retail news in context, analysis with attitude

Published on: August 25, 2010

by Kate McMahon

Just as your favorite, ultimate marinara sauce is the perfect melding of select ingredients, so is an innovative marketing campaign. And on that front, Pizza Hut delivers.

Pizza Hut just launched a new campaign that includes “slashed” prices on standard pizzas and an ambitious effort that utilizes every aspect of social media – Facebook, Twitter, mobile ordering applications for iPhones and other smart phones and the hot new geo-location service Foursquare.

Given that five years ago the national chain didn’t even have a website for ordering on-line, Pizza Hut is now a leader in social networking with its customers.

Billing its products as “your favorite food,” Pizza Hut marketing chief Brian Niccol said last week the company also wanted to deliver “favorite value, favorite experiences and favorite thing you didn’t even know yet.”

That “favorite thing” would be extending its very cool ordering application for the iPhone to other mobile devices, such as the iPad and Droid. Launched last year, that iPhone app has already generated more than $10 million in sales, and Niccol expects mobile ordering to account for more than 50% of future orders.

Here at MNB, we often talk about the importance of forward thinking, anticipating consumer demands (particularly in the ever-changing internet/mobile age) and engaging your customer in innovative ways. (As the parent of two teenage daughters, one in high school and one in college, I can tell you that just about the only way to engage that generation is via a mobile device. I’m the only member of the household who still uses the telephone.)

The Pizza Hut iPhone app, for example, allows consumers to “create” their pizza utilizing drag-and-drop toppings. If you overload your pie with too many toppings the pizza explodes and you are warned to cut back on the pepperoni or onions. You can also customize your WingStreet chicken wings – bone-in or not, level of spice – accordingly. And while waiting for your order to be delivered you can a game called Pizza Hut Racer. If your local cell service/family plan precludes you from having an iPhone (that would be my dilemma), it’s easy to simply text your order to 749488 (749HUT) and receive a return text confirmation

In addition to its mobile outreach, Pizza Hut has more than 1.4 million followers on an active and newsy Facebook page and was one of the first companies to hire a full-time Twitter guru to file timely tweets.

The company is also sponsoring a promotion on Foursquare, the location-based social networking service which allows you to “check-in” to a restaurant, bar or store via your smart phone to notify your friends of your whereabouts. Participating companies reward multiple “check-ins” with rewards, such as being named “mayor.” If you’re appointed “mayor” of your local Pizza Hut, you’re rewarded with a free order of breadsticks with the purchase of one pizza. Not quite a free lunch, but as most smart phone savvy young adults would say, “cool.”

And “cool” is important. Pizza Hut and rivals such as Domino’s are competing with anyone who sells food for share of stomach, but they also are competing for share of “cool” - which is critical to many young customers making choices about the food of choice for a Friday movie night or Sunday football game at home.

Everybody’s got to be in the game.

Have you or your company tried Foursquare, Gowalla or any of the other location-based social networking applications? If so, please share your experience for an upcoming column by shooting me an email at kate@morningnewsbeat.com .

Published on: August 25, 2010

Most days, I welcome the sounds of silence. We live in a noisy world where frequently you can’t hear yourself think. But like the famous Sherlock Holmes story of the dog that didn’t bark, I recently found myself in a strangely quiet place where the lack of noise was surprising. It was the sunny and crowded beach at Ocean City, MD.

I grew up in the New York City area and my summers were spent on beaches along the Atlantic Ocean and Long Island Sound. And it was never quiet. I can remember sitting on Jones Beach where seemingly every radio was blasting the same songs and talk from WABC-AM all the time. You didn’t need a radio to hear the radio because there were so many around you.

Not anymore. The beach is still crowded, but the sound of music is gone. Now every few feet you see more people sitting with ear buds planted listening to their own sounds. It creates a strange sense of quiet in much the way that college dormitories are quieter, lacking the competition of tweeters and woofers that dominated when I went to school.

Today everyone in is their own world of songs and sitting on a beach it provides a powerful image of the death of the mass market. Instead of everyone listening to the same Beatles’ song, everyone is off on their own.

Then again, they were all using iPods so maybe the mass market exists and is just defined differently.

And that’s my Eye-Opener...er, Ear-Opener for Wednesday.

- Michael Sansolo

Published on: August 25, 2010

The Wall Street Journal this morning reports that Costco “is taking on the role of mall anchor, moving into spaces once occupied by department stores that for decades reigned as the retail centers' big draws.”

According to the story, Costco wants the mall stores to be roughly the same size and carry the same merchandise as its non-mall stores, though it will reconfigure somewhat to fit into existing real estate. Three mall stores have recently been announced, and the company is actively looking for new opportunities.

"Our preference is to never be in a mall or by a mall," says co-founder and chairman Jeff Brotman said. "But in metro areas there just is not that much land, and we still want to expand. We will continue to penetrate areas" using the mall approach.

Published on: August 25, 2010

In New York, the Journal News reports that Ahold-owned Stop & Shop is accusing the Great Atlantic & Pacific Tea Co. (A&P) of using a lawsuit to hide the fact that its prices are higher than Stop & Shop’s.

A&P sued Stop & Shop 10 days ago, charging that the retailer’s price ads were false and deceptive.

"A&P's motion is just the latest in a series of attempts by A&P to impermissibly prevent Stop & Shop from engaging in truthful, accurate commercial speech regarding the respective prices of Stop & Shop and its competitors on similar products," lawyers for Stop & Shop wrote in the filing. "A&P seeks to restrain this speech so it may obtain a competitive advantage in the marketplace and charge its customers higher prices ... "In trying economic times, Stop & Shop's truthful, accurate commercial speech regarding the prices of its and competitors' products and services should be encouraged, not enjoined," Stop & Shop's lawyers said.

Published on: August 25, 2010

Here’s one way to motivate employees.

Save Mart Supermarkets in Northern California and Northern Nevada said yesterday that it had rewarded almost 200 employees for having provided excellent customer service by giving each of them “three minutes to shop for up to $500 worth of groceries, cheered on by their managers, co- workers, and customers ... To qualify to win a shopping spree, employees and their stores or corporate support departments needed to achieve top scores for customer service during the quarter that ended in June 2010. The awards...recognized employees that achieve specific criteria designed to enhance the overall shopping experience for customers. Once a store or support department qualified, a winner was drawn from all eligible employees.”

“Good customer service is the best tool we have to ensure consumers continue to shop in our stores. It defines our company culture, distinguishes us from our competitors, and is a major component of the value we deliver to our customers every day,” said Donna Smith, Manager of Consumer Relations and Employee Recognition. “We reward our employees for delivering excellent service throughout the year to reinforce its importance to the company and our customers.”

Published on: August 25, 2010

Internet Retailer reports on a new report from Forrester Research projecting that “the global online population will grow to 2.32 billion by 2014, up 42% from 1.63 billion in 2009 ... the online population in the U.S. and Canada will grow 3% each year through 2014, but will comprise just 13% of the overall online population by 2014, down from 16% in 2009. The European online population will grow approximately 20% between 2010 and 2014 and account for 22% of the online population.”

The biggest increase - 78 percent - will come in the Middle East and Africa, though these two regions will still just account for “the fewest total number of Internet users, 241 million.”

Published on: August 25, 2010

The Los Angeles Times reports this morning that Consumers Union is questioning the safety of using smart phones to pay for transactions and has called on legislators “to implement protective standards on mobile payments. Federal law currently shields credit or debit card holders from many charges associated with lost, stolen or misused cards. But without industry-wide rules for ‘digital wallet’ providers, consumers could risk losing money through fraud, merchant disputes or processing mistakes, the group said.”

Published on: August 25, 2010

The Wall Street Journal reports this morning that Carrefour has begun unveiling new and renovated hypermarkets that reflect its new thinking about the super-sized format - with expanded fashion and HBC departments, reduced home improvement sections and eliminated bike departments, all of which it feels will make the format more palatable to modern customers.

The changes are seen as necessary, the Journal writes, because “giant hypermarkets aren't adapted to Europe's changing demographics. An aging population and rising female employment have led consumers to favor the convenience of nearby supermarkets over out-of-town hypermarkets. Families are having fewer children, later in life than they used to, making households less dependent on the major weekly shopping trips that hypermarkets cater to.”

For Carrefour, the imperative also is economic, as the company looks to improve financial performance that has been lackluster.

Published on: August 25, 2010

• The Phoenix Business Journal reports that even as its reorganization plan has been approved by the courts, Bashas’ continues to negotiate with its creditors and hopes to reach a deal soon.

According to the story, “Bashas’ owes about $270 million to various creditors, including $210 million to a group of banks, insurance companies and vendors. The grocer has about 16,000 creditors, according to published reports. Some are secured, such as the banks; others are unsecured, including vendors that supplied the grocer with goods and services.”

Some of those creditors have challenged the court-approved reorganization plan as being inadequate.

• The Boston Globe reports that State Street Corp., a financial services group, and Ahold-owned Stop & Shop “announced a ‘Healthy Packs’ initiative that will provide 2,000 pre-packed reusable bags of healthy snack options to children in need in the Boston neighborhoods of Dorchester and South Boston and in Brockton ... The snack packages will...be delivered to children in the Greater Boston area with the goal of teaching these children about the importance of making healthful food choices, State Street and Stop & Shop said.

• USA Today this morning reports on one of the results of the current salmonella-related egg recall - wholesale egg prices are up about 40 percent.

A half-billion eggs have been recalled nationally to this point.

• MarketWatch reports that a Tyson Food subsidiary has recalled 380,000 pounds of deli meat that could be contaminated with listeria - including much of it sold to Walmart, which used the meat for Marketside Grab and Go sandwiches. No illnesses have been reported by people who consumed the meat.

• Stew Leonard’s announced that it is expanding the pilot program - previously reported here on MNB - that provides free physical examinations - including on-site cholesterol and blood pressure screenings, mammograms, and flu shots - to employees.

The retailer started the program in its original store, in Norwalk, Connecticut, last June. It is now expanding the program to its Danbury, Connecticut, store.

• The California Grocers Association (CGA) said yesterday that it “is urging Governor Arnold Schwarzenegger to veto legislation passed Monday in the State Senate that would effectively ban assisted checkout systems in supermarkets ... The bill would prohibit the sale of alcoholic beverages through assisted checkout systems. It makes the assumption that minors or intoxicated individuals can manipulate the system to illegally obtain alcoholic beverages ... Assisted checkouts contain appropriate safety protocol including the system locking when any age-restricted product is scanned, requiring a clerk to verify age and sobriety, and when even slight variations in weight of product scanned and product bagged are detected.”

“Assembly Bill 1060 presents itself as feel good legislation but in reality is about punishing innovation and protecting union dues,” said CGA President Ronald Fong. “Its target is one non-union grocer which utilizes an assisted checkout system as its primary form of finalizing customer sales.”

Published on: August 25, 2010

• McDonald’s announced yesterday that it has promoted Steve Easterbrook, current CEO of its U.K. division and president of Northern Europe operations, to the new role of global chief brand officer.

Jill McDonald, current chief marketing officer for Northern Europe, will succeed Easterbrook in the U.K. and Northern Europe roles.

Published on: August 25, 2010

We continue to get reaction to the Fortune story that in part questioned whether Trader Joe’s may have lost some of its entrepreneurial zeal as it gets bigger and more corporate ... and to a couple of emails yesterday that seemed to agree that Trader Joe’s may have lost a step or two as it gets older and bigger.

MNB user Norman Mayne wrote:

I happen to like TJ. If one can leave their ego at the door there’s a lot to learned from a visit to their stores. Look at the growth they’ve had under Dan Bane and Chuck Pilliter - in a word, amazing. I’m also impressed with their team members who have bought into what the company stands for. Sure, I wish they didn’t have a store in the Dayton area on the one hand ... but good competition has a way of making us all be better.

David Schools, the president/CEO of Piggly Wiggly, provided MNB with a copy of a letter he has written to Fortune:

Reporter Beth Kowitt’s article on Trader Joe’s was interesting to me.  I am in the supermarket business and in fact am president of Piggly Wiggly Carolina Co., the Charleston, SC-based Piggly Wiggly franchisee that covers South Carolina and southeast Georgia.

While I have been in several Trader Joe’s, my life is Piggly Wiggly.  I, therefore, take exception to the flippant sentence in the article: “Try getting that kind of love at the Piggly Wiggly.”  I assume you were not trying to directly disparage Piggly Wiggly (“The Pig”, as we call it), but, since you DID disparage us, I feel as if I should at least share some information that may shed light on your opinion.

At the Pig, we wear Pig shirts in our stores which are t-shirts that come in a variety of bright colors, our pig-face logo on the front and our “I’m Big on the Pig” tag line on the back.  You will see these all over the world as visitors to our stores in Hilton Head, Kiawah Island, Pawley’s Island, Myrtle Beach, and Edisto Island love these shirts and buy them from us at these stores and online at www.thepig.net.

Furthermore, at the Pig you will find some of the friendliest people you have  ever met.  They go out of their way to make sure our guests feel the “love” of their local, neighborhood supermarket.  Our company is 100% employee-owned and the atmosphere feels good in our stores.  I agree that Trader Joe’s has some really cool products and is definitely “yuppie-friendly.”  But, at Piggly Wiggly, everyone is welcome and we serve the most affluent, discriminating customers at Kiawah and Hilton Head Islands just as proudly as we serve customers in Prosperity or Bamberg, SC, or Eulonia, GA.

As a long-time subscriber and one who has always enjoyed Fortune Magazine, I was truly disappointed to see you so offhandedly dismiss a brand that is supported so fervently by 4,000+  employee-owners who day after day work hard to make sure our guests know that… Piggly Wiggly Feeds Your Life.  To fawn over Trader Joe’s at the expense of the Pig was at least uncalled for.

Finally, in closing, here is the text from an email we received today:
 
“I was reading an article today about the success of Trader Joe’s and within a few paragraphs came across the following line: ‘Try getting that kind of love at the Piggly Wiggly.’

“I can assure you I feel lots of  LOVE from Piggly Wiggly.  One of my most recent memories is the Edisto Island Piggly Wiggly where all the store employees were highly engaged with the public during the Winter Holiday Parade.  They passed out candy, gave out hugs, shared stickers...

“As I travel … South Carolina every store feels like a local store and not a corporate chain.  The shelves are stocked with local and regional products not just national or international brands.

“There is a Trader Joe’s less than a mile from my workplace.  I have stopped shopping there because the atmosphere feels manufactured.

“If I am in a town with a Piggly Wiggly I stop and shop for the love of it.   I am stickin' with the Pig.”
 
Thank you for your time and attention.