retail news in context, analysis with attitude

Published on: October 1, 2010

Want to know how to reach the customer of the future?

The New York Times reports that a new study from Scholastic suggests that “many children want to read books on digital devices and would read for fun more frequently if they could obtain e-books.” In fact, “about 25 percent of the children surveyed said they had already read a book on a digital device, including computers and e-readers. Fifty-seven percent between ages 9 and 17 said they were interested in doing so.

“Only 6 percent of parents surveyed owned an e-reader, but 16 percent said they planned to buy one in the next year. Eighty-three percent of those parents said they would allow or encourage their children to use the e-readers.”

While many parents are heartened by the notion that technology can be used to get kids interested in reading books, and not just for games and other distractions, there remains a number of concerns that the simple act of reading words may not be engaging enough for some kids, who will demand faster-moving and more interactive experiences.

However, there remains some good news for traditionalists: Two-thirds of the kids surveyed say they “would not want to give up their traditional print books.”

Still, the map to the future seems clear. Old methods of communicating to consumers will fast grow obsolete, and marketers need to figure out quickly how to replace them...and then be nimble enough to tweak and shift as new technologies become available and are adapted.

And that’s my Friday Eye-Opener.

- Kevin Coupe

Published on: October 1, 2010

Bloomberg reports on a study by J.P. Morgan Securities saying that Walmart’s prices “rose in September to the highest level in at least 21 months ... The cost of a 31-item basket of goods at a Wal-Mart in Virginia was $95.75, a 2.7 percent increase from August and a 5 percent gain from the start of 2010 ... The price is the most since the New York-based analyst began the survey in January 2009.”

According to the story, “ Prices for produce climbed as Wal-Mart offered almost no discounts on food last month ... Price cuts on items such as cereal and ketchup failed to attract as many consumers as Wal-Mart anticipated, dragging down sales in the latest quarter, U.S. stores chief William Simon said last month.

“Produce accounted for 7 of the 31 items in the basket, with prices 10 percent higher in September than the previous month. Prices for dairy products rose 2 percent, and meat was unchanged.”

While Bloomberg notes that “Wal-Mart’s prices came in below a similar basket of goods bought at stores operated by Kroger Co. and Safeway Inc.,” it also showed that the gap “between Wal-Mart and the traditional grocers narrowed in September.”

Published on: October 1, 2010

The Des Moines Register reports this morning that Canadian c-store giant Alimentation Couche-Tard has thrown in the towel on its hostile bid to acquire Iowa-based Casey’s General Stores. Yesterday, Couche-Tard said that it has allowed its $38.50-per-share offer to expire, saying that “we have decided not to continue to pursue our offer given the Casey's board's repeated refusal to negotiate with us.”

Casey’s has continually said that the offer was too low, and responded to the Couche-Tard approach by opening negotiations with 7-Eleven, which offered $40-per-share. At the company’s annual meeting last week, shareholders supported Casey’s management, refusing to elect an alternative slate put up by Couche-Tard.

According to the Register, “Analysts peg the stock's real future value at $46 to $49, depending on whether Casey's decides to remain independent or sell part of the company to another firm.”

Published on: October 1, 2010

Wine Spectator writes about a new study conducted by the University of Texas looking into the various reports saying that people who consume alcohol in moderation tend to live a longer life. In fact, the Texas study confirmed that “compared to moderate drinkers, patients who abstained from alcohol had more than double the estimated mortality risk, while heavy drinkers and light drinkers had a 70 percent and a 23 percent higher mortality risk, respectively.”

However, further examination revealed that “a large portion of the subjects who abstain from drinking admitted to prior problems with alcohol and/or poorer health habits. Lifetime moderate drinkers, they found, use alcohol less as a coping agent and more as a social lubricant. They also tend to exercise more often and had lower rates of obesity.”

The Wine Spectator story goes on, “But what of studies that find wine drinkers enjoy an extra benefit, presumably because of antioxidant compounds such as polyphenols found in red wine? The theory that polyphenols provide wine's benefits has led to a growing supplement industry, with shops selling resveratrol and other polyphenols in pill form.”

“A recent Dutch study looked at the chemical components found in grapes and found little to support claims that polyphenols such as resveratrol provide cardiovascular benefits when acting alone.”

Published on: October 1, 2010

Good piece in the Wall Street Journal noting that the Blockbuster bankruptcy means more than just the slow death of a company that just a few years ago seemed ubiquitous; it also confirms that “technology is killing the video-rental store - and a piece of American culture with it,” the many independent, mom-and-pop video rental stores that have been in business for the past few decades.

Here’s how the Journal describes this dying industry:

“Since the first video-rental shops emerged in the late 1970s, they have served as shrines to films and created new social spaces for neighborhoods, often reflecting their personalities. They drew cinephiles, rebellious teens seeking movies of which their parents might not approve, and budding young actors and directors who canonized them in their work.

“The shops made accessible high quality films, or quirky or foreign ones, that weren't likely to be broadcast on TV—and on customers' own schedules. Brought down off the silver screen, movies were artifacts people could swap, study and recommend. A generation of movie buffs and cultural critics collected copies of films the same way art and books were amassed ... Quentin Tarantino spent several years working at a shop called Video Archives in Hermosa Beach, Calif., while writing his first screenplays.

"’I got to be little Mr. Critic at the store, putting films in peoples hands, and arguing my points about why this movie was good and this movie was bad,’ the director told Charlie Rose in a 1994 interview.”

Published on: October 1, 2010

The New York Times reports this morning that the Arms Wide Open Childhood Cancer Foundation has filed a complaint against Pepsi, alleging that the company’s Refresh charity fund-raising contest “has been infiltrated by organizations with a political agenda.”

Specifically, the foundation is saying that a group of 16 organizations called the Progressive Slate has been unfairly organizing a get-out-the-vote effort aimed at winning funds for their charities. As the Times writes, “Through Pepsi Refresh, Pepsi is giving more than $20 million to charities this year, allowing 1,000 organizations to compete for grants of $5,000, $25,000, $50,000 and $250,000 each month. Online voters decide who wins.” The foundation, which raises money for alternative therapies and treatments for children with neuroblastoma, has been in the running for the $250,000 prize, but it contends that the Progressive Slate is violating the rules through its organizing efforts.

According to the Times story, “Groups belonging to the Progressive Slate, many of which are skilled at voter registration and community organizing, are collectively working to help each other win the contest. The strategy is proving successful: as of Thursday evening, eight of the top 10 contestants in the $50,000 category were Slate members, and two members were among the top five contestants vying for $250,000.

“Many of their Web sites promote liberal agendas, featuring comments from MoveOn.org, recommending LeftyBlogs.com, and displaying membership lists that include labor unions.”

Published on: October 1, 2010

Kantar Retail is out with its projections for the upcoming end-of-year holiday season, suggesting that “retail sales for the fourth quarter holiday period will be significantly better than a year ago ... However, the holiday will feel weak compared with the relatively strong pace of retail sales growth in the first three quarters - a pace inflated temporarily by economic stimulus and pent-up demand. 

“Kantar Retail forecasts growth of 2.5% - compared with 0.5% growth in 2009 - for the holiday fourth quarter in the key holiday retail segments combined.”

“Prices and uncertainty will weigh heavily on the holiday outlook,” says Frank Badillo, Kantar senior economist.  “Ongoing price competition among retailers, led by Walmart, is more likely to take a toll on sales gains than boost unit demand among shoppers who remain value conscious.”

Published on: October 1, 2010

The Business Journal of the Greater Triad Area reports that Harris Teeter “has launched two new programs to help customers pare down health care costs. The company’s updated Generic Prescription Savings Club program offers a shoppers a 30-day supply of generic medications for $3.99.

Harris Teeter also has launched its new ‘yourwellness’ Savings Card to provides consumers with savings on everything from eyeglasses and contact lenses to dental cleanings, X-rays and prescriptions. The cost to enroll is $3.95.”

Published on: October 1, 2010

A new task force called the the Grocery Center Store Initiative has been created by the Food Marketing Institute (FMI) and other partners in both the retailer and supplier community “to demonstrate to retailers and wholesalers how the sales and profit contribution of the center store can increase trips to the grocery store and will help identify the perimeter departments and the center store categories that drive up the number of shopping trips. The group also plans to identify center store attributes that are seen as differentiating and equity building for retailers. The task force will study shopper attitudes toward the role of the center store and test new merchandising treatments, layouts and approaches.”

Among the partners: Nestle Purina PetCare Company, Kimberly-Clark, Anheuser-Busch, Campbell Soup Company and The Kellogg Company, as well as The Nielsen Company, Willard Bishop and Accenture.

“Our goal is to address the important role of the center store in today’s and tomorrow’s supermarket. Our belief is that a sustainable, more vibrant center store is a key ingredient to achieving the promise of future sales and profit growth as part of the total store solution,” said Leslie G. Sarasin, president and chief executive officer at FMI. 

Published on: October 1, 2010

The Grocery Manufacturers Association (GMA) has commended U.S. Rep. Marcia L. Fudge (D-Ohio) and Rep. Joseph Cao (R-Louisiana) for introducing comprehensive obesity legislation, the Fit for L.I.F.E. Act of 2010, which is designed to improve the nutritional quality of and access to foods in underserved American communities
 
“On behalf of GMA and the food and beverage industry I applaud Representative Fudge for introducing this important piece of legislation,” said GMA President and CEO Pamela G. Bailey.  “The Fit for L.I.F.E. Act will help Americans in underserved communities build healthy diets and improve access to physical activity. This will help Americans of every age live healthy lives and will be vital to successfully addressing this country’s critical obesity challenge.

Published on: October 1, 2010

The Cincinnati Enquirer reports that Kroger has been pulling boxes of Ochocincos - a new cereal featuring Cincinnati Bengal player Chad Ochocinco that was meant to draw attention to the Feed the Children charity - because a toll free phone number given on the box was directing consumers to a phone sex line.

The problem: the toll free prefix given was 1-800 instead of 1-888.

Published on: October 1, 2010

• USA Today reports that the World Trade Organization has rebuked the Obama administration, saying that a US ban on Chinese poultry violates international law. The US recently extended a five-year ban on such imports that was originally put into place after a 2004 outbreak of bird flu in china.

• Reuters reports that “the European Union's food safety watchdog said it saw no need to cut the official limit on accepted exposure to bisphenol A, a chemical in plastic containers which some experts believe may harm human health.

“Some European countries have sought to lower bisphenol A (BPA) intake after several recent scientific studies linked exposure to increased risk of health problems such as heart disease, breast cancer and diabetes.”

Published on: October 1, 2010

• Walgreen announced that it has hired Jeffrey Berkowitz, most recently senior vice president of global market access for Merck & Company, to be its new senior vice president of pharmaceutical development and market access, responsible for “the overall pharmacy contracting strategy for the company, both on the pharmaceutical manufacturing side and on the retail payer side. As a member of the senior management team, he will assume leadership for identifying and cultivating strategic external relationships and will oversee key initiatives with pharmaceutical manufacturers that will add to the company’s growth.”

Published on: October 1, 2010

Got some reaction from the MNB community to yesterday’s radio piece about FedEx trying to make amends after a customer service snafu that I publicized in this space.

One MNB user wrote:

Any chance you get a call from Alice Hill, discounts for future shipping and a credit for your prior shipment if you don’t write a blog that reaches thousands?  While FedEx certainly did the right thing, reacting to your publicly stated poor experience is not exactly customer service worthy of kudos.  Whether or not you stick with FedEx is your choice, but your initial experience should certainly be considered as a better window to their operations than the manufactured follow up.

And another MNB user wrote:

So, it took a customer with a massive following on the web to voice his frustrations, where people in the Manufacturing, Retail, and Consulting industries read, listen and engage with you, which got Fed-Ex to react in the way it should have from the beginning?

Had you been a customer without an online presence and/or industry insider, I doubt the outcome would have been same. At least you now know you’ve reached popularity/celebrity levels that multi-national companies are quickly reacting to your criticism…maybe your next complaint should be about how your local Ferrari dealership mistreated you, and maybe you can score free wheels for a year or something.

I’m flattered ... even by what I assume are your tongue-in-cheek compliments.

You are absolutely right. I got attention because I made noise, and I have a soapbox. (I never thought about using it for a Ferrari...)

I would, however, make two points.

One is that more people than ever have soapboxes. Social media makes it possible for people get get a lot of traction with their complaints about virtually any business, and companies will be forced to take notice and respond. Hopefully, FedEx is getting that message.

And second, it would be my hope that FedEx learns from this experience. If they just tried to assuage me because I have a forum, then the culture is more broken that I suspected. But if they take this seriously, then this could be a turning point ... which they badly need, if all the emails I got from discontented FedEx users are any indication.

One other thing. When I mentioned yesterday that FedEx promised to mail me discount coupons that I could use for future shipments, it prompted a number of emails from people who pointed out the irony of FedEx “mailing” anything. To be fair, that was my word. I think that the FedEx employee, Alice Hill, probably said “send.” I was paraphrasing her, and should have been more careful.

However, if the coupons show up via the PSPS, I’ll be the first to let you know.




Yesterday, we had a story about consumer confusion regarding high fructose corn syrup (HFCS), noting that a recent Mintel survey said that “while 35% believe that the government should limit HFCS content in food/beverages, 45% think that this should be up to manufacturers -- and 37% say that no one should be responsible for imposing HFCS content restrictions.”

I commented:

I actually take almost every survey these days about what government should and should not do with a grain of salt, since there is such a strong anti-government sentiment out there right that skews almost everything.

To which one MNB user responded:

That is so typical - dismissing other peoples' "sentiment" when it conflicts with your own.   It must be jarring by seeing your opinions "skewed" by the facts.

Give me a break.

I wasn’t dismissing anything. Just noting that there is a strong anti-government sentiment in the country right now. (You think there isn’t one? What newspapers are you reading?)

All I was saying was this: I think that anti-government fervor may be to the point where some people will take some positions that they might not take under other circumstances. I actually believe that is a fair, reasonably non-judgmental observation, and hardly a dismissal of popular concerns that I think in some cases are entirely valid.




Here’s an email that I knew I would get, responding to yesterday’s email by David Livingston suggesting that a lawsuit filed by a woman who says she got fired by her retail employer because she was pregnant was an example of “another nut attacking a good company.”

This MNB user wrote:

Kevin, please consider not publishing this gentleman’s comments.  His opinion is always demeaning, disrespectful or cruel and offers no insight or knowledge about the CPG industry.  MNB is about respectful discussion.

I thought long and hard about running that email. But I decided to - and this is a decision I make pretty much every time I run one of his missives - because I believe it reflects a point of view held by more than just one person.

Yesterday, as it happened, the first email in “Your Views” was from a guy who believed that I was underestimating the extent to which men “get” and even share the parallel lives often lived by women executives. And this came after a couple of days during which I wrote about the exceptional Leadership Summit put on by the Network of Executive Women (NEW).

And there was the “another nut” email, suggesting that there are guys out there who don’t get it.

However much I disagree with Livingston’s comments, I thought they needed to be on MNB because, in their own way, they train the spotlight on how far we still have to go, on why people cannot be complacent about these sorts of issues.

That’s my message to my daughter. You can do anything...but look out for some people who will never believe it, and who will bring 19th century attitudes to a 21st century reality.

Published on: October 1, 2010

I wish that baseball had made this move on its own, but beggars cannot be choosers.

Advertising Age reports that due to financial support from Chevrolet, Major League Baseball and Fox have agreed to “start Game Three of the World Series at 6:57 p.m. ET on Saturday, Oct. 30 -- the earliest start to a World Series game since Game Six of the 1987 World Series. The start time comes an hour earlier than the scheduled start time of the 2009 World Series game on Saturday.”

The goal in starting the game earlier is to allow young people on the east coast the ability to watch a World Series game without staying up until midnight or later. Basically, Chevy is willing to pay prime time ad rates even for hours not in prime time, and so assured of not leaving any money on the table, Fox and MLB are doing the right thing.

It has long been argued that while the broadcast networks and baseball owners have every right to be worried about their bottom lines, the way they schedule playoff games could have the long-term effect of making baseball irrelevant to many young people, which could virtually kill the game. (Remember the “Star Trek: Deep Space Nine” prediction that professional baseball would fold in 2042?)

I think that Chevy comes out of this looking better than MLB and Fox, and I trust that they will trot out their old slogan, “baseball, hot dogs and Chevrolet.” But they all may be missing the bigger picture.

There is at this moment at least a 50-50 shot that the game, which will be played in an American League city, will be in a cold weather city. It could be the Tampa Bay Rays or the Texas Rangers in the series, or it could be the New York Yankees or the Minnesota Twins...and the Twins not only play in a really, really cold weather city, but also for the first time in decades are occupying an open-air stadium, having moved from the cavernous Metrodome to Target Field, which everybody I’ve talked to says is absolutely gorgeous.

But gorgeous or not, it is incredibly likely that if the Twins go to the World Series, it is going to be bitingly cold on the evening of October 30, no matter how early they start the game. There could even be snow.

In fact, it sounds like a pretty good bet. Because I think the Twins are going to the Series this year. And if I’m right, much as it pains me, they’ll be playing the Philadelphia Phillies. (Average low temperature for Philadelphia that time of year: 39 degrees.)




Did you hear the news?

Astronomers have discovered what appears to be an inhabitable planet, dubbed Gliese 581G. There seems to be every possibility that this planet could support life, if it does not already. They say it is a kind of Goldilocks planet - not too hot, not too cold. So if we screw up Earth, there may be someplace to go.

That’s the good news.

The bad news? It is 20 light years away. And since we haven’t developed warp speed yet, that means it would take an awfully long time to get there.

(The Washington Post put it this way: “If Jupiter were inches away, this would be miles away.”)

Oh, well.

However, you can probably expect to see Gliese 581G in the movies long before we actually get there. I was reading on one blog that it has a unique rotation around its sun that means that one side is perpetually in sunlight, and the other is always dark. I’m thinking a really cool film with vampires existing in the dark, a solar powered military on the bright side, with the two camps fighting for control of Gliese 581G. (The twist would be that the vampires would actually be the good guys, and the solar powered guys would be Nazi-like.)

Maybe I’d better get started on the screenplay now.




A bit of good news from the Sansolo-Coupe camp.

Our book, The Big Picture: Essential Business Lessons from the Movies has just gone to its third printing.

Which is just impossibly cool.




That’s it for this week, as I wrap up a 10-day period in which I gave five speeches...and Monday, I head up to Cornell University to do one of my favorite things - guest lecture at a class on retailing.

Have a great weekend. I’ll see you Monday.

Slainte!