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    Published on: June 25, 2010

    The Cost of Growth...

    LONDON - The first Consumer Goods Forum (CGF) Summit, following in the tradition of its forebear CIES, has produced a thought-provoking several days...albeit with a dysfunctional character that may leave the audience with few answers.

    The problem is that while clothed in the cloak of sustainability, addressing the very real steps that can and should be taken by manufacturers and retailers to use less and be smarter as they aim for operational effectiveness and efficiency, there have been sessions here that have suggested that the very nature of traditional capitalism needs to be reconsidered.

    On the one hand, much that has been focused on here at CGF makes sense. If there has been a theme to these meetings, it is that the building blocks of change are being put into place by organizations big and small that recognize sustainability must be a top priority in coming years for both environmental and economic reasons. CGF recognizes that it has a role to play in helping companies communicate about their efforts, successes and failures, and to help create dialogue and idea-sharing that can serve the industry and, by extension, the global consumer population. Good enough.

    But...

    Will Day, chairman of the UK’s Sustainable Development Commission, spoke this morning about the ways in which human beings are using up the world’s resources and how wealth is not spread about with any sort of parity. He noted that 38.4 percent of the world’s wealth is owned by 10 percent of the world’s people, “and that is not a recipe for harmony.” He suggested that geographic and demographic shifts are creating an ever expanding chasm between the haves and have-nots, and that “economic growth is destroying more than it is creating.” And he proposed to the audience of highly capitalistic, successful business executives that they have to reconsider the nature of appropriate growth.

    In essence, Day’s position is that infinite growth is not possible in a world of finite resources - and that while growth is not wrong, effective and responsible leaders have to reconsider whether growth by itself is enough of a motivation, whether short-term goals (like, say, volume, profit and share price) need to be put aside in favor of longer term, strategic imperatives with greater societal resonance.

    The problem is that, unless I’m wrong, there cannot be many attendees at this conference who are not judged - sometimes daily - on the growth they generate for their businesses. There is not a CEO on the planet (with the possible exception of Apple’s Steve Jobs) who would not lose his job if he suggested to his board and shareholders that “enough is enough.” Indeed, Will Day noted that current lifespan for a North American CEO is 15 months, in part because they are forced to make short-term tactical decisions that are focused on the balance sheet, not posterity.

    There is not a politician in the known world who could get elected by saying that we live in an era of limits and that there ought to be a redistribution of wealth to create harmony between peoples. (Well, maybe Jerry Brown said that kind of stuff when he ran for president back in 1976 and 1980...but even he isn’t saying that anymore as he tries to once again to become California’s governor.)

    “Better lives through better business.” That’s the slogan being used by CGF, as noted by Muhtar Kent, the Coca-Cola CEO, who serves as the association’s co-chairman.

    “Better lives is creating more wealth.” That’s the line used by Lars Olofsson, the Carrefour CEO, who serves as CGF’s other co-chairman.

    The problem is that for most people, “better lives” and “more wealth” may be at odds with the philosophies being urged by people like Will Day and Tony Juniper, the sustainability activist who spoke yesterday.

    Indeed, this morning’s other speakers were independent retailers who have used the IGA system to create successful, consumer-oriented retail businesses in places like China, Russia, and Sri Lanka. They’re not thinking about limits. They’re thinking about growth, about more stores, about selling more stuff to more people. As they should be, because that’s the dream. It’s the basic tenet of capitalism.

    But the fact that they spoke immediately after Will Day argued for a different kind of growth and a new set of business priorities illustrates the core dysfunction that defines this conference.

    Give CGF credit. The notion of redefining capitalism - indeed, the idea of a “natural capitalism,” as defined in book of the same name that suggests the next industrial revolution will be of a sort much more in tune with the ecosystem - is probably not something that comes up at a lot of business conferences. (If I have a criticism of the programming, it is that there are too many speeches and too little of the kind of real, profound dialogue that will be necessary to confront and deal with these fundamental issues. I’ve been told that a lot of CEOs don’t like the uncertainty and unpredictability that come with public conversations; if true, they’re missing a real opportunity.)

    If people like Day and Juniper are right, and we are living on a fragile planet that has been over-exploited, and that sustainability cannot just be a catch phrase used by business executives looking to establish their environmental and economic bona fides, then a lot of hard decisions remain to be made. It won’t just be using less water and less packaging. It won’t just being creating more nutritious products that offer a promise of better health. It won’t just be about carbon and food safety. It won’t just be developing an infrastructure that is more transparent, engendering greater trust in a system by a global population that has less faith in institutions than ever.

