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 20, 2010

    by Kate McMahon

    Sometimes, it pays to think twice before you think outside of the box.

    Particularly if the box in question is the iconic Gap blue box logo. As reported here on MNB and elsewhere, the clothing retailer brought back its original logo last week after a torrent of online criticism of a new, updated logo unveiled on its gap.com e-commerce site. The fresh look was trashed on Facebook and Twitter, became a mainstream media story, and drew immediate comparisons to Tropicana’s disastrous logo/packaging redesign.

    “Ok, we’ve heard loud and clear that you don’t like the new logo,” the company wrote its 771,208 followers on its Facebook page after the ill-fated launch. “We’ve learned a lot from the feedback.”

    For Gap, and other retailers, the power and immediacy of social networking has ramped “feedback” up to a whole new level. Thanks to blogs, Facebook and other online forums, today’s consumers are increasingly emboldened – sort of a cyber-version of your opinionated Aunt Betty. The term “Twitter-storm” is part of our everyday jargon, and “mommy bloggers” wield power and influence from their laptops. On the internet, everyone is entitled to their opinion.

    From damning criticism to passion for the brand, recent postings on the Gap Facebook page are typical:

    • “Admit it, this was a marketing stunt, you were never serious about that horrible logo.”

    • “Connected Consumers 1; Gap Marketing 0.”

    • “I am very delighted. Now let’s go back shopping!”

    • “Why change something that works. How moronic.”

    • “Thank Gawd!”

    Prior to the retreat, Ad Age commissioned a poll to get consumer input on the logo hoopla. Of 1,000 people surveyed, only 17 percent were even aware that the logo had been changed online. But given an opportunity to weigh in, they certainly channeled opinionated Aunt Betty.

    More than 60 percent said they preferred the old logo – no surprise. What I found more interesting was that 52 percent said they expected prominent companies to ask for the public’s input before making a major change to its logo, packaging or product. That’s pretty bold, and indicative of today’s consumer.

    So here’s the challenge – how do companies encourage innovative thinking without fearing consumer backlash over any change? For Gap, the damage and cost was minimal, as the new logo was only online and had not yet been incorporated into its holiday campaign.

    For Tropicana, which rolled out a new design and packaging only to learn consumers were angry because they couldn’t find their favorite orange juice (I was one of them), the misstep was very costly. The same holds true for Sun Chips, which is jettisoning its eco-friendly packaging because consumers complained the biodegradable bags were way too noisy (they are).

    Clearly, an online focus group could help prevent a marketing debacle. Marka Hansen, president of Gap North America, acknowledged that the retailer "did not go about this in the right way. We recognize that we missed the opportunity to engage with the online community.”

    But she didn’t completely rule out thinking outside of the blue box. Said Hansen: "There may be a time to evolve our logo, but if and when that time comes, we'll handle it in a different way."

    Comments? Send me an email at kate@morningnewsbeat.com .
    KC's View:

    Published on: October 20, 2010

    There was an obituary the other day in the Washington Post for Carla Cohen, the co-owner of Politics and Prose, a celebrated and influential independent bookstore on Connecticut Avenue in the nation’s Capital.

    A former Carter Administration official who opened the store after she left the government in 1980 when Ronald Reagan was elected, Cohen wanted to have the kind of bookstore that she liked to shop in. Here’s how the Post described the store:

    “Politics and Prose distinguished itself as the purveyor of public affairs books, literary nonfiction and other genres not known for impressive sales figures. The collection has been embraced by a particularly Washington mix of customers: journalists, think-tankers and other book-hungry types drawn by the intersection of literature and big ideas.

    "’We don't have to carry anything that's just ordinary,’ said Mrs. Cohen, who often worked the phones and the cash register to keep tabs on what people were asking for. ‘We don't have a romance section.’

    “In an effort to remain afloat in a sea of Internet booksellers and big-box chains, the store has also become a sort of progressive community center. A basement coffee shop serves steaming lattes and hosts a regular open-mike session for local musicians. The store sponsors panel discussions and more than 100 book clubs.

    "’It's a place where books are not commodities - they're something else,’ said longtime Washington reporter Susan Stamberg. ‘You feel you're with like-minded people, people who share your passions and your interests.’

    “Perhaps most of all, the store has become known for its steady stream of author talks, which has given scads of local writers - Seymour Hersh, Judith Viorst and Jim Lehrer, among dozens more - a platform unlike any other to air their ideas and promote their books.”

    In other words, success doesn’t always come from being the biggest, or the most ubiquitous or the lowest priced on everything. It can come from not being ordinary, not being predictable, not being the purveyor of commodities - whether those commodities are products or ideas.

    It can come from being truly different.

    And that’s out Wednesday Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: October 20, 2010

    The Wall Street Journal reports that Supervalu, challenged by sales and market share declines, “plans a fresh round of price cuts” that it hopes will reverse what CEO Craig Herkert calls "unfavorable value perceptions" of some of chain's supermarket brands.

    According to the story, “Supervalu hopes to offset the impact to profit margins by squeezing out efficiencies and also getting suppliers to chip in on the price cuts, though the process will be painful ... Supervalu has taken a hit due to intense competition from rivals who are fighting for customers by lowering prices. Supervalu, which owns supermarket chains such as Albertsons and Shaw's, has tried to be more measured in spending on promotions and price cuts. The strategy helped grow margins in the quarter at the expense of sales and market share, which some analysts worry will be hard to win back.”

    “We must regain our relevance to customers,” said Herkert. “Our prices must be fair ... our stores must be simpler to shop.”

    The Supervalu stories come as the company reported a second quarter loss of $1.47 billion, compared to a profit of $74 million during the same period a year ago, a revenue decline of 8.5 percent to $8.66 billion, a same-store sales decrease of 6.4 percent, and a gross margin increase to 22.3 percent from 22.1 percent during the same period a year ago.
    KC's View:
    The thing is, consumers - the approval and enthusiasm of whom is the goal of any retail enterprise - don’t give a damn about profit margins. They care about price, and they care about the other differential advantages that retailers use to attract them into the store. The extent to which price and other factors are persuasive depends on the store, the brand argument and the community at which it is targeted. And so if Supervalu has been focused primarily on margins, that could explain why things are headed south.

    So, sure, a sharper price message probably is called for.

    But the company probably also needs to pay attention to the other stuff ... unless, of course, this further cements the feeling at Supervalu headquarters that the Save-A-Lot format and approach is the company’s future.

    If the latter is the case, then the question may be when Supervalu begins putting what it views as marginal formats and chains up for sale.

    Published on: October 20, 2010

    The New York Times reports that Consumer Reports has created an iPhone application that “provides the magazine’s ratings and reviews on more than 3,000 products, like home appliances, electronics, car accessories and power tools. The app also provides more basic information, including price and user reviews, on about 17,000 products.

    “The app’s main feature is a scanner that allows shoppers to take a photo of an item’s bar code with their iPhones and learn what Consumer Reports has said about that product.

    “When the app is able to match the bar code to its database, shoppers can find the Consumer Reports ‘Ratings Report Card,’ which gives an overview of the product’s strengths and weaknesses and lists its performance in a number of categories. If the app does not find an exact match to a bar code, it will list ratings for similar products.”

    The application costs $14.99, which is high for an app sold via iTunes. But, as the Times notes, Consumer Reports “more than most magazines has been able to command a premium for its online content,” and “is betting that its loyal readers will pay as much to gain access to its vast library of product reviews from their mobile phones.”
    KC's View:
    This is huge, in my view. And it speaks to the level of transparency of the modern marketplace.

    There is no more trusted objective consumer perspective than that of Consumer Reports. For all that information to be available at my fingertips anytime I am going shopping for virtually anything is an enormous asset, and $14.99 seems like a bargain ... especially because I know that the magazine doesn’t accept any advertising, which is a way of staying objective.

    Published on: October 20, 2010

    The Indianapolis Star reports that Ahold-owned Peapod is expanding from the 11 states where it currently does business into Indiana, where it plans to “deliver four days a week to Marion, Hamilton, Hendricks and Johnson counties.” There will be a $7.95 delivery charge for orders $100 and higher, and $9.95 for orders less than $100.

    The story notes that a number of online grocery services have failed to get traction in Indiana, but the suggestion is that they may have caught the wave too early ... and that Peapod’s timing may be better than that of those who came before.
    KC's View:
    Last time I checked, Walmart operates in Indiana. And it is planning to introduce online grocery shopping next year.

    Last time I checked, Amazon delivers to homes and businesses in Indiana, and it offers online grocery shopping. Same thing for Alice, another online grocery purveyor.

    And, last time I checked, there is a segment of the Indiana population young enough to prefer using online retailers to buy many other things, that will soon be the center of the target when it comes to supermarket retailers, and that will be completely comfortable with the notion of doing a portion of their supermarket shopping on the internet.

    Retailers not in the online space will find themselves at a competitive disadvantage. It’s that simple.

    Published on: October 20, 2010

    The National Retail Federation (NRF) says that it believes that “Americans will increase holiday-season spending by 1 percent this year as they shop less at discounters and focus more on quality and service,” according to a story from Bloomberg.

    According to the story, “ U.S. consumers plan to spend an average $688.87 on holiday-related shopping, more than last year’s estimated $681.83, according to a survey conducted for the National Retail Federation by BIGresearch. Of the total, $518.08 will be spent on gifts, up 2.1 percent from 2009, the survey showed.”

    It is, according to NRF president Matthew Shay, “a glimmer of hope.”
    KC's View:

    Published on: October 20, 2010

    The Chicago Tribune reports that Kraft Foods is using comedian Anita Renfroe - already something of an internet success because of a YouTube video in which she sings a series of cliched parental instructions to the theme of the William Tell Overture - in a web series that highlights the “challenges of motherhood such as finding time or sticking to a diet.”

    “Because the sketches are short, amusing and don't always mention the brand, Kraft hopes moms pass them along to friends on Facebook,” the writes.

    “Julie Fleischer, Kraft's director of consumer relationship marketing, content, strategy and integration, said the videos spring from a desire to ‘find other relevant and compelling conversations we can have with our customers’ that don't involve recipes. Fleischer acknowledged that ‘there's an extraordinarily fine line’ between entertainment and an ad.”
    KC's View:

    Published on: October 20, 2010

    Bloomberg reports that Walmart has agreed to pay a $775,000 fine to settle a New Jersey lawsuit accusing it of selling infant formula and non-prescription drugs after their expiration dates; the settlement does not require Walmart to admit liability.
    KC's View:

    Published on: October 20, 2010

    • The New Mexican reports that unionized employees of the New Mexico District of Smith's Food and Drug Centers, an affiliate of The Kroger Co., have unanimously approved a four-year contract with the United Food and Commercial Workers (UFCW). The agreement covers 2,000 workers employed at 26 stores and 11 fuel centers in New Mexico.

    • The Los Angeles Times reports that “San Francisco supervisors have decided to put off voting on a proposed ban on handing out promotional toys with fattening childrens' meals until after the state and national election campaigns are over.

    “The vote on the so-called Happy Meal ban will take place on Tuesday, Nov. 2 -- at a late-afternoon meeting on Election Day that will ensure that the measure is not considered until the campaigning ends and many voters have already gone to the polls. The vote originally was scheduled for today.”
    KC's View:

    Published on: October 20, 2010

    • Tom Bosley, best known for his portrayal of Howard Cunningham, the father on the highly successful series “Happy Days,” as well as the star of “Fiorello!” on Broadway in 1959, has passed away at age 83.
    KC's View:

    Published on: October 20, 2010

    ....will return.
    KC's View:

    Published on: October 20, 2010

    As the Major League Baseball League Championship series continued, the two favorites fell behind their opponents in their best-of-seven series.

    • In the National League, the San Francisco Giants beat the Philadelphia Phillies 3-0 to take a 2-1 series lead.

    • And in the American League, the Texas Rangers defeated the New York Yankees 10-3 to take a 3-1 series lead.
    KC's View: