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    Published on: July 23, 2010

    A story in the Philadelphia Inquirer about the new Wegmans store, after describing all the innovations in the new unit, featured this quote from CEO Danny Wegman:

    “I think we are a life-changing experience, and I say that with humility.”

    Reading that, I was reminded of a similar comment from Hy-Vee CEO Ric Jurgens, who was telling me why he believed so fervently in the nutritional labeling program that his company was adopting:

    “I want to change the world.”

    I’ve worked for a number of people in my life, but I think it is fair to say that I’ve never worked for anyone who believed - or said - that they wanted our efforts to result in changing people’s lives or changing the world. And we were in the information business, where you’d think that shaping opinions and changing lives would be a natural goal. Mostly, the guys I’ve worked for were about making the numbers.

    Both Danny Wegman and Ric Jurgens run companies that have as their chief goal helping people to feed themselves intelligently, responsibly, and creatively. That is a noble cause, and they treat it that way. Maybe it is because both Wegmans and Hy-Vee are private companies, but I don’t think it is coincidental that they use similar words to describe their missions.

    Think of the message they are sending ... and not just to customers and the media. They are saying to the people throughout their organizations that they have a higher purpose. The guy who stocks the shelves, or the woman who runs the deli counter, or the people at the front end - they hear their CEOs and cannot help but think that they aren’t just supermarket employees. They are engaged in something more. It gives them a better reason to go to work in the morning, and to do their jobs better, to be more productive, to be an ambassador and advocate for the companies that employ them.

    That’s what I call leadership worth emulating.

    That’s my Friday morning eye-opener.

    - Kevin Coupe
    KC's View:

    Published on: July 23, 2010

    Kroger announced yesterday a new “digital coupon center” that will offer “discounts on Kroger store brands as well as manufacturer discounts and web-only coupons that apply to a variety of brands,” according to a story in the Denver Business Journal. The program applies to all of Kroger’s banners, and allows customers to easily load offers directly onto their Kroger Plus Card or loyalty cards for other stores Kroger operates.

    “This new digital coupon center makes it even easier for our customers to save money,” Evan Anthony, Kroger VP of corporate marketing and advertising, said in a statement. “Our customers asked to make online coupons easier for them to use and we listened. The time and money they can save is just the latest way Kroger delivers more value to its customers.”

    The digital discounts will be active on a customer's card one hour after the discount is loaded onto the loyalty card, Kroger said.
    KC's View:
    I think that companies can create a real differential advantage for themselves when they develop programs that make it easy for customers to use things like coupons. Make us jump through hoops, collect paper, whatever...it ends up being annoying. But putting discounts/coupons directly onto our cards, giving us information about what those discounts are so that we can act on them, and then making the transaction effortless - that’s a real value.

    Published on: July 23, 2010

    Valassis announced that first half 2010 coupon distribution and redemption continue to build on the record- breaking growth trends of the past year. In total, consumers saved nearly $2 billion with coupons in the first half 2010, a 37% increase over pre-recession levels. Marketers offered 18 billion more consumer packages goods (CPG) coupons in the first half of 2010, up 11.4% from a year ago and 24.8% from mid-year 2008.

    First-half 2010 findings also reveal a shorter expiration of 9.5 weeks compared to 10.6 weeks for the full year of 2009. In addition, face value is up to $1.43 for the first half of 2010 compared to $1.37 for 2009.

    The findings were revealed as part of the Mid-Year 2010 CPG Coupon Facts Report, released by Valassis-owned NCH Marketing Services.

    “Marketers have increased their promotional activity as consumers have embraced mindsets toward value and are defining what has been called the ‘new normal’ when it comes to these learned shopping behaviors,” said Suzie Brown, Valassis’ Chief Marketing Officer.
    KC's View:

    Published on: July 23, 2010

    Bloomberg reports that Bill Simon, Walmart’s new US operations chief, “is shifting away from widening profit margins through inventory reductions to focus on sales growth, according to Cleveland Research Co. Bill Simon is bringing back promotional displays at the front of stores, returning more items that were removed and dialing back price cuts ... the retailer is renewing its focus at some stores on ‘Action Alley,’ the high-traffic area in front near the checkouts, which had earlier been cleared out to reduce clutter.”

    The story notes that this seems to be a clear move away from the recent strategy of building margins through SKU rationalization and a greater dependance on private brands.

    • The Chicago Tribune reports that “approval for Chicago's third Wal-Mart will follow hard on the heels of the second if Mayor Richard Daley has his way. Daley held a news conference Thursday to call on the City Council's Finance Committee to approve a long-discussed Wal-Mart store at 83rd Street and Stewart Avenue in the Chatham neighborhood. The proposal is on the committee's Friday agenda.”

    Walmart has earned support for expansion in the city by pledging to pay employees above minimum wage and agreeing to develop $20 million worth of “charitable partnerships” over the next five years, donating as many as 1.2 million meals per year to the under-privileged.
    • The Wall Street Journal reports this morning that “Wal-Mart Stores Inc. plans to roll out sophisticated electronic ID tags to track individual pairs of jeans and underwear, the first step in a system that advocates say better controls inventory but some critics say raises privacy concerns. Starting next month, the retailer will place removable ‘smart tags’ on individual garments that can be read by a hand-held scanner. Wal-Mart workers will be able to quickly learn, for instance, which size of Wrangler jeans is missing, with the aim of ensuring shelves are optimally stocked and inventory tightly watched. If successful, the radio-frequency ID tags will be rolled out on other products at Wal-Mart's more than 3,750 U.S. stores.”
    KC's View:

    Published on: July 23, 2010

    Tesco-owned Fresh & Easy Neighborhood Markets in the western US announced that it is expanding its popular ‘Farm to Store in 24’ program, bringing more produce from California farms to its stores in less than 24 hours. The grocer is working with local growers to bring additional fruit such as peaches and nectarines as well as vegetables into the program as summer turns to fall.

    Fresh & Easy said that its ‘Farm to Store in 24’ program “started with a simple concept: getting the freshest produce possible to its customers in the shortest amount of time. In choosing partners for the program, Fresh & Easy’s produce team identified local growers who share the grocer’s passion and commitment to bring customers high-quality food at affordable prices. All ‘Farm to Store in 24’ products come from California farms, and depending on the season, as much as 65% of all of Fresh & Easy’s produce comes from California.”

    The company said that it has been “offering strawberries and table grapes through the ‘Farm to Store in 24’ program. With the table grape season in the Coachella Valley wrapping up, Fresh & Easy is now getting ‘Farm to Store’ grapes from Pandol Bros. in Delano. Andrew & Williamson (A&W) grows strawberries for the program in Ventura County and Watsonville, always within sight of the Pacific Ocean.”
    KC's View:
    The best marketing programs are both easily understood and have a clear value proposition. This meets both criteria.

    Published on: July 23, 2010

    The Tampa Tribune reports that Delhaize-owned Sweetbay Supermarkets in western Florida increasingly is “turning up the volume” on its marketing, advertising its everyday low prices and comparing them to the specials offered at competitors such as Publix and Winn-Dixie.

    "BOGO deals may cost less every once in a while," Geoff Waldau, vice president of merchandizing for Sweetbay, tells the Tribune. "But we're saying that if customers shop with us over time, they'll save week-in, week-out on the things they actually want to buy."

    According to the paper, “the difference between those strategies plays out over time. The Tampa Tribune's Market Basket tracks 30 specific items each week. Over the last 42 weeks, Sweetbay's prices stay relatively stable, and total between $65 and $74, while Publix's total varies widely between $65 and $82, but generally above $74. (The Publix total does not count a BOGO item as half off because buying one item still costs the full price.)”

    The story goes on, “For Sweetbay, the risks of such a provocative campaign resemble those of the little guy picking on the market dominator. Sweetbay has just 104 stores, compared to Publix with more than 1,000 nationwide.

    “Meanwhile, Publix is consolidating that dominance with the purchase of about a dozen Albertsons stores in the area. And both Target and the retail giant Walmart are quickly expanding their grocery departments to edge more into the food business ... Sweetbay may have an uphill battle convincing those shoppers that Sweetbay offers lower prices over time. But if Sweetbay is going to stick with relatively long, stable prices, they'll have to advertise them as heavily as possible. As for success of the new campaign, Sweetbay officials decline to say how much it's boosting revenue, if any. But they do say it's doing well enough to keep the project going.”
    KC's View:

    Published on: July 23, 2010

    The Arizona Republic reports that “the fate of Arizona's hometown grocer could hang on the results of a contentious hearing” that started yesterday in U.S. Bankruptcy Court in Phoenix. The company described itself as one that has gone from being bloated and dysfunctional to one that is a “lean, profitable venture with $104 million in cash and the capacity to pay off some $300 million in debts in a timely fashion.”

    “Bashas' Inc., which operates 125 supermarkets throughout Arizona, is seeking court approval of a plan to reorganize and repay its debts, over the objections of its largest creditors. The company's secured creditors, who hold a security interest in the business, contend the plan is unfair and unfeasible and have formally asked the court to reject it.”

    If the creditors win, there are two possible results. Bashas’ could come up with an alternative plan, but the creditors also might be able to offer their own restructuring option - which could to lead to the sale of the company.

    The hearing is scheduled to continue today and into next week.
    KC's View:

    Published on: July 23, 2010

    • The Minneapolis / St. Paul Business Journal reports that Hy-Vee is expanding its relationship with Caribou Coffee, which currently has kiosks in 18 of its stores. By this fall, the companies announced, that number will grow to more than 230, and Hy-Vee will offer be selling Caribou products on store shelves.

    “We researched dozens of coffee brands. Caribou Coffee’s product, personality and commitment to Rainforest Alliance certification, the most comprehensive sustainability certification available, ultimately made this an easy choice,” Greg Frampton, Hy-Vee’s assistant vice president of food service said in a statement.

    Full disclosure: Caribou Coffee is a valued MNB sponsor. But we didn’t think we should hold that against Caribou, and we would have reported this deal even if it were not a sponsor.

    • Alimentation Couche-Tard has increased its hostile offer for c-store chain Casey’s General Stores to about $1.9 billion, from the previous offer of $1.85 billion. The offer already had been extended to August 9, from the previous deadline of July 6.

    • Cracker manufacturer Lance and pretzel maker Snyder’s of Hanover said yesterday they plan to merge their operations,with shareholders of each company owning 50 percent of the new entity. The two companies had combined revenue of about $1.6 billion during the last fiscal year.
    KC's View:

    Published on: July 23, 2010

    • The Food Marketing Institute (FMI) announced the appointment of Erik Lieberman as Regulatory Counsel.

    Lieberman joins FMI from the U.S. House Committee on Small Business where he served counsel to the majority on issues ranging from regulatory relief to antitrust, food safety, data security and transportation. Lieberman was Director of Government Affairs at the National Grocers Association from 2004 to 2007.

    KC's View:

    Published on: July 23, 2010

    Ralph Houk, who managed the New York Yankees and guided the team (which included Mickey Mantle, Yogi Berra and Roger Maris) to two world championships and three pennants in the early sixties, died on Wednesday at age 90.

    Houk, a backup catcher who played just 91 games in the big leagues, also managed the Detroit Tigers and Boston Red Sox during a three-decade managerial career.
    KC's View:
    Tough month for the Yankees, losing George Steinbrenner, Bob Sheppard and now Houk in just a few weeks.

    Tell you a story about Houk. When I was a little kid - probably no more than seven or eight years old, I wrote Houk a letter asking how to become a batboy. And I vividly remember getting a personal letter back, explaining that I was a little young for the job but thanking me for my interest. I clearly remember that it wasn’t some sort of form letter, but a nice note with personal touches. I suspect that it had something to do with the times (this was 1962 or 1963), but I also think it probably had something to do with the man.

    Published on: July 23, 2010

    ...will return.
    KC's View:

    Published on: July 23, 2010

    The Chicago Tribune reports that airlines around the world collected more than $13 billion in fees for things like baggage, food, blankets and pillows - all things that used to be included in the price of a ticket. Access to things like faster security lines also is generating some cash for the airlines.

    Yes, $13 billion. With a ‘b.” That’s not a typo.

    United Airlines alone collected close to $2 billion of that, and was the airline with the highest fee-based revenue, and the president of United tells the paper that they’ve only just begun to develop these alternative revenue streams.

    Yikes.

    That’s a little scary. You begin to wonder what else they could charge for, and one always comes back to the option reportedly being considered by Ryanair - charging a small fee to use the bathroom. Mostly, that gets mentioned as a punchline...but it begins to seem more likely in an environment like that described by the Tribune.

    Though I wonder if middle-aged men would have grounds for a class action suit against any airline that might try it, since it would seem to be discriminatory against those of us who need to use the lavatory more often than others.

    I also have to wonder at what point this approach comes back to bite the airlines, at what point consumers begin thinking that they are being nailed for things that simply ought to be included in the price of a ticket. Taking what might be called the “Southwest position” - aggressively marketing the fact that a ticket costs what a ticket costs - may increasingly become a favored approach.




    There is a wonderful piece in Knowledge & Wharton this week about the growing popularity of what is called “referral marketing,” in which companies say to customers, I’ll reward you for every customer you send my way. The result, the piece suggests, is that people not only offer referrals to companies that offer products and services they like, but even look for new friends they can refer.

    According to the story, a recent study conducted in Germany concluded that referred customers have higher margins than other customers, stay longer with the firm than other customers, and have a higher customer lifetime value (CLV), the net present value of all the profits a customer generates over his or her entire association with the firm.

    That’s what I call winning the trifecta.

    But the other thing it does, I think, is create an environment that encourages the creation of advocates, not just customers. And we all know that advocates are the best advertising for any business.




    I was flying from JFK to San Francisco this week and the fellow sitting next to me had an iPad. I inquired about it, and he did nothing but rave.

    Then, after our conversation, I pulled out my Kindle.

    And to be honest, it just felt like I was using old, dated technology.

    I know it is just in my mind. But there it is.

    And the thing is, this is precisely what Apple wants me to think and feel.

    Damn you, Steve Jobs!

    (Now, how long is the wait for the new iPad...?)




    Great news from San Francisco. One of my favorite bistros, the Cafe Zoetrope, which is owned by Francis Ford Coppola, has put chilaquiles back on the menu. Chilaquiles are a wonderfully spicy dish made from crispy tortillas, scrambled eggs, tomatillo sauce and melted cheese - it’s typically a breakfast item, but I can eat it anytime, and I’ve always loved the Zoetrope version. (It fell off the menu a few years ago, and I am thrilled that it has made a return. I figured it had to happen eventually, since a bartender there once told me that chilaquiles are a personal favorite of Coppola’s.)

    And it went great with both the 2007 Coppola Diamond Malbec and 2007 Coppola Diamond Syrah. (Each of which I could drink anytime, anyplace...but tasted even better because I was sitting at Coppola’s bar drinking them.




    BTW...anybody have recommendations for a “don’t miss, can’t miss” vineyard in Napa?




    On one other subject...one MNB user wrote the other day that he’d taken note of how I’ve changed the sign-off for my Friday OffBeats.

    Bring back Sláinte, he wrote.

    Maybe in the fall. For now, we’re enjoying a hot summer, I’m spending much of my time in shorts and flip-flops. And so I think it is appropriate to use a different sign-off ...

    Fins Up!
    KC's View:

    Published on: July 23, 2010

    Ron Marshall, the former Nash Finch CEO who left Borders earlier this year to take over the reins at the troubled Great Atlantic & Pacific Tea Co. (A&P), reportedly has been dismissed by A&P and will be replaced by Sam Martin, the former COO of Whole Foods who most recently has been serving as COO of OfficeMax.

    Marshall had been brought in to replace Eric Claus, who had been brought down from A&P’s Canadian operations in 2005 and was fired without apparent warning in 2009.

    The move comes just seven months after taking the A&P job, and as A&P announced first quarter sales down to $2.6 million from $2.8 million during the same period a year ago, same store sales that were down 7.2 percent, and continued and what the company described this way: “Adjusted loss from operations was $51 million versus adjusted income from operations of $4 million in last fiscal year's first quarter.

    Christian Haub, A&P’s executive chairman, released the following statement:

    "The Board and the company's major shareholders, Tengelmann and Yucaipa, have been instrumental in developing what I believe is the right turnaround strategy for A&P. As we moved to the implementation and execution stage of this comprehensive operational and revenue-driven turnaround, the Board determined that the company needed a leader at the helm with the skill set Sam Martin possesses. Sam is a proven, hands on operational expert in the food retail industry. He has an ideal mix of food industry management experience encompassing operations, merchandising and supply chain. We are confident that he will successfully drive the rapid implementation of our multi-faceted effort to make A&P a stronger and more efficient company. We thank Ron Marshall for his service and wish him well in his future endeavors."

    For his part, Martin released the following statement: "I am thrilled to be joining A&P and to have the opportunity to lead the company's turnaround effort at this important time in its history. I look forward to working with the Board, Christian and A&P's talented associates to quickly execute on the opportunities for improving our performance in the near term and to put the company on a solid foundation for the future."

    Back in May, BTW, Ron Marshall told analysts 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.”
    KC's View:
    The problems at A&P certainly are systemic, deep and profound, but at this point one has to wonder whether the bigger problems are in the stores - which seem to stand for nothing specific, offer little of real value, and are losing that questionable ground with every passing day - or in the executive suite, where they can’t seem to make up their mind about who should be running the company and what the vision should be.

    Maybe Marshall was the wrong guy. Maybe this is all some kind of positioning, as Yucaipa looks to have a greater role in management. Maybe they are positioning the company for some sort of sale, though at this point, it is hard to imagine that A&P is worth very much beyond some real estate. Maybe this has less to do with Marshall than it has to do with Haub and Yucaipa head honcho Ron Burkle, or has to do with a board that may never be satisfied. (In which case, Martin better watch out.) And maybe it doesn’t really matter.

    At the very least, this is yet another illustration - not that we needed one - of a company in total disarray. They can talk about turnaround strategies all they want - this company is so deep in the ditch that it may never get out. And the sad reality is - and I take no great pleasure in saying it - that Christian Haub as been at the wheel for much of the sad trip. If he didn’t belong to the family that owns much of the company, he would have been gone years ago.

    The biggest problem for A&P is that it is almost out of time. Ten years ago, the company had time to revive itself. Ten years ago, there was some room for the mediocre. Not anymore. While A&P cannot get out of its own way, its competitors are getting better and stronger. Companies like Walmart, Stop & Shop, Whole Foods and Fairway aren’t standing still. A&P could end up with a zero market share, irrelevant and obsolete. The clock is ticking, and it is almost hard to imagine that anyone short of a miracle worker could come in and fix the company’s extensive problems. (Houdini is not available, last I heard.)

    Who in that organization is not looking for another job right now? Who would follow any of these people? This would be textbook dysfunctional management if it were not to much worse that that.

    Eric Claus got four years. Ron Marshall got seven months. What’s the over-under on Sam Martin’s tenure? And who the hell would even consider replacing him? (One can only imagine that Martin must have gotten a great package - and a terrific guaranteed severance agreement - just to join the company.)

    When reporting that Marshall would start his new job at A&P on February 8, I wrote: “On February 9, he’s going to wonder what the hell he’s gotten himself into.” And I added, “there is no time like the present to see if he can change his last name to Haub.”

    Even that wouldn’t help.

    What a nightmare, and it is especially saddening when you realize that A&P was once one of the legendary names in retailing.