    Those will be building blocks, sure. Important ones. Muhtar Kent talked several times about the power of the food industry to shape and mold public policy, behavior and global priorities because it touches virtually every person on the planet. We’ll see. That power - and the good intentions behind it - may be tested, because some of the changes and recommendations being made here could home with a high price tag.

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    KC's View:

    Published on: June 25, 2010

    by Michael Sansolo

    Standing in the aisles of a price oriented supermarket in California, I thought I heard the best definition of value.

    Now this was no average store. This was Grocery Outlet, a company whose stores will never get compared to Wegmans or Whole Foods. The stores are extremely simple, with small selections of self-service fresh products almost included as an afterthought. The bulk of the store is dedicated to the most ordinary center store products in crude, low-cost displays.

    What’s most striking about Grocery Outlet is some of those products themselves. This is one of the few stores around where you can find (as I did) adjacent displays of private label applesauce from both Kroger and Albertsons. If Grocery Outlet can get it cheaply, they do it.

    But that’s not the story. What caught me on this little visit was an announcement “from aisle three” as the in house audio explained. The ad reminded shoppers why they were at Grocery Outlet and why they should come back before they go to any other store. Simply put, it’s to check out the cheap prices. By purchasing some products at these cheap prices, the ad said, shoppers could save money to spend elsewhere on the products that are really important to them.

    There it is, the meaning of value. Spending money where it matters most and spending less where it doesn’t. Grocery Outlet knows who is it and understands why its shoppers are in the store. Sure it’s not pretty, but it’s a heck of a message.

    The key to any message is actually telling it clearly and simply. Elsewhere on the same trip I got two reminders why Fresh and Easy, Tesco’s concept store, may just make it yet. F&E is finding its voice and its message in ways others should consider. In one store I saw a simple frozen food case with a very interesting message. The sign above explained that a case with a door saves 45% in energy costs over an open-air case. And F&E passes those savings along.

    Later I heard an F&E radio ad with a similar reminder. In that ad, a customer talked about his experience at F&E, obviously praising the store. Nothing special to that, except the announcer explained that by using real customers F&E saves money and that saving is passed on in lower prices.

    Now, quite honestly there is nothing especially groundbreaking or radical in either the F&E ad or the frozen case sign, but that doesn’t matter. F&E’s stores still need work, but the messages are getting there: we find ways to save money to help you save money. Years from now those messages may explain why F&E took hold.

    Of course, not every measure of value is in price. Some comes from the caring of staff, which I saw briefly at a Stater Bros. store. An employee chatted with me briefly while she repaired a “no soliciting” sign outside the supermarket. As she explained, the sign was positioned perfectly after her last shift, but then someone messed around with her sign. And she wasn’t happy about it.

    If a staffer cares so much about a sign, I have to believe she cares an awful lot about food and customers. That too speaks volumes about value.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . 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: June 25, 2010

    New research by Datamonitor suggests that when it comes to the nation’s childhood obesity epidemic, sedentary lifestyles play a significant role in addition to bad eating habits.

    According to the research, 30 percent of parents of overweight children said that they do not set limits of television viewing, computer usage, or other couch potato-like activities (which aren’t actually, active at all).

    That’s not to say that food consumption isn’t a problem. The study also found that children between the ages of 5 and 14 eat twice as many confectionary snacks as the general population.
    KC's View:
    While some will suggest that this is why we need fat taxes, I think what we really need is responsible parenting. Our job is to get them off the couch, get them outside shooting hoops or playing stickball, while modeling good eating habits and not feeding them crap.

    (Stickball? Yes, stickball. I’m that old. I can remember as a kid growing up in Larchmont, NY, going up to Murray Avenue School, where we would play stickball on the playground for hours. Did it with friends, did it with my brothers, and - this is really important - did it an awful lot with my dad, who loved to go up and play with us. I used to take my son to the elementary school near our house and do the same thing, until it got to the point that every pitch I threw he’d hit about a mile and a half, and every pitch he threw I couldn’t get around on. I was - and am - so proud.)

    Published on: June 25, 2010

    LONDON - Here in the UK, the Waitrose supermarket chain is the official food purveyor to the Royal household. But Walmart-owned Asda Stores is suggesting that the Queen might be able to save a few pounds of she’d just start shopping at Asda.

    The suggestion has been made via a letter to the Queen that is reprinted on Asda’s website. The letter reads, in part:

    Your Majesty,

    As your most loyal subjects at Asda, it has come to our attention that you will be officially negotiating the next 10 year expenses with the Government this month. We wanted to let you know that the royal households could save thousands if they made the switch to Asda.

    We couldn’t help but notice that in 2009 your food bill was half a million pounds. We also understand that you will be requesting a 75 per cent increase in your allowance compared to 2009.

    You may have seen that Asda has recently launched the ‘Asda Price Guarantee’, a website allowing you to compare the price of your weekly shop to see which supermarket is the lowest priced.

    As of Thursday, June 17th your official grocery supplier, Waitrose, will be included within the Asda Price Guarantee so you can see first hand how much it is possible to save with us.

    As an example, based on the savings made in the below basket, Asda’s shopping bill will be roughly 27 percent cheaper than at Waitrose so could immediately cut your bills to £365k per year saving you £135k – without compromising on quality.

    The letter then offers a shopping list with comparative prices. And then goes on:

    If you would like more information on the Asda Price Guarantee or if you would like to check for yourself, simply carry out your normal shop at Asda, visit http://www.asdapriceguarantee.co.uk/ then smile as you see how much you have saved.
    KC's View:
    First of all, this is brilliant. Cheeky, funny, and with the advantage of being rooted in truth. Since the Queen lives off taxpayer funds, it seems to me that Asda makes a pretty interesting point.

    (Could the Queen’s allowance force her to comparison shop? The mind boggles.)

    Not sure what the current laws are over here, but I just hope that Simon Hulme, head of pricing at Asda, who wrote the letter, isn’t at risk of being hung. Or beheaded. Or sent to the Tower of London.

    Published on: June 25, 2010

    Fortune has a piece in which it suggests that despite Walmart’s inability to get a bank charter in the US, gaining entry into the financial services business remains a core goal.

    According to the story, “For Wal-Mart, the benefits of offering financial services are clear. In addition to the $3 or so that customers pay for things like applying for and refilling debit cards, and having checks processed or printed, Wal-Mart steers shoppers toward making purchases in its stores through cash-back incentives. It also benefits from offering what amounts to a mall of services within its own stores, which offers everything from groceries and retail goods to fast food restaurants, drugstores, eyeglass centers, portrait studios, gas stations and salons.”

    The story goes on, “The idea is to take Sam Walton's ethos of lowering ‘the cost of living for everyone’ and apply it to financial services as well. Just in the debit card department, Wal-Mart estimates it can take in its still-generous fees while reducing what the average check-cashing customer pays by 25% to 50%. Although Wal-Mart does not break out the fee revenue it makes on its money services, last year the company estimated that customers would register $2 billion in deposits on the cards and save approximately $450 million in fees.”
    KC's View:
    I’ve said it before and I’ll say it again. While I understand that there are some problems inherent in giving a behemoth like Walmart power within the financial services sector, the name “Walmart Bank” could do more to lower fees and create more consumer-oriented banks than all the regulations and legislation that Washington, DC, can muster.

    Published on: June 25, 2010

    The Seattle Times reports that Starbucks is satisfied enough with its two Seattle stores that operate under different names and sell food, beer and wine in addition to coffee that they are building another one - but this one will be called Starbucks.

    “The Starbucks store at 1600 E. Olive Way on Capitol Hill is expected to close in July for a two-month remodel that includes new deck seating, an indoor-outdoor fireplace and a 360-degree coffee and wine bar with narrow countertops to let baristas interact more closely with customers,” the Times reports. “Starbucks will continue serving coffee from a van on the property during the remodel. Its design will be more rustic and industrial than traditional Starbucks cafes, like the stealth and several other recently remodeled stores.”
    KC's View:
    The question is whether this represents a broader trend for the retailer - in appropriate locations, opening stores that stretch the brand in new directions that don't hurt the company’s core equity and reinforce its “third place” philosophy. Sounds likely, especially since it may be one of the few ways that the almost ubiquitous company can build sales and satisfy the investor class.

    Published on: June 25, 2010

    • The Wall Street Journal reports that “Wal-Mart Stores Inc. won a key zoning approval to build a second store in Chicago, a potentially significant political breakthrough that could pave the way for the world's largest retailer to finally penetrate more of the biggest cities in the U.S.” The unanimous City Council vote in Walmart’s favor comes at the end of six years of wrangling and debate.
    KC's View:

    Published on: June 25, 2010

    QSR reports that Chipotle mexican Grill has opened its 1,000th restaurant, in Flower Mound, Texas.

    According to the story, “Chipotle was the first national restaurant company to commit to serving naturally raised meat (from animals that are raised in a humane way, never given antibiotics or added hormone, and fed a pure vegetarian diet), the first to commit to local and organically grown produce, and the first to serve dairy (cheese and sour cream) made with milk from cows that are not treated with the synthetic hormone rBGH (recombinant bovine growth hormone). Ells (Steve Ells, the company’s founder) calls the vision behind this commitment ‘Food with Integrity’ and it has the company looking for more sustainable sources for all of the ingredients it uses.”
    KC's View:
    In other words, one doesn’t have to pursue a lowest-common-denominator strategy in order to succeed. Congrats to Chipotle.

    Published on: June 25, 2010

    Forbes has an interview with Jonny Bowden, author of “The Most Effective Ways to Live Longer,” in which he talks about the ten foods that we need to eat more of ...and why we should ignore the “U.S. Department of Agriculture's food pyramid, which is a graphic, pyramid-shaped depiction of nutrition guidelines, updated every five years, that tells Americans what to eat according to food groups. Bowden dismisses it as the product of interest group politics.”

    The foods that Bowden recommends are: cherries, blueberries, kiwifruit, grass-fed beef, wild salmon, flax seed, whey protein powder, kale, dark chocolate and coconut.
    KC's View:
    It’d be a lot of fun constructing a marketing campaign around these, huh?

    I can live with most of this list - especially the grass-fed beef, wild salmon and blueberries. I actually don’t eat a lot of chocolate, but I suppose I could manage if I had to for health reasons. And d’ya think it is okay if I get my coconut via pina coladas?

    I guess I just need to find a way to integrate flax, kale and whey into my diet...none of which I probably have ever eaten (at least knowingly) in my life.

    Published on: June 25, 2010

    • The Richmond Times-Dispatch reports that at the company’s annual meeting this week, Kroger CEO Dave Dillon said that while the company will grow, it will not do so by acquiring troubled competitors

    "We look at lots of things, but we're not interested in becoming someone's turnaround artist," Dillon said. "We run good stores and are good at running good stores, and we don't want to buy somebody else's problem ... "Our acquisition and expansion plans are really designed around what we think works for Kroger; it's not a reaction to, say, Wal-Mart being international.”

    MarketWatch reports that Kroger’s board of directors “approved the repurchase of $500 million of common shares, replacing the $225 million remaining from the $1-billion program announced in January 2008. The grocery chain plans to use free cash flow to repurchase shares, pay dividends and maintain its current debt rating. The timing of the buybacks will hinge on market conditions.”

    • Supervalu’s board of directors has authorized a stock buyback of up to $70 million of common stock over the coming year. The program replaces a similar buy back program authorized as year ago.

    • In Alabama, the Times Daily reports that “the two Southern Family Market stores in Florence and the former Piggly Wiggly in Muscle Shoals have been renamed Food World. That name is a familiar one because it once adorned the signs of two of the stores ... Food World is part of a group of grocery stores owned by C&S Wholesale Grocers, of Keene, N.H. The company also owns Southern Family Markets, Piggly Wiggly and Bruno's.”

    • The Atlanta Business Chronicle reports that Coca-Cola plans to start selling the Russian beverage Krushka & Bochka Kvass - described as a non-alcoholic drink “fermented with high quality rye and barley and flavored with natural sugar” - in New York.
    KC's View:

    Published on: June 25, 2010

    • The Pittsburgh Business Times reports that Rite Aid Corp. has named Ken Martindale as company's new chief operating officer. Martindale has been serving as
    KC's View:

    Published on: June 25, 2010

    ...will return. Believe it or not.
    KC's View:

    Published on: June 25, 2010

    Just down the road at Wimbledon yesterday, there was an amazing tennis match that actually needed to be spread over two days - American John Isner defeated Frenchman Nicholas Mahut in five sets, winning the final set 70-68 to end a match that lasted 11 hours and 5 minutes. (There is no fifth set tie breaker at Wimbledon.)
    KC's View:

    Published on: June 25, 2010

    Once again, it has sort have been an “OffBeat” week, and so I won’t wear you out with lot of rants and digressions. Besides, to be perfectly honest, for the first time in this two week trip, I can feel my battery wearing down just a bit. So, just a few things...

    • I love London. Always have, but for some reason this grand old city seems more charming than usual this trip. Perhaps it is the weather, which has been sunny and warm every day. perhaps it is my walk to work each day, which takes me down Park Lane, past Buckingham Palace, along Bird Cage Walk, past lovely old townhouses, and finally to the corner where the Queen Elizabeth II Conference Center sits - directly across from Westminster Abbey and within sight of Parliament and Big Ben. Or maybe it is the fact that the city seems so alive - there are joggers and bicyclists everywhere, giving London a kind of pep that I do not remember from past visits.

    This isn’t a bad gig, I constantly remind myself. It may be my job, but it is rarely actual work.

    • There was a wonderful piece in the New York Times yesterday about how Pete Hamill, “having published 10 novels, finished an 11th, written a memoir and four other works of nonfiction, polished off countless columns and magazine articles, covered a few wars, briefly run the newsrooms of two newspapers and landed on a list of 400 New Yorkers described as helping to define the city over the past four centuries,” will finally get his high school diploma this weekend.

    Hamill will get get the diploma from Jesuit-run Regis High School “two days after his 75th birthday,” and 59 years after having done the “dumb” thing of leaving school.

    Being myself the product of a Jesuit education - at Loyola Marymount University in Los Angeles - I also recognized this passage from the Times article:

    “The Jesuits stayed with him, as well. ‘They put doubt in you, intellectual doubt,’ Mr. Hamill said. ‘Someone presents a thesis, you back up and say, ‘Is that really true? How do we know that’s true?’ ‘The Jesuits, he said, also bequeathed ‘standards of excellence — you couldn’t just show up.’

    “‘Even now, as old as I am, I have this secret Jesuit over my shoulder,’ he said. ‘I think I’ve written a pretty good paragraph and he’s shaking his head: ‘C’mon, pal. Better try that again.’ This critical intelligence directed at yourself is very good. In that sense, those two years at Regis shaped a lot of what I did later, because I was never satisfied’.”

    • Those of us who mourned when Robert B. Parker died - because we knew that eventually the flow of Spenser, Jesse Stone and Virgil Cole/Everett Hitch novels would run out - have probably spent the last few months wondering what series of books to adopt now that Parker, who could be counted on to publish as many as three novels a year, is gone.

    Well, at the recommendation of my local librarian, Barbara Thomas, I read the first Jack Reacher novel, “Killing Floor,” by Lee Child. And liked it. A lot.

    Jack Reacher is a former military policeman with extensive combat and intelligence training who is now a kind of hobo, wandering the back roads of the US with only the clothes on his back. In “Killing Floor,” he is accused of and then drawn into investigating a gruesome series of murders in rural Georgia; Child has that kind of clipped, Hemingway-esque approach to narrative that Parker used so well - he never uses 10 words when five will do. Jack Reacher isn’t Spenser or Jesse Stone, but he’s certainly earned of my attention to get me to download a bunch of the novels to my Kindle.

    • I saw a movie on the plane the other day that I’d missed when it was released - The Men Who Stare At Goats, directed by Grant Heslov and starring George Clooney, Ewan McGregor and Jeff Bridges in the story of a military unit trying to use New Age methods to get an edge on the enemy. This isn’t a perfect movie, but it is a lot of fun - well -acted, and perfect for a Saturday night rental.

    • Two Australian wines to recommend to you this week...

    - the 2007 Keith Tulloch blend of Shiraz and Viognier, from the Hunter Valley in New South Wales;

    - and the 2008 Wonga Estate Pinot Noir from the Yarra Valley in Victoria.

    Both are delicious...I enjoyed the first with a fish I’d never had before - mulloway, served with pancetta and red wine butter sauce. And I had the second with a delicious kangaroo fillet served with eggplant caviar and red onion jam. The whole thing was consumed at the excellent Odyssey wine bar in the Rocks section of Sydney...and I thank them for their recommendations and high level of service.

    Like I said. This may be my job, but it is almost never work.
    KC's View:

    Published on: June 25, 2010

    As has become a tradition at this time of year, I’m taking the week adjacent to the Fourth of July off…it is the beginning of the summer, the news cycle tends to be a little slow, and at this point in the year - especially considering the travels of the last few weeks - I can use the break.

    I’ll be back on Tuesday, July 6. Have a great weekend…a great week…and I’ll see you soon.

    Fins Up!

    Livin' for the weekend,
    Jumpin' off the deep end,
    With just enough money to buy
    A license to chill
    And I believe I will…

    KC's View: