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    Published on: June 21, 2010

    ...sponsored by TCC, “changing shopper behavior”

    G’day, mates. To use what here is called strine, they had a corker of a NACS Global Forum here, and there’s better than a fair go that attendees got a high level of good oil.

    Notes and comment...

    One of the things that makes any sort of global forum interesting is when people from one industry operating all over the world come together to figure out what makes them the same and what makes them different. The similarities are how the industry defines itself; the differences are what give the attendees strength.

    Here in Sydney, people have come from down the road and from relatively nearby places as New Zealand and China; they’ve also come here from the US, Canada, Mexico and even Angola, hoping to see their own challenges and opportunities reflected through a different prism, and thereby see new approaches and solutions.

    The problems facing convenience retailers here in Australia include those that face food retailers in many other places - rampant competition from every sector, as everyone goes after the same consumer dollar with a variety of approaches. Brett Barclay, founding CEO of him! Australia and New Zealand, the research consultancy, noted that while supermarkets - especially market leaders Woolworths and Coles, which have been relentless - have been attacking the sector on price, the result has been a diminishing of confidence on the part of the Australian consumer in the integrity of everybody’s prices. The impact has especially been felt by the c-store sector; Barclay noted that more than a third of convenience shoppers today believe that pricing is worse than it was two years ago, and another 37 percent believes that it is no better. As supermarkets use price as a bludgeon and self-checkout as a wedge, c-stores also have to face competition from the likes of McDonald’s with its popular McCafe outlets, and small format “top-up” stores that seem to be cropping up with greater regularity.

    Kosta Conomos, who runs The Nielsen Company’s retail services for Australia and New Zealand, noted that channel blurring is an enormous challenge here - despite the relative health of the Australian economy, 54 percent of consumers have changed their spending habits in recent years,m 57 percent have changed to cheaper formats, and 33 percent have said that they will continue to look for cheaper alternatives for the foreseeable future.

    Add to the problems that c-stores face a fast changing population. (This is a challenge facing every food retailer, not just the convenience sector.) There is the age issue - Australia’s population is growing both older and younger; while aging baby boomers make up an increasing percentage of the population, there also is the reality that Generation Y - with its very different habits and mindsets - is 27 percent of the population. And there are more and more people everyday - Australia currently has about 22 million people (most of them in very specific population centers on the east coast), but it is expected that another four million people will move here by 2020. (This has to be kept in some sort of context. Australia may be the sixth largest country in the world, but it is only 224th in terms of population density.)

    That’s a lot more people as potential customers, but it also is a different customer base. Many of these immigrants come from places like China, Indonesia, and India, and they have very different palates, views of brands, and definitions of what is convenient. By 2050, Conomos said, one-fifth of Australians will be either Asian born or of Asian descent....which create both challenge and opportunity in the food sector.

    The opportunity, said Ted Zittell of Ted Zittell & Associates and McMillan/Doolittle, may be in taking a counter-intuitive approach. If the major supermarket chains are focusing more and more on private label as a price/value tactic, then perhaps it makes sense for convenience stores to look for innovative ways in which to collaborate with CPG companies on new offerings that can “wow” the customer. (Retailers, Zittell said, need to act as “marketers, advocates and editors,” not just passive landlords, and manufacturers need to serve in a consultative role, not just supply stuff for the shelves.) They’ll have to be careful, he said, since there is a balance to be struck between “brand stretch” and “brand snap,” but at the very least retailers need to show a greater degree of specificity about what they are and who they are serving.

    Part of the challenge, Peter Struck, the general manager of merchandise and offer development for Cole Express, the c-store division of Coles, is that “the most convenient retailers in Australia are supermarkets,” not convenience stores. Supermarkets, he said, tended to be easier to park at, increasingly offer express lanes and self-checkout, and lower prices. Why would the shopper looking for convenient shopping go there?

    One of the problems that Australian food retailers in various venues may be facing was illustrated by Ramnik Narsey, general manager for petrol at Woolworths Australia, who commented that “loyalty is something you have to buy.” What this statement does not acknowledge is that such an approach can create a kind of discounting death spiral that nobody wins if everybody takes the same approach.

    What’s interesting about these problems and solutions is that they seem so universal in nature. Most mass retailers - ranging from Walmart to the single unit, independently owned c-store - are dealing with the nation of a diversifying and fragmenting population, and should know that it is only through more specific knowledge of who one’s customers are and what they want that one can be successful.

    It is all about the differential advantage. It is all about having a product or a service - or even a mindset - that the other guy does not have. The Australian retail experience, facing as it does so many changes in coming years, offers an interesting laboratory for thought leadership.

    Warren Wilmot, the CEO of 7-Eleven Stores in Australia - which has undergone a highly successful transformation with the development of urban units offering what he called the “ant’s pants of foodservice” (it can be judged from his enthusiasm that this is a good thing) - urged the attendees to confront their issues with a passion for innovation. “The more research you do, the more you can convince yourself that you can’t do some of these things,” he said. In the end, to succeed, retailers need to be marketers, they need to be merchants...and they need to sell.

    My Web Grocer

    BTW...I’ll continue to post pictures from my Sydney trip on our MNB Facebook page.

    And we’ll have more from the NACS Global Forum here in Sydney tomorrow...

    Thanks, as always, to TCC ... which is sponsoring “The Content Guy On The Road.”

    TCC offers customized retail marketing programs that change shopper behavior - attracting new customers and building customer loyalty...generating 4-5 percent sales increases and expanding basket sizes...generating in-store excitement and creating real and tangible differential advantages for your stores.

    For more information, Click here.
    KC's View:

    Published on: June 21, 2010

    The Wall Street Journal reports that Saint Consulting Group - the company named in a previous WSJ story as coordinating clandestine campaigns on behalf of clients such as Safeway and Supervalu that are designed to look like grass roots opposition to Walmart’s expansion efforts - is suing a former employee that it says shared confidential information with the Journal.

    According to the WSJ, “The story was based on interviews with former Saint employees and hundreds of pages of documents that listed Saint's clients and outlined Saint's business practices, including employees using fake names to infiltrate citizen groups and helping them file suits against Wal-Mart. Company founder Michael Saint confirmed the tactics in the story.

    “A week after the article appeared, Saint sued Crystal Litz, a former district manager for the Hingham, Mass., firm, claiming she violated a nondisclosure agreement by allegedly providing the Journal with names of clients, corporate documents and other ‘trade secrets’.”

    Litz has denied that she even talked to the Journal, and the paper. which does not disclose its confidential sources, isn’t commenting.

    The court filing notes that Saint “lost at least one valuable customer due to the disclosure of its identity as a Saint customer... Another potential customer of Saint has declined to retain Saint expressly because of the Article."
    KC's View:
    I’m not sure what the legalities are behind Saint’s way of doing business, but at the very least it strikes me as creepy.

    There is a lovely irony here, though. Saint has made a lot of money essentially by anonymously manipulating the news. Now it wants to sue someone who, it claims, in essence, anonymously created a news story. Apparently anonymity is good for the goose but not for the gander.

    “Live by the sword, die by the sword.” “Hoisted on their own petard.” Choose your own cliche here. I cannot say that Saint’s problems cause me any sort of distress.

    Published on: June 21, 2010

    • National Public Radio (NPR) has a piece about Walmart’s “Heritage Agriculture” program, which it is using around the US to get more local produce into its stores, a move that the company says will have both economic and environmental implications - all positive.

    Here’s how NPR describes one case:

    “Wal-Mart is eyeing areas like southern Arkansas, where farmer Randy Clanton drives the back roads of the town of Hermitage. He's checking on field workers preparing tomato seedlings. A shotgun rides in the truck beside him.

    “Clanton says his family started growing tomatoes in this area 50 years ago. ‘That was back when most of your produce business was done in small, mom and pop operations,’ Clanton says. ‘They'd bring these tomatoes in on trailer trucks, even on half-bushel baskets back then.’ Clanton says Wal-Mart has helped make his operation more professional, especially in the area of food safety. Wal-Mart has urged Clanton to diversify and plant watermelons, peppers and cabbage. Now he supplies food to distribution centers covering six states. And the larger market means Clanton makes more money.

    “‘It gives us a sense of security whenever we go out here and start kicking the dirt out here and cranking up ole John Deeres up to get ready,’ he says. ‘If you know you've got a market out there — that gives you a reason to get up out of bed every morning.’

    “Clanton is one of about 350 farmers Wal-Mart is working with as part of its Heritage Agriculture program.”

    NPR notes that “Wal-Mart won't say what its long-term goal is for the Heritage Agriculture program, but it says as of today, 6 percent of its produce is grown in the same state it's sold.”
    KC's View:
    This is never going to account for a dominant part of Walmart’s produce business, simply because things like climate and growing seasons create natural limitations. But at a time when “local” seems to have as much or more marketing power as “organic” or “natural,” this is a big deal. And a better deal for Walmart, as it thinks strategically about what it wants its food business to look like in a few years.

    Published on: June 21, 2010

    Whole Foods Market has announced that all personal care products and cosmetics making an "organic" claim sold in its U.S. stores must be third-party certified by June 1, 2011.

    According to the company, “Under the new guidelines, all products making an ‘organic’ product claim (e.g. "organic shampoo") must be certified to the USDA's National Organic Program (NOP) standard. Products making a ‘made with organic ingredients’ claim must also be certified to the NOP standard, and products making a ‘contains organic ingredients’ claim must be certified to the NSF 305 ANSI Standard for Organic Personal Care products, a consensus-based industry standard accepted by the American National Standards Institute and managed by NSF International.”

    While organic certification for personal care products exists, it is not mandatory for products in the segment that make such claims.

    "At Whole Foods Market, our shoppers do not expect the definition of organic to change substantially between the food and non-food aisles of our stores," said Joe Dickson, quality standards coordinator for Whole Foods Market. "We believe that the 'organic' claim used on personal care products should have just as strong a meaning to the 'organic' claim used on food products."

    Suppliers who are making an "organic" claim have until August 1, 2010 to submit their plans for compliance and until June 1, 2011 to be in full compliance.
    KC's View:
    This is as much about marketing as it is about product quality, but that’s okay. Companies like Whole Foods stand for something very specific, and they cannot afford to compromise because mistakes in this area dilute the brand’s equity.

    Published on: June 21, 2010

    A new study, conducted by BIGresearch for the National Retail Federation’s Mobile Retail Initiative, shows an increasing number of people want to be “tuned in” more than ever before via their mobile phones. Among the results:

    • Nearly nine out of 10 adults (87.5%) say they have a cell phone, an increase of 17.9 percent from January 2006 (74.2%).

    • 41.5 percent of adults want a cell phone with internet access, compared to just under one-third (32.6%) who said so in July 2008.

    • More than half (51.4%) of adults 18-34 years old say they want to be able to surf the web on their phone, compared to the 41.0 percent who said so in July 2008.

    • Over half (51.1%) of 18-34 year-olds say they want a cell phone with email access, up from 28.1 percent in January 2006.

    • 42.6 percent of all adults want email on their phone, up significantly from 22.5 percent four years ago.
    “The combination of new technologies coupled with consumers’ desire to adopt these new apps are redefining the cell phone into a ‘consumer communicator’,” says Phil Rist, Executive Vice President of Strategy, BIGresearch.  “Marketers and retailers should leverage shopper’s needs to stay connected by providing information and communications to assist them with their purchase decisions.”
    KC's View:
    No argument here. Retailers without a mobile strategy are playing a dangerous game that almost inevitably will lead to obsolescence.

    BTW....I think there is pretty good evidence that the big CPG companies - such as Coke and Pepsi - understand the mobile connectivity game, and are doing everything they can to target and communicate with their customers via this technology. Retailers that do not understand this and look to level that playing field also run the risk of being disenfranchised from the relationship.

    Published on: June 21, 2010

    The San Francisco Chronicle has a nice piece about Grocery Outlet, the 138-store, 65-year-old, Northern California-based chain that is “drawing flocks of new customers seeking deals like giant 99-cent bags of tortilla chips, half-price Hamburger Helper and $4 family-size frozen pizzas,” and that is now “poised to capitalize on the new frugality with a major expansion in California, Washington and Oregon” that could as much as double the size of the company.

    Recession (with apologies to Chico Escuela) apparently has been very, very good to Grocery Outlet. The Chronicle writes, “Grocery Outlet, which offers about half off supermarket prices by selling manufacturers' excess inventory, rang up 5 million additional customer transactions last year compared with the prior year and has clocked double-digit annual sales growth since 2008.”

    Not that Grocery Outlet hasn’t evolved with the times. Formerly a place to buy canned goods, today it offers a full selection of grocery - albeit an edited selection, with just 4,000 SKUs. The company is betting that its broader selection, combined with a sustained consumer desire to save money, leavened with a treasure hunt atmosphere in which inventory can fluctuate dramatically depending on what products are available to the chain at low cost, will make it a long term winner.
    KC's View:
    The Grocery Outlet business model, which combines franchising with corporate stores, is a fascinating one. These days, increasingly the spoils of war go to the companies that enter battle with an unorthodox plan and a unique read on the competitive environment. Which sounds a lot like Grocery Outlet.

    Published on: June 21, 2010

    The Kansas City Business Journal reports that the federal Trade Commission has approved three sales of Wild Oats stores as part of the agreement made by Whole Foods top divest certain Wild Oats units to settle antitrust concerns leveled after it acquired Wild Oats.

    A Kansas City store is being sold to Healthy Investments LLC, a Boulder, Colorado, store is being sold to AM Holdings LLC, and a Portland, Maine, store is being sold to Trader Joe’s.

    At the same time, the story notes, the FTC approved the sale of White Oats’ intellectual property to Luberski Inc. and the sale of Alfalfa’s Markets’ intellectual property to A-M Holdings.

    Wild Oats had previously acquired Alfalfa’s, but kept the brand.
    KC's View:

    Published on: June 21, 2010

    The New York Times reports that “after an unusually public showdown that threatened to restrict where millions of consumers could fill their prescriptions, Walgreen and CVS Caremark said on Friday that they had agreed to a new contract.

    “In addition to being in the drugstore business, CVS Caremark is a leading provider of prescription benefit plans that many employers offer workers and their dependents ... Earlier this month, the rivals had threatened to stop doing business with each other.”

    According to the story, “As a result of the deal announced Friday, people enrolled in those drug benefit plans will be able to continue shopping at Walgreen, which operates about 7,500 drugstores across the country, the two companies said. The two did not disclose the terms of the new contract and neither would elaborate beyond the joint statement they issued.”
    KC's View:

    Published on: June 21, 2010

    Stew Leonard’s announced late last week that it will begin selling organic milk in whole, one-percent and skim varieties, charging $2.99 for a half gallon, higher than the $1.89 company charges for its regular milk. (Stew Leonard’s only sells milk under its own label.)

    “Our customers have raised their families drinking Stew Leonard’s milk for more than 40 years!” says Stew Leonard, Jr., CEO of Stew Leonard’s, in a prepared statement. “Our milk has always been free from synthetic hormones, and we’ve always sold milk from local farms for the lowest price in town. However, our customers have been asking for organic milk so we knew the time was right to introduce this new product.”
    KC's View:
    It is worth pointing out there that Stew Leonard’s has really been ramping up its game in the past year or two, especially in the newly renovated original store, where there is a competition from a new Whole Foods a few miles away, and soon to be competition from a new Fairway.

    I haven’t used this line in a while, so let me trot it out for a repeat performance:

    “Compete” is a verb. An action word.

    That’s something that Stew Leonard’s understands.

    Published on: June 21, 2010

    USA Today reports that the Obama administration is proposing a new regulatory approach to the meat industry that would toughen rules covering companies, establish a more level playing field for big and small producers, and make it easier for farmers and ranchers to sue companies that they believe are creating unfair price pressures.

    "I think it's fair to say that what we're proposing is aggressive," said Secretary of Agriculture Tom Vilsack. "The reality is, the Packers and Stockyards Act has not kept pace with the marketplace ... Our job is to make sure the playing field is level for producers."

    "They're basically trying to roll back time," replied Mark Dopp, policy director for the American Meat Institute. "This rule attempts on many levels to undercut all the progress that's been made" in the meat industry.

    • The Atlanta Journal Constitution reports that a soft drink price war is sweeping the nation, as a low price campaign begun by Walmart - which is sometimes charging as little as five bucks for a pack of 24 cans of Coke, Pepsi or other brands - is met by competitors. Experts say there is no end in sight.

    According to the paper, “The cuts could put the retailer in a fundamental conflict with big beverage companies, which worry that ultra-low prices could jeopardize eight or nine years of work to get consumers to accept higher prices. That effort was meant in part to produce gains for the bottlers who make and distribute soft drinks.

    “Analysts say the new low prices could train shoppers to look for deep discounts before parting with their money.”

    • The Cincinnati Enquirer reports that “Tide detergent, Procter & Gamble's signature brand, will undergo a change in formula later this summer ... Called Tide ActiLift, the new variety will include three new ingredients and is formulated to better remove stains and also prevent them.”

    According to the story, the change will affect nearly all of Tide's liquid detergent varieties.

    • Teamsters Local 120 announced that its member, employed at SuperValu’s flagship distribution center in Hopkins, Minnesota, have ratified a new three-year contract by a 15-1 margin. A strike had been threatened.

    According to the union, the The agreement “preserved 100 percent employer paid healthcare; secured across-the-board wage increases; protected pension eligibility and benefits; reduced the number of part time employees; added an additional double-time paid holiday; and improved the flexibility of vacation scheduling.”
    KC's View:

    Published on: June 21, 2010

    The Grocery Manufacturers Association (GMA) announced that Denny Belcastro, the Vice President of Customer Development and Industry Affairs at Kraft Foods North America, is leaving the GPG giant and joining GMA as Executive Vice President for Industry Affairs and Membership Services.
    KC's View:

    Published on: June 21, 2010

    One of the things that I’ve always tried to be careful about here on MNB was observing the old “church and state” rule that I learned when I started out in journalism. I try to keep the punditry separate from the sponsors, and when they get close, I try to at least note it so that we’re all clear about where the lines are. (This is as much for the protection of my sponsors as anything...I would hate for anyone to suffer because of some politically incorrect statement that I make.)

    That’s not to say that I am anything but thrilled about my sponsors. I’ve always been lucky that the people and companies supporting MNB are wonderful folks with whom I love being associated. I hope they feel the same way about me.

    Here’s the reason I am mentioning this today...

    MyWebGrocer, which is a long time MNB sponsor, has a new DrumBeat and tile ad starting today that feature, rather prominently, my name and picture. That’s because MyWebGrocer was kind enough to hire me to produce a series of videos about their company - which I was thrilled to do, not just because I have a video production business in addition to MNB, but also because I happen to feel strongly that MyWebGrocer is a terrific company that is making it possible for a lot of companies to be on the online cutting edge.

    How great is it to have a website that has a point of view that is shared by a sponsor like MyWebGrocer. It is like the best of all possible worlds.

    I hope you’ll check out the videos. I hope you’ll contact MyWebGrocer about their offerings. (Just like I hope you’ll check out all my sponsors...because they make it possible for me to continue to provide MNB to you each day.)

    And I hope you won’t get sick and tired of looking at my face.
    KC's View:

    Published on: June 21, 2010

    Just a reminder...the next couple of days may have MNB arriving at odd times.

    You are getting this on Monday morning, which is late Monday night in Australia. On Tuesday afternoon, I get on a flight from Sydney that arrives in San Francisco early Tuesday morning. (Hence the rip in the space-time continuum referenced above). Assuming everything goes smoothly with customs, I should be able to get you Tuesday’s MNB before 12 noon EDT...

    Then, I fly from SF to London late Tuesday afternoon, arriving early Wednesday morning there, which will be really early Wednesday morning or very late Tuesday evening in the US, depending on where you live. I’ll get you MNB for Wednesday as quickly as I can...and then hopefully will be able to file more frequent reports from the Consumer Goods Forum in London through the end of the week.

    Make sense? Got that straight? I hope so ... because I’m not entirely sure I do.
    KC's View:

    Published on: June 21, 2010

    ...will return.
    KC's View:

    Published on: June 21, 2010

    At the always challenging Pebble Beach Golf Links in California, 30-year-old Graeme McDowell of Northern Ireland held on to win the US Open by one stroke, earning his first major title and, according to the New York Times becoming “the first player from his country to win a United States Open and the first European to win the Open in 40 years.”
    KC's View:

    Published on: June 21, 2010

    click to play videoNow it is is your turn.  
    Click here to find out how.

    2010 has been a dynamic year for online grocery and the pace continues to accelerate with online grocery sales projected to grow from $12 Billion this year to $16 Billion by 2012, according to Nielsen.  As the leading solutions provider for online grocery, MyWebGrocer has enabled its retailer partners to help fuel this trend, as eCommerce orders generated from our platform have increased 22% year to date over 2009 levels.

    KC's View:

    Published on: June 21, 2010

    My Web GrocerMyWebGrocer provides digital solutions for grocery retailers. Join Kevin Coupe as he explores today’s most pressing issues with MWG executives, including:

    • Growing your customer base
    • Battling Walmart
    • The advantages of eCommerce
    • Differentiating your brand
    • Earning incremental revenue from manufacturer advertising

    In these exclusive videos from Kevin Coupe and MyWebGrocer, you’ll gain actionable insights that will improve your bottom line. Click here to view the videos…

    KC's View: