounts to making your innovations easy for competitors to copy.

Learn from the fringe-- the Whole Foods, the Stew Leonard's, but don't stop there. This is why I invite retailers and suppliers to learn about "talent development" from adapting standards and practices from USC football, Ritz Carlton, the Marines.

Agreed.

I would add to this that while differentiation gives you a competitive advantage, it does not provide a permanent and unassailable advantage.

All advantages are by their very nature assailable. Which is why innovation and differentiation have to be an ongoing process.




MNB also took note last week of a Bloomberg Business Week story about how a wide variety of companies are trying to control health care costs by encouraging their employees to get into shape. One of the ways they are doing so is by requiring employees to cover a larger percentage of their premiums and health care expenses. But many also are using the internet to create “technology-enhanced wellness programs, many of which incorporate online assessments,” to help employees get in shape.

I commented that I am one of those people who believes that companies are entitled to get employees to have some skin in the health care game. This all works for me.

One MNB user responded:

I’m one of those employees who works out regularly, is lowering my weight, etc, etc. And my problem is that I “chose the wrong parents.” I have inherited two conditions that require expensive treatment. According to the smartest people I’ve talked to, nothing I did could have contributed to these conditions, or helped me avoid them. So when companies say they’ll raise premiums on their less-healthy employees, it makes me a little crazy. I do agree that motivation payments—lowering premiums for those participating in certain programs—makes sense.

One would hope that situations such as yours would be factored into how companies create healthy living programs. That may be asking for too much, but that would be the ideal.

Published on: May 10, 2010

by Ed See and Jeanne Liveslberger, SymphonyIRI Group

Any poker player knows that the more information you have about your competitor’s hand, the easier it is to make the right decision at the table. The same can be said about consumer packaged goods (CPG) manufacturers being equipped with the best insights on their shoppers. Competitive advantage is all about staying a step ahead of your competitors and managing your relationships with facts and insights.

Like poker players, CPG marketers can face obstacles as they try to see their competitors’ “cards.” The shopper isn’t about to show you their hand and neither is your competitor. But, you can learn how to read their poker faces. Two major advancements in technology can assist CPG manufacturers and retailers in understanding and managing shopper behavior:

Technology that provides more granular market data at near real-time speeds
New generations of predictive analytic tools that provide insights about shopper behavior that have never before been available.

Rich data helps you start managing the market and begin seeing trends, performance, and opportunities that get lost when the data is aggregate. And, it’s just as important that you are able to see this information fast - nearly as soon as it happens in market. Knowing what your shopper and competitors have done is great, but you also need to know what they are likely to do next.

To be able to have true shopper relationship management (SRM), organizations must also be able to anticipate what their shoppers will do in the future, which can be achieved through predictive analytics. These analytic tools help marketers answer the following three questions that will that help them win in the marketplace:

Due to: Why did something happen? What caused the change?

What if: What happens if we change pricing? Change the marketing mix? Bring in new products or new flavors for existing products? Change what we’re promoting when? And, what if the competition does the same?

How to: How do we achieve our goals? What needs to change to make our goals? How do we course correct mid plan? How can we counter competitive actions?

It’s all about understanding what influences shoppers and how you can control or shape those influences. Today’s technology overcomes the barriers CPG manufacturers and retailers once faced. Data is being collected and delivered faster than ever and combining this with predictive analytics ties it all together. For the first time, organizations have the tools to manage and analyze these insights, creating new strategies to discover and shape shopper demand in ways never before possible.

CPG companies can improve their odds of winning by learning to better play their own hands and better anticipate the next move by their shoppers and competitors. Better data and better analytics can help make any CPG company a stronger player at the table.

To learn more about how technology innovations and predictive analytics can help navigate the way to success, please download the following publications from SymphonyIRI Group:

Finding the Buried Treasure at Retail

Shopper Relationship Management Delivers the Winning Hand