retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: May 25, 2010

    by Michael Sansolo

    As even casual readers of this column know, I try to find lessons everywhere. Whether it’s from movies, sports, world events, economics, children’s games or fashion, I argue that there is always something for us to consider and learn.

    And then there’s Congress ... where the best lesson may be to watch what happens and head the other way.

    Well, the hits just keep on coming. The Omaha World-Telegram reported on an amazing discussion in the Senate last week surrounding proposals to limit the fees charged on ATMs. It turns out that Nebraska’s two senators - one a Democrat and one a Republican - aren’t exactly cutting edge on technology. One admitted he has never used an ATM; the other said he might have used one three or four times in his life.

    Now think about that for a second. We’re talking about a technology that was invented in the 1960s and has been ubiquitous in the US since the early 1980s. ATMs are found in literally millions of locations around the US including on the way to the Senate floor. Sure, we could forgive Senators for leading unusual lives that somehow remove them from what the rest of us face daily, but this one just seems too much to swallow. (Ironically, the inventor of the ATM died only a few days before this news appeared. He was 84, older than either Nebraska Senator.)

    However, making fun of Congressional quirkiness is hardly a lesson or a challenge. Rather, I think we have to consider the attitude of anyone in power ignoring a technology that is popping up all around them.

    It wasn’t that long ago that many CEOs I knew bragged that they had a computer on their desk…but they never, ever turned it on. Some mentioned this like a badge of courage. Likewise, their use of e-mail consisted of reading the notes printed on paper by their assistants. It wasn’t until a handful of fellow leaders starting demonstrating the incredible time savings of new technologies for themselves and their companies that we started to see a change. Today we have top executives checking Blackberries (and beyond) just like everyone else.

    Now certainly we all have the same problem that there is only so much time in the day and only so many technologies we can learn. I’d hate to find an executive driving a fork lift, running price checks or waiting by the fax machine instead of doing something more productive. Nor would I like to have executives constantly checking You Tube, Facebook or Twitter for updates. The nature of management jobs demands that we leave certain tasks - and technologies - to others. But that doesn’t excuse ignorance or apathy.

    We live in a time when more generations are working together than ever. Think of the stunning opportunity to sit down with a junior member of your team to talk about the technologies they use. You might learn things about social media, mobile devices, killer apps and more. At the minimum these talks will make you sound tons cooler and at the upside may give you business ideas beyond anything you could imagine. You might learn about how your employees are using technology to produce benefits in ways you could never imagine or, better yet, the ideas they have to use technology even more productively in the future. You might learn more about what your customers do today and what they are likely to do tomorrow.

    So for once, we have Congress to thank. After all, we want to studiously avoid becoming like the distinguished senators from Nebraska who at some point must have wondered about those strange machines outside banks, airports, supermarkets and their offices. (It’s not like Congressmen get money in other ways, is it?)

    No one is saying that you have to be expert in every emerging technology, but certainly don’t bury your head in the sand. Or in Congress.

    Michael Sansolo can be reached via email at . 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: May 25, 2010

    The Washington Post reports that the Vermont Legislature has passed the first law in the country designed to limit the “swipe fees” charged by banks on credit and debit card purchases.

    According to the story, “The Vermont law targets the fee retailers must pay card issuers and processors each time shoppers swipe a credit or debit card, which typically ranges from 1 to 2 percent of the price of the purchase. The law allows retailers to set a $10 minimum for credit and debit card charges and to offer a discount to shoppers who pay with cash starting Jan. 1.”

    Trish Wexler, a spokeswoman for the Electronic Payments Coalition, tells the Post, "I suspect that you're going to see a lot of unhappy Vermont citizens who can't use their cards the way that they want to.”

    The Post adds, “The Vermont law is the second big win for retailers this month on what has long been one of their top political issues. Last week, the Senate approved an amendment sponsored by Sen. Richard J. Durbin (D-Ill.) that included similar provisions. In addition, it directed the Federal Reserve to ensure that the fees are ‘reasonable and proportional’ to the costs incurred by the network that processes the card, typically Visa or MasterCard. The Senate passed the financial overhaul bill that includes the amendment Thursday, and now it must be reconciled with a version passed by the House in December that does not address swipe fees.”
    KC's View:
    The banks better get used to this, because greater regulation - hopefully - will be part of the new world order with which they must deal.

    Published on: May 25, 2010

    Bloomberg reports that Supervalu plans to expand its Save-A-Lot limited assortment concept “in urban areas to fill in gaps left after larger chains moved to the suburbs ... About half of Save-A-Lot’s stores will ultimately be located in metropolitan areas, said Bill Shaner, president and chief executive officer of Save-A-Lot. The expansion is still in the planning phase, he said in a telephone interview.”

    Shaner points out that Save-A-Lot currently has stores in cities like Philadelphia, Cleveland and Detroit, and is planning to enter the Washington, DC, market within several years.

    “Some of the urban markets have a dearth of supermarkets that are quality grocers delivering good, nourishing food at good prices,” Shaner tells Bloomberg. “We offer a good solution for that opportunity and we are very focused on that.”
    KC's View:
    I had the opportunity not that long ago to spend some time in a Save-A-Lot store in New Orleans, and was extremely impressed...if this is the Supervalu urban model, it strikes me as extremely viable.

    I keep hearing that there have been a series of nonstop meetings at Supervalu headquarters as top management - led by CEO Craig Herkert, who reportedly has been intimately involved - looks to fashion a short-term marketing and merchandising strategy that will help the company regain a sense of viability on both Wall Street and Main Street. So let’s see what additional initiatives come out of Minnesota...

    Published on: May 25, 2010

    The Wall Street Journal reports on a new study out of the University of Washington Center for Public Health Nutrition saying that the notion of food deserts - areas with a dearth of food shopping choices - is a lot more complicated than just geography.

    “Having a grocery store nearby doesn’t guarantee purchases of fresh produce or other more healthful foods, the report found - those decisions are often driven by economics.” The writes that “the report found, not surprisingly, that richer, skinnier, more-educated people patronized Whole Foods, Trader Joe’s and a local co-op. Their demographic opposites were more likely to shop at Albertsons and Fred Meyer. Most people shopped outside their immediate area, likely on the basis of price (for poorer people) or the perception of higher quality (for wealthier people).

    “Moreover, the relative prices within the store also likely dictate diet. Fresh fruit and vegetables, fish and other unprocessed foods are often more expensive than processed, less nutritious foods. That suggests a focus on making more healthful foods more affordable, not simply opening grocery stores in underserved areas.”
    KC's View:
    I know someone who recently decided, for a variety of reasons, to shift to a vegetarian lifestyle. Over a period of time, his entire family of four has moved to a diet that is pretty much completely plant-based...with an emphasis on organic and local products. (I think I’m getting this right.) One thing I do remember is that he told me that his food expenses went up by 30 percent as a result of this shift...

    Now, he’s lucky. He can afford it. But not everybody can. (And I recognize that he may have been making shopping choices that pushed the number up...that one can probably become a vegetarian without going broke.)

    When he told me this, I remember thinking that movements like those focused on local foods and organic products will only really become mainstream when they become economically within the reach of a broader community.

    Which is a long way of saying that it doesn’t surprise me that food deserts have as much to do with demography as geography.

    Published on: May 25, 2010

    Computerworld reports that Walmart plans to make “all its payment terminals in the U.S. compliant with a smartcard-based credit card technology that is widely used around the world but isn't common in the U.S.” The retailer reportedly is “working on making all payment terminals in its domestic stores chip-and-PIN-capable.”

    Jamie Henry, Walmart’s director of payment services, is quoted as telling a smartcard conference that signature-based credit-card transactions have become a "waste of time" for the retailer.

    The magazine says that the increase in credit card fraud in the US is likely to push the card industry here to move toward smartcards, which use computer chips rather than magnetic stripes.
    KC's View:

    Published on: May 25, 2010

    The Food Marketing Institute (FMI) announced yesterday that exhibitors at the recent FMI Show in Las Vegas donated 37,000 pounds of food from exhibitors to the Las Vegas Three Square Food Bank.

    According to FMI, “The donation equals roughly 29,600 meals, including milk, bread, produce, cereal, luncheon meats, cheese and other items to help feed area residents who are living on the brink of hunger, according to Feeding America. The Three Square Food Bank is part of Feeding America, the nation’s largest hunger-relief organization.”
    KC's View:

    Published on: May 25, 2010

    Gourmet Retailer reports that Target CEO Gregg Steinhafel told analysts recently that “the company is on track to remodel more than 240 stores this year with the expanded grocery, or P Fresh, areas. ‘By the end of the third quarter, we expect to have more than 450 general merchandise locations, with the P Fresh assortment and presentation,’ he said.”

    • More than 300 full-time employees have gone out on strike at Mott’s plant in Williamson, New York, complaining that the company - owned by the Dr. Pepper Snapple Group - demanded wage cuts even while enjoying $550 million in profits.

    The workers say that they chose this moment because May is a particularly busy season for applesauce processing, and the facility being struck is the only one that makes Mott’s applesauce.

    • Nash Finch has announced that it has completed the “significant expansion” of its Lima, Ohio, distribution facility, which allows it to triple the frozen volume shipped from the warehouse. At the same time, the company announced the closure of a Bridgeport, Michigan, distribution center, the capacity of which will be transferred to the Lima facility.

    • The Wall Street Journal reports that ConAgra is aiming “to reinvent the lowly sweet potato for mass consumption, starting with its shape and sugar content ... When it opens this fall, ConAgra's first new U.S. plant in years will turn sweet potatoes into French fries, waffle fries and other products. ConAgra thinks it is the first factory dedicated to sweet potatoes in North America ... ConAgra executives hope that new, improved sweet potatoes will fuel growth and profit in its $2.2 billion potato business as well as with its Healthy Choice and other retail brands, where sweet potatoes increasingly are part of the mix.”
    KC's View:

    Published on: May 25, 2010

    • Safeway announced that Tom Schwilke, currently the company’s Texas Division President, will be joining the company's corporate merchandising team as President & General Manager, Perishables, reporting to Kelly Griffith, President, Merchandising.

    Succeeding Mr. Schwilke as Texas Division President will be Paul McTavish, currently Vice President, Retail Marketing Execution in Safeway's Denver Division.
    KC's View:

    Published on: May 25, 2010

    Yesterday, MNB reported on a new Planet Retail study suggesting that CPG manufacturers need to be careful as they address what they perceive as the growing threat of private brands.

    “In the recession, many brand manufacturers responded to the private label threat by launching their own value sub-brands. While these brands may have helped to retain shoppers from defecting to private label, they could do damage to the brand in the long-run,” said co-author Matthias Queck, who also serves as the company’s research director.

    At the same time, the report says that CPG companies should be careful about their new direct-to-consumer models, such as the one announced by Procter & Gamble last week.

    MNB-fave Glen Terbeek observed:

    In this report, the following statement amused me; "The more successful and sustainable strategy is for retailers and manufacturers to work together in the form of joint planning, promotions and co-branding in certain cases."  That sounds sooo old model to me!  Isn't that what ECR tried to do, in the 90's?  It will never work in today's marketplace of product and store saturation; i.e. shopper clutter!  And for sure it doesn't understand that the shopper is now in control through their access to information and choice.

    History demonstrates that the manufacturers have always followed the least resistance to reach the shoppers they want to target.  They moved from corner stores, to supermarket chains, to "alternative formats", (I love that definition), and now to consumer direct for "frictionless" connectivity with their shoppers for product information, marketing, and product distribution. Today, the retailer controls up to 40% of the retail price (gross margin, trade dollars) of an item. This is the same retailer that is competing with the CPG companies with their private label products, and "category rationalization".  Why would CPG companies keep funding their competitors when they could/can control 100% of the retail price by going around them? And through 100% control, they can convert their current  mass consumer marketing dollars into much more effective/efficient shopper marketing dollars with no interference by a middleman (retailer).

    So the statement above should read as follows:  "The  more successful and sustainable strategy is for all manufacturers to work together in creating the (real) new model that recognizes the shoppers are in control, and which connects "frictionlessly" with them." No more buying, reselling of product with no value added. No more redundancy of inventory and logistics systems.  Much more effective marketing expenditures.  I believe that the real consumer direct model is not far in the future!  Market conditions and economics will make it happen!

    Just FYI...Glen Terbeek wrote a truly prescient book on this entire subject called Agentry Agenda: Selling Food in a Frictionless Marketplace, which remains available on If the industry had adopted his suggested model a decade ago, the business might be very different - and far more effective - today.

    We also quoted yesterday from a column by Gray Poehler in the Richmond Times Dispatch in which he discussed declining customer service levels. it generated a lot of response...

    MNB user Bob Anderson wrote:

    Customer Service is not dead or obsolete.  I firmly believe that retailers who believe that customer does not matter will ultimately fail.

    Customer service takes many forms and it matters.  Any on-line retailer that has a difficult to navigate web site loses my business,  Likewise, brick and mortar retailers who do make customer service a priority also lose my business.  One thing I have noticed about this economic downturn, the first retailers to close down were those where customer service was lacking.

    I live in the heart of Walmart country and I avoid them when possible. However, patronizing a Walmart is often the only choice.  When in that situation, I choose the Walmart with the best customer service.  Yes, the customer service level Walmart varies from store to store and ranges from downright awful to very good.

    Mr. Poehler may believe that customer service is dead but I for one believe that in the long haul Customer Service will prove to be critical mark of measuring success.  Just having low prices will not guarantee success if customer service is lacking.

    Kevin, most of the time your views are interesting and on target.  At other times, I just have to write your view off as not representative of those living in rural America.

    We agree on customer service.  By the way, Manufacturer direct to Consumer will only be successful when they design the consumer to website with customer service foremost.

    Another MNB user, Jeff Weidauer, wrote:

    It seems that I’ve been hearing about how great customer service was in the “old days” for most of my life. And now that I’ve reached the point where I can talk about the “old days,” it seems to me that customer service is no better or worse than it ever was. Even in the days when you got a live person on the phone, it didn’t mean that person was necessarily going to be helpful or knowledgeable. You were taking your chances, and were as likely to be left on hold or transferred to who-knows-where as get someone willing and able to help.

    We talk about “human connections” as if they were something magical, but based on the human connections I’ve had at the DMV, I’d prefer a soulless machine, thanks very much. Bad customer service has always been with us, and always will be. This means that for those who want to make customer service a point of difference, there is money to be made. But let’s stop waxing nostalgic about how good service used to be; customer service will always present opportunities for those looking for a niche, just as it’s always been.

    MNB user Bob Vereen chimed in:

    In my recently-published book about the postwar hardware industry, I point out that one of the main reasons thousands of independent hardware, lumberyard and home center retailers have survived, when other independent retailers have gone by the wayside, is that personal service and knowledgeable employees are the mainstays of their businesses.   In fact, the North American Retail Hardware Association, where I worked for many years, has offered product knowledge training courses for nearly 50 years--by mail and in personal training sessions--and now via digital methods.

    On another subject, MNB user Mark Delaney wrote:

    Ronald McDonald is now an "insidious force" that apparently tricks our kids into eating junk food - have we gone absolutely over the edge? On a recent trip to Disney, my daughter fell in love with Mickey Pops (vanilla ice cream on a stick - very high tech stuff) - she had to have one every day we were there - quick - string up the mouse!!! Are these people cracked! If these people believe their children don't have the backbone or ability to judge what's good or bad for themselves then that's what's really sad as it shows an utter lack of confidence in their children and lord knows we need some kids with self confidence when idiots like Miley Cyrus or Lindsay Lohan are being viewed as role models! Yes - my daughter had Mickey Pops on vacation - but this is the same 8 yr old that knows that ice cream (or McDonald’s) is a treat and isn't an everyday food group.

    You know what the fundamental difference may be? If my wife or I saw one of our children gaining weight - the first place we'd turn is ourselves - what are we eating, why aren't we getting enough exercise, what's changed in their routine etc. The first place we would look is not "them" - "them" being you name it - the school, the fast food joint, the media, the government…. Be a parent, look in the mirror and take some responsibility! It's not "their" responsibility to make decisions for your kids - it's your kids' - and they're looking to their parents for that guidance. We're not the best parents by any stretch but we're certainly not going to assume that "they" will teach our kids how to eat properly - that's our job. it sucks to say no and be the bad guy sometimes but that's the job. I just can't help but think if these loonies spent half the amount of time they spend searching for scapegoats focusing on their own children - the world might be a little better off and mascots would not be fearing for their lives!
    Thanks - I feel much better now!

    In the broadest sense, I think that a lot of parents believe that their role is to win some sort of popularity contest with their kids. Which is utter nonsense, and is a belief that compels one to look for other people or institutions to blame when one has not done one’s job.
    KC's View: