retail news in context, analysis with attitude

Published on: September 7, 2010

The end of the world as we know it? Or just another indication of where the world is going, and resistance is futile?

The Daily Beast noted the other day that Oxford University Press has announced that the next edition of the 20-volume Oxford English Dictionary is likely to come out not in book form, but online only. According to the company, the market for print dictionaries is declining by more than 10 percent a year ... and the company has taken notice of the fact that it gets two million hits a month from people who pay $295 for an annual subscription.

Which means that the company is on the verge of changing its definition of success.

Some will say that this is sacrilege, and that the culture loses something as shifts such as these take place. But others will say, no, that is an example of a company recognizing the inevitability of change and doing what is necessary to remain relevant to the customer, even if it seems to violate the very premise of the product. Because the simple truth is that a dictionary’s mission is to educate people about words, to both broaden and deepen their ability to use the language. Paper and ink are just the means of the moment.

That’s a good lesson for every business. You have to be able to separate the mission from the means. The means can and will change. The mission...well, the mission is what you really have to pay attention to. All the other stuff is just wrapping paper.

And that’s my Tuesday Eye Opener.

- Kevin Coupe

Published on: September 7, 2010

The Wall Street Journal reported last week that the Great Atlantic & Pacific Tea Co. (A&P) reportedly “is considering selling its Food Emporium stores as part of a boarder effort to rid itself of some assets and boost its liquidity.”

Food Emporium is considered a “crown jewel asset” and a “saleable asset,” retail consultant Burt Flickinger III told the Journal, and some reports suggest that Food Emporium could fetch as much as $200 million.

And, the Journal reported, “Some private equity firms that could be possible bidders are Angelo, Gordon & Co., which owns Kings Super Markets Inc., and Sterling Investment Partners, owners of the Fairway Market grocery chain, industry analysts say.”

The report came just days after the Journal also reported that A&P’s largest shareholder, Germany-based Tengelmann Group, has said that it believes that the retailer eventually will merge with another retailer, but that Tengelmann would like to remain a shareholder in that combined entity.

Over the past few weeks, A&P has gotten a new CEO (its third in a year) and a phalanx of new executives, all hoping to turn around the troubled retailer.

Published on: September 7, 2010

The California State Senate last week voted to reject a bill that would have instituted a statewide ban on plastic shopping bags, which would have followed up on similar bans approved by cities that include San Francisco, Palo Alto and Malibu; reports say that the county of Los Angeles and the communities of Santa Monica and Redondo Beach are in the process of considering local bans.

As the Los Angeles Times reported, had the bill passed it would have been the first statewide ban in the nation. According to the story, “Supporters of the bill said the 19 billion plastic bags state residents use every year harm the environment and cost the state $25 million annually to collect and transport to landfills. It had been the subject of a furious lobbying campaign by the plastic bag manufacturing industry, which called it a job killer.” In addition, opponents said that such a ban would represent an unnecessary government intrusion into people’s personal lives.

Published on: September 7, 2010

Very interesting story in Advertising Age which reports that “between January and August 2010, a staggering number of the nation's biggest food, pharma, clothing, and car marketers have initiated voluntarily recalls of products -- by the thousands and hundreds of thousands ... In the span of last week alone, companies like Tyson, Garmin and Johnson & Johnson pulled all manner of consumer products, including GPS devices, contact-lens solution, hip replacements, flat-screen TV wall mounts, popsicles, deli meat, baby bottle warmers and yet more Toyota cars.”

The story suggests that two things may be happening here.

One is that “companies these days are quicker to pull the trigger on a voluntary product recall both in the hopes of averting legal problems down the road and as they come to grips with conducting business in an ever-more transparent world where consumers air their grievances via Twitter and Facebook and government agencies are right there to listen.”

The other is that the sheer magnitude of the recalls could create a generation of consumers that tunes them out - not changing their behavior even when circumstances suggest that they should, in a kind of recall fatigue.

Published on: September 7, 2010

USA Today had an interview with Whole Foods founder John Mackey the other day, on the occasion of the chain’s 30th birthday, which occurs on September 20.

Among the things addressed by Mackey are changes taking place in the stores:

• “A new animal welfare rating program will be in all stores by Jan. 1. Signs will tell customers exactly how meat animals were raised. In stores Wednesday, we'll become the first retailer to have transparency on all species of seafood we sell, in a partnership
with the Monterey Bay Aquarium and the Blue Ocean Institute. We're rolling out initiatives to help shoppers and (staff) make healthier, more educated choices about food.”

• “We're opening Wellness Clubs in five prototype stores. It's potentially a new paradigm for people being healthy. All of the key diseases killing Americans can be largely avoided or prevented through healthy diet and lifestyle, but people don't know exactly what to do. Whole Foods will help educate them.”

• “When we began, we were healthy foods. Around 1991, we began to evolve to food as pleasure. Now, food as health is beginning to wax again. It's not that we'll stop selling pleasurable foods. But we'll put greater emphasis on food as a health product.”

• “We're in the process of deglitzing our stores. We think that's part of what contributes to the ‘Whole Paycheck’ image. We want it to look more natural, more wood and more earth tones.”

Published on: September 7, 2010

The Washington Post reports that the US Food and Drug Administration (FDA) “is poised to approve the first genetically modified animal for human consumption, a highly anticipated decision that is stirring controversy and could mark a turning point in the way American food is produced.

“FDA scientists gave a boost last week to the Massachusetts company that wants federal approval to market a genetically engineered salmon, declaring that the altered salmon is safe to eat and does not pose a threat to the environment ... Those findings will be presented Sept. 19 to a panel of scientific experts which will advise top officials at the FDA whether to approve the altered salmon.”

Critics say that not enough is know about whether genetically modified fish will have an impact on human health and/or the environment; supporters say that such innovations are important at a time when the global fish population is declining and there remains a considerable hunger problem on much of the planet.

Published on: September 7, 2010

Okay, maybe there was a little hyperbole at work.

Last week, at the opening of Eataly, his new “Italian food destination” in New York City’s Flatiron district, chef Mario Batali said, “We are extremely happy to open the most important grocery store in the world in the most important city in America, and we are happy to share the beauty of the Italian culture and table with the most sophisticated people on the planet.”

But if Batali was a little carried way in this enthusiasm, there is no question that Eataly is a unique offering; here’s how the company describes the new store:

“Eataly encompasses 42,500 square feet of restaurant and retail space and a 4,500 square foot open-air rooftop beer garden. The seven Eataly restaurants include Le Verdure (vegetable), Il Manzo (meat), Il Pesce (fish), La Pasta (pasta), La Pizza (pizza), I Salumi eI Formaggi (salumi and cheese), and Il Crudo (raw bar). The rooftop beer garden, La Birreria, will serve a range of beers year-round as well as a variety of pizzas and sausages, and Lavazza Café will serve espressos, cappuccinos, gelato and pastries. The pasticceria counter will also serve several petite desserts called dolci al cucchiaio ("spoon desserts").

“Eataly's retail marketplace will offer a variety of cured meats, cheeses, fruits and vegetables, fresh meats and fish, handmade pastas, desserts, baked goods, coffees and teas, Italian dried pastas, canned goods, sauces, olive oils, vinegars and a selection of housewares and books. Many of the fresh products come from the New York metropolitan area, including all of the milk, eggs and flour. David Pasternack, executive chef of New York's Esca restaurant, will oversee Eataly's fresh fish and seafood selection, which will come through New York City's Fulton Fish Market at Hunt's Point.”

And, “Eataly's La Scuola culinary education center will offer special events occurring year round, including food and wine courses, demonstrations and lectures led by accredited instructors, renowned chefs, winemakers and producers from the best farms in the world.”

Published on: September 7, 2010

The Nielsen Company is out with a Gas Price Impact Consumer Survey, which indicates:

• “Consumers continue to combat high gas prices by combining errands/trips (63 percent), doing more at home (39 percent), and reducing spending to a small degree (29 percent), moderating from levels seen at the peak of the recession.”

• “Eating out less (46 percent) and coupon use (38 percent) rank high as money saving strategies due to gas costs, elevated from pre-recession times.”

• Supercenters are losing some appeal for consumers seeking gas savings; only 26 percent of households say they shop more at supercenters to save on gas compared to 28 percent a year ago.”

• “Sixteen percent of households say that gas prices have no impact on their driving or spending; double the response in June 2008.”

• “Some consumers buy gas at locations because of incentives tied to their spending at stores where they shop, such as grocery (24 percent); convenience stores/gas (19 percent); warehouse/club (14 percent) and mass merchandisers (7 percent).”

Published on: September 7, 2010

Advertising Age reports that Supervalu-owned Save-a-Lot has been testing a new promotional approach in the Louisiana community of Opelousas, west of Baton Rouge - about twenty bucks worth of free groceries delivered unannounced to 1,000 homes near the company’s new store there.

According to the story, “the items are mostly household staples that resonate with buyers, such as three-for-a-dollar macaroni and cheese. All of the items are also strictly Save-a-Lot's own brands, which he said are typically 30% to 40% lower than name brands.”

The company has said that the promotion has been a success...and in fact has even taken on a viral component, with neighbors using Facebook and Twitter to inform others about the promotion.

Ad Age continues, “This is the first instance that Save-a-Lot has tried the free groceries promotion. Marketing and advertising decisions for Save-a-Lot are made separately from the parent company, a Supervalu spokeswoman said, and the modest media spend -- $1.9 million through the first six months of this year -- means Save-a-Lot has to get creative when necessary.”

"It's been tremendously successful," Mark Kotcher, director of brand marketing and design for Save-a-Lot, tells Ad Age. "We're glad it has legs, and we're thrilled that it's become part of the social-media landscape." And he says, since the company
Save-a-Lot has plans to double its current 1,179 stores in the next five years, “I imagine you'll see this promotion in other places.”

Published on: September 7, 2010

Fast Company reports that the advertising agency Crispin Porter + Bogusky is launching “an ambitious $25 million campaign to help the carrot industry compete with the junk food industry.” The campaign is being funded by almost 50 carrot growers, and will include billboards, web ads, and even an iPhone application.

However, the campaign is hardly a sure bet. As Fast Company writes, “Carrots are ingrained in our minds as a healthy, family-friendly food from a young age -- can an ad campaign really change that? And what happens when the kids eat the carrots -- and discover they don't taste nearly as good as Cheetos?”

Published on: September 7, 2010

The Chicago Tribune reports that contrary to thousands of consumer accusations aired most vociferously in various social media, the US Consumer Product Safety Commission (CPSC) and Health Canada have concluded that “they have not found any specific cause to link Pampers Dry Max diapers with diaper rash.” The conclusion does not suggest that no babies got rashes from the new diaper formulation; babies with heightened skin sensitivity “may” be vulnerable, the agencies say, but the research does not point to any serious problem.

Published on: September 7, 2010

Bloomberg reports that after a successful three-store test in Kansas City, Procter & Gamble plans to go national with its franchised Tide Dry Cleaners format, with plans for more than 150 units to be opened over the next four years.

Published on: September 7, 2010

Stores Media is out with its list of the top online retailers, and the top ten are: Amazon.com, Walmart.com, eBay.com, BestBuy.com, JCPenney.com, Target.com, Kohls.com, Google.com, Overstock.com, and Sears.com.

One interesting note: all of the top ten retailers were on the list last year, leading BIGresearch, which conducted the survey of consumers, to conclude that brand loyalty remains a strong motivator in the online segment.

Published on: September 7, 2010

• Building off the success of ShopRite’s iPhone App, MyWebGrocer and ShopRite supermarkets have teamed up again to launch a new Android Application, ShopRite Weekly Specials™. The new App, which is free and available now through Android’s Market, is the first App dedicated to weekly grocery specials on Android’s Operating System. 

ShopRite Weekly Specials enables consumers to see what’s on sale in real time at their neighborhood ShopRite store. Once they select an item, it is added to their shopping list, which is neatly organized by category with pictures, descriptions and real time prices. Shoppers can also use the voice command to add items to their list by speaking into the App.

Content Guy’s Note: As a matter of full disclosure, MyWebGrocer is a longtime and valued MNB sponsor. But since we would have covered this story if it were not, it hardly seems fair to not cover it because the company has such good taste in news and information vehicles.

Published on: September 7, 2010

• The Arizona Republic reports that Fry’s Food Stores, known for its low-price approach, “is staking a claim for more affluent shoppers - and the higher profits they bring - with an upscale store that features valet parking, custom car washes, a cooking school, wine bar and expanded selections of organic produce and high-end meats.

“With the region still in the throes of a historic economic downturn and other grocers closing stores, opening a lavish, upscale supermarket may seem counterintuitive. But Fry's, which is celebrating its 50th year in Arizona, is betting the new store will help reposition it as more than just a low-price player in what is considered one of the country's most competitive grocery markets.”

• Advertising Age reports that “the Federal Trade Commission is once again handing out subpoenas to companies that market food to children and teens. Three years after initially delivering what is technically known as ‘orders to file special report’ to 44 marketers, the FTC last week began sending subpoenas to 48 companies in order to prepare a follow-up to its 120-page report issued in 2008, ‘Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities and Self-Regulation’.”

An FTC spokesperson said that no Congressional hearings are in the works, and that the commission is not calling for new regulation at this time.

• Burger King Holdings said last week that it is selling itself to the 3G Capital private equity firm for $3.26 billion. The report says that 3G “proposes to reinvigorate the struggling hamburger chain by accelerating its international expansion.”

Shortly thereafter, Burger King’s current management announced that the chain will roll out a new series of breakfast items, including pancake platters and blueberry biscuits, in an attempt to recapture a meal segment that the company’s CMO, Mike Kappitt, concedes has almost been abdicated to McDonald’s.

• The Seattle Times reports that Coinstar-owned Redbox has reached a milestone - last Sunday, it rented its billionth movie, just six years after its first kiosk began operating in Denver.

There are currently more than 24,000 kiosks in the US, and Redbox is seen as one of the contributors, along with Netflix, to the decline of Blockbuster.

Ironically, the billionth movie rented was “Clash of the Titans.”

Published on: September 7, 2010

• The Great Atlantic & Pacific Tea Co. (A&P) announced that it has hired Tom O'Boyle to the new position of Executive Vice President, responsible for leading the Merchandising, Marketing, Supply & Logistics departments. O’Boyle most recently was President and Senior Vice President, Food and Drug for Sears; before that, he was the Senior Vice President, Merchandising and Marketing for Albertson's.

• Publix Super Markets announced that it has promoted Joseph DiBenedetto, a regional director in the company’s Atlanta division, to be that division’s vice president.

Published on: September 7, 2010

Before I went on vacation, I did an MNB Radio piece about generational differences in which I used the old Lone Ranger/Tonto joke that ends with the line, “What you mean ‘we,’ kemo sabe?” as a metaphor. I’d used the line with my daughter, who had no idea what the hell I was talking about...and I suggested that this is an example of why it is important for people in business leadership positions to understand the language and cultural references used by young people. They don’t have the same touchstones that we do, and if we want to communicate effectively with them - whether they are employees or customers - we have to “get” their touchstones. Or at least try to.

Now, I got an enormous number of emails from folks who related to my experience, having spent a fair number of time talking to their kids and using stories and references that might as well be in Greek.

But one MNB user disagreed:

Whoa kemo sabe.  It’s also important for the young folks to know some of what we know.  It’s called history.  I loved your story and learned something from it.  I did not know the details of the legend and I grew up during the time the Lone Ranger was on TV, so I knew what you were talking about but not the “history”.

It isn’t all about them, it’s about all of us.  Understanding goes both ways and it’s time the up and comers figure that out.  I think we’ve coddled and provided and pretty much made them feel like they are so very special (wouldn’t want to affect their self-esteem, etc.), that we’ve created a generation or two of “it’s all about me” people.  I even popped out a couple of them myself, so I consider myself part of the problem.  I’m not even sure they’re going to pick nice nursing homes for us LOL  I can only hope I instilled some of the values I grew up with and they will emerge when I least expect it.  I could go on and on but I’m hopping off the soapbox now.

I’m not suggesting that we should not teach them history, nor that they have no responsibility in this area. After all, communication goes both ways.

But leadership, in my view, means that older folks have to take the initiative. We have to be educators and mentors as well as bosses.

And maybe, in the end, the young people who accept and act on their responsibility to communicate, to learn other people’s touchstones and not just be focused on themselves, will be the ones identified as future leaders.

Published on: September 7, 2010

...will be posted on Wednesday this week.