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: August 18, 2010

    There are times when silence is golden, but certainly not when it comes to managing a team and feedback is necessary. In those cases, silence can hurt.

    The New Yorker ran a short article recently that offered a classic demonstration of what happens when no one will directly address a problem. The story detailed a recording session featuring a world-class group of musicians lead by trumpeter Wynton Marsalis. Sitting in that day was a world-renowned pianist, Cecile Licad.

    Despite the glittering resumes of the musicians in the room, a problem crept up during one difficult piece. At a critical point, Licad’s tempo on the piano picked up. The other musicians tried (as they usually do) to match her pace, but the complexity of the piece made it too difficult.

    The solution should have been simple. Someone needed to explain the problem to Licad, only no one would. Instead they talked around the problem, trying one method after another to slow her down at that critical passage. The indirect approach never worked, so the group labored through a series of unusable takes until they finally found one that was passable.

    Everyone had reasons for not talking with Licad, from her sterling reputation to a desire to help her fit in with a new group. Yet no one ever thought of being straight with her, which would have led to a more enjoyable and successful experience. (And certainly Licad is aware of the issue by now. After all it ran in the New Yorker and now on MorningNewBeat. She has to read one of them....)

    It’s a stunning reminder that deference and respect are incredibly important, but within limits. Sometimes even a superstar can goof up and saying nothing means nothing gets fixed. And for many teams, one take is all they get, so the problem can result in failure.

    And that’s the Wednesday morning Eye-Opener.

    - Michael Sansolo
    KC's View:

    Published on: August 18, 2010

    In releasing its second quarter financial results yesterday, Walmart laid out the following imperatives as it moves forward:

    “Chief Executive Officer Mike Duke has cut prices on cereal, detergent and other items to lure U.S. consumers,” Bloomberg reports. “The so-called price rollbacks did not generate the sales the company had anticipated,” according to US stores chief William Simon.

    Simon also said that “the company has restored ‘thousands’ of products that had been removed amid previous inventory reductions and has also added new products,” Bloomberg reports. “Low-priced merchandise displays in the front of stores -- so-called Action Alleys -- have also come back over the past six weeks, he said. Simon expects to see improvement in sales by the fiscal fourth quarter.”

    Bloomberg also writes that “sales of food in the U.S. increased in the quarter, Simon said, particularly fresh produce such as strawberries. Sales of apparel, home furnishings, and entertainment declined.”

    Here’s how Advertising Age frames Walmart’s current condition:

    “Walmart will bring back thousands of items previously cut through Project Impact, scrap the deep ‘Rollbacks’ it tried in April and May and reduce ad spending to ‘historical levels’ as new U.S. President William Simon wastes no time reversing much of what his predecessor did.

    “New U.S. President William Simon acknowledged that many of the deep 'Rollbacks' on merchandise last quarter were funded out of Walmart's margin, not supplier funds. Moves such as returning merchandise displays to the ‘Action Alley’ aisles of Walmart stores have already resulted in better customer traffic and sales in July than during the prior two months of the just-completed fiscal second quarter, said Mr. Simon on a pre-recorded Aug. 17 earnings call.”

    And, Ad Age noted that Simon said, “"We plan to win in every category and let customers decide through their purchase decisions what to include in our assortment.” And, he said that “he's placing an emphasis on strengthening supplier relationships, and that store and regional managers are getting greater leeway to merchandise and manage assortment.” more than a billion dollars a day in sales

    For the record, Walmart reported a 3.6 percent increase in Q2 profit to $3.6 billion, compared to the same period a year ago, and sales abroad were up 7.3 percent while US sales were down 1.8 percent - the fifth consecutive quarterly decline.
    KC's View:
    There is no doubt here that Walmart will figure this out and get pointed in the right direction, though it may take some time (perhaps more than Walmart expects) and it could even require additional turnover in the company’s executive suite (how long a leash is CEO Mike Duke on?).

    But enough people tell me that Walmart has moved too far away from its traditional EDLP approach, allowing dollar stores and other competitors to get a foothold; it will complicate or at least prolong the process of re-establishing its mass market/discount credibility.

    Some folks think that Sam Walton is rolling over in his grave, thinking about Walmart has become. But let’s keep in mind that it remains a company generating more than a billion dollars a day in sales. It may have detoured a bit from the path it took to world domination, but that doesn’t mean that Walmart can’t fix what ails it.

    Published on: August 18, 2010

    The Wall Street Journal reports this morning that Frito-Lay’s Sun Chips are creating a lot of noise these days - but not because of the quality or environmental purity of the food.

    Rather, it is the bags that are causing a problem. Its newest bags are made out of biodegradable plant material instead of plastic, and apparently make “loud crackling sounds” that some compare to a "revving motorcycle" and "glass breaking." The Journal notes that “a Facebook group called ‘SORRY BUT I CAN'T HEAR YOU OVER THIS SUN CHIPS BAG’ has attracted 29,949 fans, with many posting outraged comments.”

    Here’s how the Journal frames the story:

    “The Sun Chip bag hit store shelves in January and was available nationwide by April. Sales have been in decline, posting year-on-year decreases each month since February (excluding Wal-Mart and some other retailers), according to SymphonyIRI, a Chicago market-research firm.

    “A Frito-Lay spokesman said: ‘There are a lot of potential factors that are playing a role and we are looking at all those things.’ He accepted packaging could be one of those factors. The company has received some complaints about the packaging, he said, but most feedback has been positive.

    “The original bags, made from polymers such as polypropylene and polyethylene, weren't recyclable. ‘They are not designed to degrade,’ says Brad Rodgers, Frito-Lay's North American manager of sustainable packaging. ‘Depending on what scientific research you read, it could be more than a 100 years’.”

    It took a lot of time and effort to come up with the new bags, the paper notes, and the current problems are similar to those suffered by Frito parent PepsiCo when it redesigned the packaging for its Tropicana juice brand - people couldn’t recognize the new design and sales plummeted, forcing Pepsi to revert to the earlier, more familiar design.
    KC's View:
    Sometimes you can’t get a break ... even when you try to do the right thing.

    But the real lesson here comes from that Facebook page, demonstrating how passionately some people feel about the CPG products they buy and consume. The complaints may be annoying, but their passion and engagement should be treasured.

    Published on: August 18, 2010

    The Wall Street Journal reports that Tesco UK market share dropped to 30.8 percent in the most recent quarter, from 31 percent during the same period a year ago.

    Walmart-owned Asda Group also saw a market share decrease, to 16.9 percent from 17.2 percent a year ago.

    Sainsbury’s market share for the quarter was up slightly, to 16.1 percent from 15.9 percent a year ago. William Morrison Supermarkets saw a similar increase, to 11.6 percent from 11.4 percent.

    The Journal also notes that UK discount retailers, including Aldi, Netto and Lidl, saw a slight increase, to 6.1 percent from 6.0 percent a year ago.
    KC's View:

    Published on: August 18, 2010

    Zagat is out with its annual fast food survey, ranking Panera Bread as number one in the large chain category, followed by Chipotle, Five Guys, Chick-fil-A, and In-N-Out Burger.

    In the “mega chain” category, Subway is ranked at the top, followed by McDonald’s, Wendy’s, Burger King and Taco Bell.

    P.F. Chang’s China Bistro was ranked the top full-service chain, followed by Bonefish Grill, Cheesecake Factory, California Pizza Kitchen and Maggiano’s.
    KC's View:
    At this moment, I can only imagine that Michael Sansolo is plotzing because Five Guys was ranked above In-N-Out. Say it ain’t so...

    Published on: August 18, 2010

    The Wall Street Journal reports that Office Depot has begun offering US Postal Service (USPS) products and services - including Priority Mail flat rate shipping and stamps for sale in books and large coils - at its stores around the country.

    According to the story, both Office Depot and the Post Office are looking to improve their fortunes in a tough economy.
    KC's View:
    We’ve talked a lot about this here. The Post Office needs to find new ways of coming to market...and maybe by locating in new places with multiple functions (stores, libraries) it can find one way of re-engineering its economic model.

    Published on: August 18, 2010

    • The Troy Record reports that The Fresh Market is scheduled to open a new store today in Latham, New York, just north of Albany - the first unit opened by the company in the Empire State. The store will not lack for competition - it will be facing off against a Hannaford store, a Sam’s Club, and two Price Choppers.

    • The New York Times reports this morning on the ongoing strike at the Mott’s apple juice plant in upstate New York, writing, “The union movement and many outsiders view the strike as a high-stakes confrontation between a company that wants to cut its labor costs, even as it is earning record profits, and workers who are determined to resist demands for wage and benefit givebacks ... For unions across the country, the stakes are high because if the Mott’s workers lose this showdown, it could prompt other profitable companies to push for major labor concessions. Such a lengthy strike is unusual at a time when work stoppages have become much less common than they once were.”

    Making the scenario somewhat unusual is the fact that Mott’s is a profitable company, but is still looking for concessions because it believes that “Mott’s workers are overpaid compared with other production workers in the Rochester area, where blue-collar unemployment is high after years of layoffs at employers like Xerox and Kodak.”
    KC's View:

    Published on: August 18, 2010

    Kudos to J. Patrick Boyle, president/CEO of the American Meat Institute (AMI), who appeared last night on “The Colbert Report” as part of what host Stephen Colbert described as the “12th installment of my 35,000 part series, Better Know A Lobby.”

    In the segment, which you can view by clicking here, Boyle talks about meat consumption, food safety and even cannibalism.

    It all is good fun, and Boyle gets points for pulling off what must have been an anxiety-inducing session with Colbert.
    KC's View:

    Published on: August 18, 2010

    • The Retail Industry Leaders Association (RILA) announced the addition of Adam Siegel as Vice President of Sustainability and Retail Operations.

    An engineer with an MBA from MIT Sloan School of Management, Siegel has consulted for numerous companies including Staples, IBM, and Seventh Generation, as well as for leaders in the transportation and energy sectors. RILA noted that he has experience with the Environmental Defense Fund's Corporate Partnerships Program, where he worked with the private equity firm KKR and their portfolio companies.
    KC's View:

    Published on: August 18, 2010

    • Gerald E. D’Amour, who co-founded the Big Y supermarket chain in 1936 with his older brother Paul, has passed away at age 90. Paul D’Amour died in 1991.

    • Bobby Thomson, who hit the home run dubbed the “shot heard round the world” while playing for the New York Giants against the Brooklyn Dodgers in the third game of a three-game playoff to go to the 1951 World Series, died yesterday at his home in Savannah, Georgia. He was 86.

    Thomson’s name will be forever linked with that of Ralph Branca, who threw the pitch that Thomson hit. The two men eventually became close friends, attending baseball and memorabilia shows together.
    KC's View:

    Published on: August 18, 2010

    ...will return.
    KC's View: