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: October 11, 2010

    The branding lesson of the week comes courtesy of various news reports that started late last week, saying that Apple plans to make a version of its iPhone that will run on the Verizon wireless network, the first time that an iPhone would work on anything in the US other than AT&T.

    This rumor has been around before, but this time there seems to be a lot more behind it; the reports have gotten to the point where Apple’s stock price might actually take a hit if the speculation turns out not to be true. The general feeling seems to be that Apple, facing real competition from the Android smart phone, would help itself immensely by expanding the number of networks on which it works.

    All of which makes sense. But it also is possible that the long-term advantages could create some short term problems.

    I’ve had an iPhone for almost three years, and am still using my old, original equipment. I remain extremely satisfied, but it’s gotten a little beaten up, the battery doesn’t have the life it used to have, and I’ve been thinking that it is time to upgrade to a new iPhone.

    To be fair, unlike a lot of people, I haven’t had any huge complaints about AT&T...but there’s also no question in my mind that Verizon has a superior network. And so when the rumors started getting traction last week that there could soon be a new iPhone on a new network, I immediately decided to put off any decisions until I find out whether the Verizon rumors are true.

    I can’t be alone in this. I suspect there are a lot of folks who immediately decided that a new iPhone purchase could be put off for a while.

    If I’m right about this, it certainly reinforces the notion that AT&T has a serious brand problem. I have no idea what to do about it, but it certainly underlines the kind of problem that every brand has to avoid. Can you imagine being the brand that people use because they have to, but abandon in droves as soon as there is alternative? Not what I would call ideal positioning.

    On the other hand, if the rumors are true, it will be interesting to see what impact the timing has on iPhone sales. (They could suffer a fourth quarter collapse...and the news could be worse for AT&T than for Apple.)

    Apple probably didn’t want it to happen this way; the notoriously secretive company probably would have preferred to hold a press conference and announce the move on its own timetable. But these days, being secretive is harder than ever...and maybe is almost impossible.

    (Just ask Brett Favre, who has his own brand equity problem these days, about the difficulty keeping things secret. But that’s for another discussion.)

    That’s my Monday Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: October 11, 2010

    Bloomberg reports that “Wal-Mart Stores Inc., the largest U.S. private employer, plans to end profit-sharing contributions in February, replacing them with matches to employee 401(k) retirement plans to bring down benefits costs. The retailer will match contributions up to 6 percent of eligible employees’ pay, according to a memo obtained by Bloomberg News. Previously, Wal-Mart automatically put up to 4 percent of pay into the profit-sharing plan, according to spokesman David Tovar.”

    Walmart founder Sam Walton began the company’s profit sharing plan in 1971. According to Bloomberg, “During the year ending Jan. 31, 2008, Wal-Mart contributed $724.4 million to 838,955 hourly employees in profit-sharing and 401(k) contributions, according to a May 2008 company press release. Data for more recent years wasn’t immediately available ... The switch by Wal-Mart, which has about 1.4 million U.S. employees, will only benefit those who are in the plans, so staff will need to join to profit from the move.”

    Bloomberg quotes a benefits expert as saying that retail employee participation in 401(k) retirement plans tends to be lower than the 75 percent national average.
    KC's View:
    This may not do a lot for morale, but it is a pretty good bet that the Walmart analysts meeting this week will greet this as good news. (See the MNB Walmart Watch, below.) Which will be good for the company’s stock price. Which may be a priority at the moment.

    Published on: October 11, 2010

    Delhaize-owned Bottom Dollar Food has opened its first store in Pennsylvania, a 19,000 square foot unite that will offer almost 7,000 SKUs at discount prices. The company said that this is the first of as many as 20 stores that it plans to open in the Philadelphia region in the next two and a half months; 22 leases have been signed, and it is just a matter of how many can be gotten up and running by the end of the year.

    “As we continue to expand in the market, we believe customers will enjoy shopping at our stores and we will win new business through our customer friendly approach and value we offer customers,” says Meg Ham, president of Bottom Dollar Food, adding, “We are very fortunate to have a strong emerging banner that we can continue to grow in new markets.”

    This represents a major expansion - and almost a doubling in size - by Bottom Dollar, which currently operates 29 stores in North Carolina, Virginia, Maryland and Pennsylvania.
    KC's View:
    I’ve always like the Bottom Dollar format, and it is yet another example of how Delhaize is using a variety of different formats to build a sustainable fleet of stores that serves a wide variety of shoppers.

    This move also speaks to the continued overcrowding of the Philly market...which is also the subject of our next story.

    Published on: October 11, 2010

    The Philadelphia Inquirer reports that Safeway-owned Genuardi’s is closing its Lansdale, Pennsylvania, store next weekend, saying that the unit was underperforming.

    Richard George, a professor of food marketing at St. Joseph's University, says that the bigger problem for Genuardi’s is that Philadelphia is overstored, with too many formats selling food.

    According to the story, “With the latest closing, Genuardi's now has 31 supermarkets in Pennsylvania and New Jersey, down from 39 when monster food company Safeway Inc. bought the chain from the family of founder Gaspare Genuardi and his wife, Josephine, in 2001 ... Lately, it seems as if every month brings a new Genuardi's closing.

    “Last spring, the Voorhees store went out of business, followed by one in the Edgemont Square Shopping Center in Newtown Square in July and two in August - in Tredyffrin's Chesterbrook community and the Glen Eagle Shopping Center in Concord.”
    KC's View:
    One of the things that Rich George quite correctly points out to the Inquirer is that it is hard for middle-of-the-road retailers such as Genuardi’s to compete with the successful grocers at either end of the scale, from Wegmans and Trader Joe’s at one end to Walmart and Save-A-Lot on the other.

    As we like to say around here at MNB World Headquarters, “The mainstream is where you go to drown, and the middle of the road is where you find roadkill.”

    There may be room for only one mainstream supermarket brand in a marketplace, and in the Philly area, it appears that ShopRite has successfully claimed that position.

    However, the Inquirer points out that there is an irony to Genuardi’s being described as a middle-of-the-road supermarket brand, since it was not that long ago that it was an upmarket chain with a strong focus on fresh foods. Critics suggest that Safeway did not nurture this positioning enough, and the brand lost much of its considerable equity. (Though, to be fair, five of the closings have come since the economic downturn that has hurt so many upmarket stores...)

    Published on: October 11, 2010

    Published reports say that five more co-branded Save-A-Lot Foods Stores/Rite Aid Pharmacies have opened in Greenville, South Carolina, just weeks after the first version opened in Easley, South Carolina.

    The stores are owned and operated by Rite Aid, but 75 percent of the stores’ floor space is devoted to the Save-A-Lot limited assortment grocery selection.

    According to Rite Aid, “The remaining four stores in the 10-store test remain open during conversion to the co-branded concept and are scheduled to be completed later this month. Two of the four stores are located in Simpsonville, and the other two are located in Greer and Travelers Rest.”

    “This exciting new format, featuring aspects of both a traditional Rite Aid pharmacy and Save-A-Lot food store, provides added convenience and value to our consumers in the Greenville area,” said Bill Shaner, president/CEO of the Supervalu-owned Save-A-Lot “Save-A-Lot is committed to offering local shoppers an easy way to save, with high-quality groceries at everyday low prices – typically up to 40 percent less than traditional grocers.”
    KC's View:
    Just one of the many hybrids and innovations that I think we are likely to see in the coming months and years. Which will be good for consumers and, ultimately, good for the industry.

    Published on: October 11, 2010

    In the UK, the Mirror reports that discount grocer Aldi’s operations have suffered from a major reversal, moving from the equivalent of a $148 million (US) profit in 2008 to an $86 million (US) loss in 2009. The paper quoted experts as saying that the swing reflects the fact that “recession-hit customers who had flocked to budget supermarkets are now returning to upmarket rivals like Sainsbury's and Waitrose.”

    However, a spokesman for Aldi addressed the question by saying, “We are confident our continuing investment will lead to increased turnover and profitability.”
    KC's View:
    This could be an aberration. But it also might not be.

    The circumstances are different and the companies are different, but when I first saw this story I thought about some of the moves they’ve been making over at Supervalu, where new top management has been putting a greater emphasis on the Save-A-Lot brand. At the very least, one has to wonder if the Aldi/UK numbers indicate that there could be a strategic flaw in this approach.

    Published on: October 11, 2010

    • The Financial Times reports that as part of Walmart’s announced new small store strategy that the company has said will give it a way of gaining footholds in urban markets it has thus far been unable to penetrate, the retailer is “acquiring sites of 20,000 to 35,000 sq ft in more suburban areas of both north and south California, according to a number of real estate brokers in the state. They say Walmart is looking at existing retail locations for its Neighborhood Market grocery stores.”

    And Reuters reports that “Wal-Mart Stores Inc's U.S. management will be in the cross-hairs at the company's investor meeting this week, where Wall Street analysts will press for details on rescuing the retailer's largest business.”

    On the hot seat will be Bill Simon, the new CEO of the US business, who will be asked to explain the new small store strategy and other initiatives.

    According to Reuters, Walmart has been getting hit from both sides: “Sales at U.S. Wal-Mart stores open at least a year have fallen in five straight quarters, hurt by competition from lower-priced dollar stores and an economy that has allowed some shoppers to move up to rivals such as Target Corp.”

    • In Canada, the CBC reports that “workers at a Wal-Mart store in Gatineau, Que., have won a new collective agreement, only the second at any Wal-Mart store in North America - but not everyone is celebrating. A government arbitrator imposed the agreement, after negotiations between the union and retailer were judged to be going nowhere.

    “The contract covers more than 150 employees at the store on Boulevard du Plateau. It took three years for the United Food and Commercial Workers to unionize the store, and another two years to get the contract ... The arbitrator modeled it on the contract at the Wal-Mart in St-Hyacinthe, Que., the only other store with such an agreement.”

    According to the story, the workers will get a 30 cents per hour wage increase, and an identical raise next year.

    The CBC writes, “The union said employees at the store were concerned by Wal-Mart's previous actions at unionized stores, but the Gatineau location is busy, and they hope Wal-Mart will not close it In 2005, Wal-Mart closed a store in Jonquiere, Que., days before an arbitrator imposed a contract for its employees. The employees took Wal-Mart to court over the closure but lost their case.”
    KC's View:
    I hope that the members of the MNB community that think I spend too much time writing about Walmart will concede this morning that the Bentonville Behemoth is doing things that are making news...and therefore worth coverage.

    Published on: October 11, 2010

    Ireland’s Sunday Business Post reports that Spar, which operates more than 400 stores there, is unveiling a new private brand line called “S-Budget” that will be made up of some 50 SKUs described as being 40 percent cheaper than national brands.

    According to the story, “Half of these will be sourced through the company’s bilateral agreement with Spar Austria, and the other half from local Irish producers. The new range will be introduced in the company’s 53 Eurospar outlets, and around 50 Spar supermarkets around the country.”

    Ireland, after years of prosperity and growth, has been reeling from economic reverses in recent months, and discounters such as Aldi have been able to take advantage of the situation to build sales and market share. The Post notes that Spar International managing director Gordon Campbell recently said that ‘‘the recent shift in market share to the discounters may continue in the near future.”

    The Spar move follows the Superquinn move to unveil an “Essentials” line of budget-priced products, though Spar execs say that the “S-Budget” line has been in the planning stages for some time.

    “We believe the SBudget range, along with Spar private label expansion and promotions, will encourage people to spend more of their weekly shopping budget with us," says Spar Ireland managing director Willie O’Byrne. ‘‘Spar was a fantastic Celtic tiger player and grew well then; as the economy went into recession, we have adopted a different strategy to deal with this.”
    KC's View:

    Published on: October 11, 2010

    Seven months after two activist organizations, Greenpeace and Avaaz, began circulating a petition calling for a moratorium on all genetically modified crops in the EU until safety testing is improved, they announced that one million signatures have been obtained, reflecting what they call “dominant public opposition to GM crops.”

    The organizations plan to present the petition to EU Commission President Jose Manuel Barroso,.

    Avaaz Executive Director Ricken Patel said in a prepared statement, “European citizens have given President Barroso more than a million reasons to listen to the public and act with precaution rather than cave to the private interests of the GM industry. Europeans are deeply concerned that a handful of GM companies are determining Europe's agricultural future, and have embraced the new 'citizens initiative' to re-insert a democratic voice into EU food and farm policy.”
    KC's View:

    Published on: October 11, 2010

    • The Cincinnati Enquirer reports that Jungle Jim’s, which operates a self-described “theme park of food” in Fairfield, Ohio, plans to open a second store in Union Township, on the site of a now-closed Bigg’s, in about a year.

    Jungle Jim’s is not yet commenting on the deal.

    • The Boston Globe reports that Supervalu-owned Shaw’s Supermarkets has been recognized by the Greater Boston Food Bank as the 2010 Food Donor of the Year.

    • The U.S. Environmental Protection Agency awarded Food Lion with its 2010 Montreal Protocol Award, a global achievement given for protecting the ozone layer.

    • Publix Super Markets reportedly will open its fifth store in Tennessee’s Rutherford County this week, a 45,600-square-feet store that includes innovations such as a pharmacy drive through window for customer convenience, and motion sensitive lighting installed in the frozen food cases.
    KC's View:

    Published on: October 11, 2010

    Last week, MNB took note of a piece about how some activists in Canada are targeting Campbell Soup for its line of Halal-certified soups and broths there, calling for a boycott of the company; an anti-Campbell’s Facebook page reportedly has more than 2,000 followers.

    According to the story, “the Campbell's Halal line is certified by the Islamic Society of North America, a large and mainstream Muslim umbrella group. It clearly denounces terrorism and has widespread support among non-Muslim religious and political leaders.” And the piece notes that Halal foods “are merely those that hew to basic Islamic dietary laws such as a ban on pork products.”

    Ironically, the soup line was introduced a year ago, but the controversy was fanned by the debate in the US over the Islamic community center being planned for a couple of blocks from Ground Zero in Manhattan, which has been characterized as the “Ground Zero mosque.”

    My comment:

    I think there is a technical, scientific name for these activists.


    Does anyone really think that by selling soups to people who observe a Halal diet, Campbell is supporting terrorism?

    Does anyone really think that slogans like "M-M-M-M-M-Muslim Brotherhood Good?" are either fair or useful?

    Does anyone really think that creating this controversy is anything other than not-so-veiled racism?

    They probably can’t do it, but I really wish the folks at Campbell Soup would say to these people the same thing that Woody Allen’s character said to the congressional committee at the end of “The Front”.

    One MNB user disagreed:

    I don’t want my name printed, and in fact, you don’t even really need to print my comment if it doesn’t fit with your agenda, but “morons”? Why don’t you read the attached PDF file about Halaal before you go that far.  The people that require Halaal foods are fundamentally “anti” everything about you. They are the ones who should scare you. Think of that the next time you have a glass of wine... oh great Satan Coupe.

    First of all, I take great pride in post comments that don’t fit with my “agenda.”

    Second, I read your PDF, and other pieces about Halaal foods. You’re right. They are highly restrictive, and they are intolerant of many of the dietary practices that I embrace.

    I choose not to be so intolerant. I choose not to be “fundamentally anti-everything.”

    And I choose to believe that western civilization is supposed to reflect this greater openness. Does this mean that there will be cultural clashes? Of course. Recent history amply demonstrates that.

    But if we want to be better than that, we actually have to be better than that.

    MNB user Brendan Haslam wrote:

    I am not sure I agree that the protestor’s message is “not-so-veiled racism” as Islamic people are not a race by definition but a group of followers of a particular religion. With that said, I agree and enjoyed your overall point about these ‘moron’ protestors, and think I agree with your point of view on the ‘blocks away’ Ground Zero mosque as well.

    Regardless of what positive strides a society makes, as the history of time shows, there are always numbskulls that need to belong to something like this unfortunate ‘movement’ (which I believe brings the overall happiness level of these types of people upwards in a sick twisted manner).

    So, as not to be a total downer, I also believe these ‘moron’ people are but a minute fraction of the U.S. or Canadian societies and thankfully the world at large.

    I agree that it is a fraction. But there’s pretty good evidence out there that the fractions are multiplying.

    MNB user Elizabeth Archerd wrote:

    The objections to the soup line appears based on fear and ignorance - neither of which are good motives for behavior.

    Not racism, no. Islam is not a race, it is the faith of over one billion human beings of many races. In my own workplace the Muslims include people of Arabic, Berber, Somali and European ancestry.

    MNB user Jackie Lembke wrote:

    So how do these people feel about Kosher or vegetarian or any of the other thousand things that can be put on the label? Okay slight exaggeration, just an FYI the food served in some (don’t know about all) of our prisons also has to be certified Halal. Does that mean those states are supporting terrorism too?

    MNB user Marty Gillen wrote:

    Forget about Halal certified soups, I just found out that Campbell's has discontinued my all time favorite condensed soup: Pepper Pot.  I've been eating since I can remember and it is gone.  Can't believe it. Following is text from the warm & fuzzy e-mail I received from Campbell's when I inquired about availability of Pepper Pot  Soup:

    “Unfortunately, this product is not currently available. Tastes and preferences constantly change and there is only so much space on a supermarket shelf. Periodically, we look at the sales for our various products and are forced to make the difficult decision as to which products stay and which must be replaced.

    “Inquiries such as yours remind us that sales figures aren't the only measure of a product's value. Perhaps one day Campbell's Condensed Pepper Pot Soup will make its way back to your grocer's shelf.”

    Now that’s serious stuff! 🙂
    KC's View:

    Published on: October 11, 2010

    In Week Five of the National Football League regular season...

    Jacksonville Jaguars 36
    Buffalo Bills 26

    Denver Broncos 17
    Baltimore Ravens 31

    Kansas City Chiefs 9
    Indianapolis Colts 19

    St. Louis Rams 6
    Detroit Lions 44

    Green Bay Packers 13
    Washington Redskins 16

    Chicago Bears 23
    Carolina Panthers 6

    NY Giants 34
    Houston Texans 10

    Tampa Bay Buccaneers 24
    Cincinnati Bengals 21

    New Orleans Saints 20
    Arizona Cardinals 30

    Atlanta Falcons 20
    Cleveland Browns 10

    Tennessee Titans 34
    Dallas Cowboys 27

    San Diego Chargers 27
    Oakland Raiders 35

    Philadelphia Eagles 27
    San Francisco 49ers 24

    And in the Major League Baseball Divisional the American League, the Tampa Bay Rays are currently tied 2-2 with the Texas Rangers in the best-of-five series. They will play again Tuesday for the right to play the New York Yankees, who swept the Minnesota Twins over the weekend to move on to the AL Championship Series.

    Over the National League, the San Francisco Giants defeated the Atlanta Braves 3-2 yesterday, taking a 2-1 lead in the best-of-seven series. And the Philadelphia Phillies defeated the Cincinnati Reds 2-0 last night, sweeping their series 3-0 and moving on to the NL Championship Series.
    KC's View: