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    Published on: October 28, 2010

    Now available on iTunes…

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    Hi, I’m Kevin Coupe, and this is MNB Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.

    I’m filing this commentary from Northern California, where I’ve been attending the California Olive Ranch Harvest Festival. Let’s get the formal and requisite full disclosure out of the way - California Olive Ranch is an MNB sponsor. What I want to talk about this morning is not designed to be a commercial for the company...though, to be honest, if it makes you check out their website and check into their products, I’m okay with that. But that’s not my goal here.

    In spending time learning about how the company’s Extra Virgin Olive Oils are made, and enjoying a couple of spectacular meals making use of their products, I could not help but recall one of the earliest lessons I got in food retailing when I started out writing about this business a quarter century ago. (Could it really be a quarter century? Yikes!)

    I was told that if I wanted to quickly determine what kind of demographic a store was targeting, one of the best places to go was the olive oil section. If there were dozens, it meant that the store was aiming to attract foodies with some money. If there were just a few, not so much.

    The thing is, this may be true in marketing terms. But it also may be completely wrong-headed.

    While I was going through the tasting process here, I thought about some of the most expansive olive oil sections that I’ve seen in supermarkets. And it occurred to me that when I go into those stores, and look at all that product, rarely if ever do I have any idea which ones are good and which ones are bad. I might know a couple of brands and some price points, but quality? Not really. I know enough that I want Extra Virgin Olive Oil, but there have been studies done indicating that a lot of the product labeled as Extra Virgin Olive Oil just ain’t living up to the billing. Yes, I know that the studies have been challenged by some and that they are a little controversial, but I think they are entirely credible.

    So we have a section in which choice seems plentiful but information seems minimal at best. (Actually, there are plenty of sections of the typical supermarket that could fit this description. But for the moment, for a number of reasons that will shortly become apparent, let’s stick with the olive oil department...)

    If a store really wanted to target foodies, or potential foodies, wouldn’t it make sense to a) provide specific descriptive information about the products on display, b) offer tastings whenever possible, and c) stock fewer products that offer a greater breadth of options and advantages, as opposed to just dumping a bunch of SKUs on the shelves and hope that consumers will make sense of the jumble?

    From a marketing perspective, I think this makes sense. Choice often is an illusion, hiding behind quantity when quality options really would be a lot more helpful, and maybe even better for the bottom line, as consumers would perceive that the retailer was acting on their behalf, defining specific differential advantages.

    Sure, it would take a lot more work on the part of retailers, who would in turn demand greater amounts of information and accountability from manufacturers.

    And now there could be good legal reasons to be smarter about what is sold in the olive oil department. From everything I am hearing, it is only a matter of time before some customer hires a lawyer to sue a retailer that sold a product labeled as Extra Virgin Olive Oil, but that does not measure up. That suit could turn into a class action. All sort of hungry lawyers will get involved, and the resultant litigation and press coverage will end up messy at best, and destructive to reputations at worst.

    It is all about developing an approach to marketing that does not rely on the cliched thinking of the past, like quantity adds up to quality. It is all about embracing transparency at every turn, because to do otherwise does not do your customers any favors, and could end up being a way to encourage lawsuits. It means harvesting fresh relationships with new and old suppliers, making clear that at least some of the old rules must be discarded so that a new reality can be created. And it means rethinking much of the center store, where there probably are more of these kinds of over-stocked but under-thought departments than we want to consider.

    I learned a lot about olive oil this week. I know a lot more about how to make choices than I used to. But in sampling oils and foods and trudging around an olive ranch - where, it should be noted, systems are being put in place that will make this kind of transparency possible, and foster a new kind of relationship with both retailers and consumers - I really got to thinking more about where food marketing may go in the future.

    The other revelation I had this week? That ice cream made with Extra Virgin Olive Oil is one of the best things I’ve tasted in my entire life.

    For MNB Radio, I’m Kevin Coupe.
    KC's View:

    Published on: October 28, 2010

    Go figure.

    The New York Times reports that last week, Sony Corp. “confirmed that it has ceased making tape-based Walkman players in Japan, where the first one debuted in 1979 ... Sony said that it would still be making Walkman products in China for Asian and other markets, including units that play CDs, minidiscs and MP3 files.”

    Now, this is surprising on several levels.

    One, it is almost impossible to imagine that anybody, anywhere is using a tape-based player. I cannot even remember the last time I saw one.

    Two, I cannot even remember the last time I saw a CD-based Walkman ... which makes it surprising that Sony is still making those.

    Which leads me to my third point. The story does note that Sony is making these Walkmen for “Asian and other markets.” Sometimes, it is good to be reminded that one’s American-centric view of the world is just that.

    A fourth point, and again, an unexpected one: “Sony says that it sold more than 400 million Walkman-branded products through this past March, and more than half that number were cassette-based models. A check of Sony’s United States product web site shows that it is still selling two cassette players, one a portable for $30, the other a boombox player at $50.” I guess it is also good to be reminded that while I live in a world of iPods, and occasionally whine because I haven’t got the latest and greatest Apple product, not everybody has the same technological advantages that I do.

    But, speaking of technological advantages...

    Here’s the other intriguing line from the Times story:

    “The late Akio Morita, one of Sony’s founders, believed in the late 70’s that the world would embrace a portable ‘personal’ stereo machine that used headphones. He was right.”

    True. But he also wasn’t right enough ... because Sony was unable to translate that insight into sustainable thought and market leadership in this segment. That’s a lesson that companies need to take to heart.

    A short piece from the Times ... but one that is eye-opening on a variety of levels.

    - Kevin Coupe
    KC's View:

    Published on: October 28, 2010

    The Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA) announced yesterday that they have “joined forces ... in the fight against obesity and announced their commitment to develop a new front-of-package nutrition labeling system.  The unprecedented consumer initiative will make it easier for busy consumers to make informed choices when they shop.

    “This program will add important nutrition information on calories and other nutrients to limit to the front of the packages of many of the country’s most popular food and beverage products.  To appeal to busy consumers, the information will be presented in a fact-based, simple and easy-to-use format.”

    FMI and GMA said that it will take a few months to finalize “the specifics of the initiative, including the technical and design elements.  In addition, details will be finalized on how to provide consumers with information on nutrients needed to build a ‘nutrient-dense’ diet and on ‘shortfall nutrients’ that are under-consumed in the diets of most Americans.”
    KC's View:
    Kudos to FMI and GMA for doing this.

    Anything that can be done to create a national standard that will allow people to access easy and usable information so they can make smart shopping decisions is a good idea. The one thing I hear consistently from many retailers is that as much as they would like to have a nutritional labeling system, they are concerned about the lack of a single format. So this should get a lot of buy-in. (Especially because it emerges from the private sector, avoiding dreaded “government interference.”)

    I’m fond of quoting Ric Jurgens, CEO of Hy-Vee and the current chairman of FMI, on this subject: his company has embraced nutritional labeling because he feels a personal and professional responsibility to help change the world by addressing the national obesity crisis. That’s not just good corporate citizenship, but smart marketing ... something that can be said about all the companies involved with this consumer-focused effort.

    Published on: October 28, 2010

    Forbes reports that Green Century Capital Management, described as “an investment advisory firm that administers the Green Century Funds, a family of environmentally responsible mutual funds,” has recognized Hain Celestial, ConAgra and H.J. Heinz for being pro-active about the elimination of bisphenol-A, also known as BPA, from their packaging.

    The recognition doesn’t mean that BPA - a compound found in many food containers that some studies suggest can have a negative impact on the health of children who consume food or drink from these containers - has been completely eliminated from their packages. The story notes that it only means that BPA has been eliminated from some of their packaging, while also committing to a concrete timeline for phasing out all the BPA.

    Here’s where the story gets interesting, as Forbes reports that “most of the companies Green Century graded were total flunkies. Coca-Cola, Del Monte, Kraft Foods, Unilever, Kroger, Safeway, Supervalu and Wal-Mart all scored F’s.” Whole Foods got the best grade of all retailers - a D+.

    “According to Green Century's report: ‘Most of these companies are exploring substitutes for BPA to some degree, but do not commit to phasing out the chemical, are not funding the exploration of substitutes and fail to sufficiently disclose information about how they are addressing consumer concern on the issue’.”
    KC's View:
    I may wish that these companies had been more aggressive in addressing the BPA issue, but I can hardly blame them for not knowing what to do, since the best I can tell, federal regulators have done their level best not to get off the fence on which they’ve been sitting on this issue. (Must get uncomfortable sitting on a fence for so long...)

    I am a little confused by the Walmart grade, though, since it was my impression from previous stories that I’d read that Walmart was ahead of the curve on the BPA issue.

    I do know this. What I’ve read on this issue - and I make no claim to being exhaustively educated - would be enough to make me worry about giving my kids food and beverages in containers made with BPA.

    Published on: October 28, 2010

    Crain’s Chicago Business reports that Walmart seems to be getting its Groupon.

    According to the story, “In a post on its Facebook page, the largest global retailer launched the deals app Crowdsaver, which unlocks a discount once enough consumers opt in -- much like the group deals phenomenon the start-up Groupon has made popular in recent months.

    “In less than 24 hours, Walmart reached the deal threshold of 5,000 ‘likes,’ which triggered a discount of 18% off a nearly $500 plasma TV with wall mount.”

    The Crain’s story goes on: “With this group buy-in model for local deals, Chicago-based Groupon has grown exponentially over the last year to more cities. Hinting that the service could also work for national businesses, Groupon launched what was arguably its highest-profile deal with Gap in August. The half-off coupon grossed $11 million, a sum that was shared between Groupon and the clothing retailer. At the time, the service said it added 500,000 users per week on average and hit 750,000 additions after the Gap promotion.”
    KC's View:

    Published on: October 28, 2010

    The Olympian reports that Haggen Inc., which operates both Haggen and Top Food and Drug stores in the Pacific Northwest, announced that it will no longer sell Four Loko and Joose alcoholic energy drinks, in part because of recent stories about how “nine Central Washington University students who were hospitalized after drinking Four Loko.”

    "After studying this issue for some time, we've seen consensus build among health experts and law-enforcement officials about the public safety risk posed by people consuming beverages with caffeine and above-average alcohol content," said spokeswoman Becky Skaggs.
    KC's View:
    I’m telling you, one of these days, these energy drinks are going to end up being found to be a major health nightmare. All the signs are there. Good for Haggen, getting ahead of the issue, especially because for them the story has local resonance.

    Published on: October 28, 2010

    Internet Retailer reports that Toys R Us is joining the march of retailers providing in-store pick-up services for products purchased from its website.

    According to the story, both Toys R Us and its Babies R Us division will promise consumers that they can “buy any of more than 7,500 items online and pick them up in 260 Babies ‘R’ Us and select Toys ‘R’ Us bricks-and-mortar stores in such major U.S. metropolitan areas as Boston, Chicago, Seattle and Washington, D.C. The retailer will guarantee that the products will be available within two hours ... Toysrus.com and Babiesrus.com will indicate on product pages whether a product is eligible for in-store pickup. After a consumer enters her ZIP code, the site will present the five nearest stores with the product in stock.”
    KC's View:
    I sense a bit of world-weary, “we’ve seen this all before” attitude coming from the folks at Internet Retailer. (And I approve. Most of us actually have seen this stuff before...the only question is whether we remember it.)

    The story notes that “in focusing on fast pickup, Toys R Us is following the lead of Circuit City, which offered a 24-minute guarantee before the retail chain went bankrupt, as well as Sears Holdings Corp.’s current five-minute guarantee.”

    We’ll see what kind of fulfillment Toys R Us is capable of. I do know this - I wish these kinds of services had been available back in the days when my kids were little and we used to shop in such places. Because I have to tell you, I viewed a trip to Toys R Us with roughly the same joy as I view visits to the proctologist.

    Published on: October 28, 2010

    • The New York Times reports that while it isn’t even November yet, a number of chains suffering from “tepid sales” are already starting to publicize “Black Friday” specials that normally would be reserved for the day after Thanksgiving, the traditional beginning of the end-of-year holiday shopping season.

    in fact, it isn’t just retailers like Walmart and Sears that are trying to reverse recent sales declines. In addition, retailers such as Amazon.com also are using the tactic - because they know they need to compete aggressively for the limited dollars that consumers have to spend this year.

    • The Washington Post reports that “average retail prices of beef have climbed from $4.18 per pound in July 2009 to $4.44 per pound last July, a change largely due to a tight supply of cattle.” Prices are expected to remain high for the foreseeable future, the story suggests, because “ranchers and feedlots have reduced supplies in response in large part due to rising prices of corn and soybeans fed to cattle.”

    In the long run, this could mean that other options - chicken, pork and fish - could pick up some market share in the short term, as US beef consumption lags because of economic concerns.

    • ShopRite announced that it is adding what it calls “relevant and credible health & wellness content and health widgets” to its website, designed to “inform shoppers of the latest health recommendations, provide shopping ideas, and recommend products for health and wellness goals.”

    The widget program was developed by Aisle 7.
    KC's View:

    Published on: October 28, 2010

    • It was announced this morning that Edwina Dunn and Clive Humby, founders of dunnhumby Ltd., are stepping down as chairman and CEO, though they will remain on the board as non-executive directors.Simon Hay, who spearheaded dunnhumbyUSA, is slated to succeed Dunn as chairman on March 1.

    The company said that Stuart Aitken will continue as CEO of dunnhumbyUSA.
    KC's View:

    Published on: October 28, 2010

    Yesterday, MNB took note of a Los Angeles Times report that a German company has patented a new process for what it calls “nocturnal milk” - a dairy product that comes from cows milked during the middle of the night, which it says contains more sleep-inducing melatonin than cows milked during the day. The company says it has the scientific evidence to back up its claims, but consumer watchdog groups - and the Content Guy - are skeptical.

    Which prompted this funny email from MNB user Jean Forney:

    Why does that sound so far fetched...doesn't chocolate milk come from brown cows? Maybe they'll find a way to bottle the special ingredient in Thanksgiving turkey that makes you fall asleep before the football game is over!

    You never know.

    But another MNB user thought differently:

    Actually, I can believe the story about the nocturnal milk from cows having more melatonin. When I was pregnant a year ago, I read an article stating that moms should mark any of their frozen breast milk with the date and the time it was pumped because it is naturally higher in the baby-version of caffeine in the morning, changing throughout the day until it becomes more like a warm cocoa by baby's bedtime.




    I also was a little ambivalent about a Bloomberg report that some economists are predicting that consumer purchases soon will start to increase in size and frequency; the feeling seems to be that despite an enduring unemployment rate of just under 10 percent, and an under-employment rate higher than that, there are at least some companies and business executives that can “smell a recovery coming.”

    I commented:

    Something smells, but I’m not sure it is a recovery. It’d be pretty to think so, but I think it is going to be a long, hard slog, and that it will take years for the employment and real estate markets to make a comeback.

    One MNB user responded:

    You are spot-on…and an interesting book that spells out the context in which you have made your supposition is “Aftershock,” by Robert B. Reich. His premise is, if the consumer cannot afford to buy our products..we begin a very dismal spiral…and the wealthy class with 30% GDP spending, and “other” (China) global consumers will not be enough to move us back to prosperity (defined as full employment and healthy consumerism). His book is a very interesting look at the middle class, and how far they have slipped in the last 40 years. By slipped, the book refers to the bifurcation of spending power between the wealthy and the middle class. It is well written and compelling…and a short read. One bottle of wine and you should be done with the book.

    I’ll order it up for my Kindle. Thanks.

    And MNB user Elizabeth Archerd chimed in:

    I would guess that modest increases in consumer spending have more to do with the simple fact that things wear out and need replacement, no matter how strapped the household is for cash. It's been two years since the crash and the purchases that were delayed may be happening now.

    That, any maybe people who have not lost jobs are finally exhaling. Fear of unemployment drives an urge to accumulate a nest egg. If they have one now and are realizing their jobs are not on the chopping block, they may be a little less worried about daily cash flow.





    MNB yesterday noted that GlaxoSmithKline has agreed to pay $750 million to settle criminal and civil complaints that the company for years knowingly sold contaminated baby ointment and an ineffective antidepressant.

    Which led one MNB user to write:

    Since the 750 million dollar fine caused only a yawn on Wall Street with the share value dropping a whopping .35% (yes .35%) I guess that the fine amount amounts to a pittance of the income earned...

    Until every penny of profit earned by negligent companies plus added damages is required, what stands in the way of top management gambling on getting away with such crappy ethics.  Oh, I guess if some CEO went to jail, that might help too.

    The egg fiasco...

    The organic milk fiasco...

    The Countrywide Mortgage fiasco...

    The list goes on...


    I’m with you on this one.




    It was reported yesterday that John Mills, the former CEO of Affiliated Foods Southwest, has been sentenced by a US District Court judge to 41 months in federal prison and ordered to pay $3.2 million in restitution.

    MNB user Bill White wrote:

    This is truly a sad case.  I worked with John Mills at Affiliated for a brief stint back in the mid-70's, when he was the controller, soon to be the CFO, and I was the Assistant Controller.  Amazingly, the Company had severe cash flow problems even back then, and were overdrawn at their bank more days than not.  The CFO at the time always tried to avoid the calls from the bank, which eventually went to John or me, but we weren't the ones they really wanted to talk to.  We discussed on numerous occasions the plight of the Company, and why the CFO wouldn't take their calls, or better yet, simply get a credit line set up to avoid the cash flow crunch times.

    At the time, they had the assets available to do so, but he chose instead to avoid discussions with the bank and pay the exorbitant overdraft fees.  John Mills was one of the most humble, honest, church-going men I had ever met, and the morality question of avoiding the banks and overdrawing each day really bothered him.

    That is why it is so amazing to me that he would be involved in such a check kiting scheme.  It never ceases to amaze me how the everyday pressures in business can drive some people to a life of crime.  One wonders why he didn't just file for a Chapter 11 bankruptcy instead of blatantly breaking the law, which could have potentially saved the Company and hundreds of jobs.

    Even the late Jerry Davis, John's predecessor, who some would say had questionable integrity, wasn't even that stupid!  Doc Toland, who built Affiliated Foods on a shoestring, is probably turning over in his grave.  I feel the worst for John's family, all innocent victims of his poor decision-making...





    Got the following email from MNB user Laura Musser, responding to our piece about ShopRite’s e-grocery operations:

    I am a loyal ShopRite customer and have tried several times to shop online for my groceries.  While the interface is simple and user friendly I always 'leave' without purchasing the items in my cart.

    What inevitable happens is that many of the items I want and know that my store carries are not available when I'm in the virtual store.  And since the whole purpose for me to shop online is to save time - I'm not going to stop online for 1/2 of my things only to have to go into the store and shop for the other half.  If ShopRite could get this right I'd be a very happy and very loyal ShopRite customer.

    PS - Love what you do. Always sparks discussion and conversation.


    Including, I’d guess, some conversation this morning at ShopRite.




    Got a bunch of email about the new tube-free toilet paper about to be marketed by Kimberly-Clark. Among them...

    One MNB user wrote:

    This is the kind of stuff I’m always glad to see you reporting on – innovation in unexpected places.  Toilet paper is often the butt of a lot of our jokes in terms of finding it interesting from a business perspective.  But this will likely be a nitrous oxide injection to the sales engine for Kimberly-Clark.  And it meets the holy trinity of new product development these days – innovative, sustainable, and (presumably) cost-reducing.

    Butt of jokes? Very funny.

    Another MNB user wrote:

    I agree - a great idea.

    The losers of course are the millions of pet gerbils, hamsters, mice, etc that wont have the tubes to chew on any more! Wanna bet that if these go away - folks like Petco will start selling the tubes?


    Nope.




    We took note yesterday of a New York Times report that Lost Abbey, a division of the California-based Port Brewing Company, has bowed to pressure from a special interest group offended by its portrayal of witches as being burned at the stake on the label of its Witch’s Wit pale ale. Spearheading the protests - Vicki Noble, described by the Times as “famous in the pagan and Wiccan communities for her astrology readings, shamanic healing and writings about goddess spirituality.”

    And so, because I couldn’t resist, I suggested that an alternate label could show a witch standing on the steps of the US Senate?

    Now, I got a lot of email on this one. Most of it, to be honest, suggested that I got the legislative body wrong - that I should have said the US House of Representatives. Some folks came right out and said, while others just implied, that the “witch” I should have been referring to was Nancy Pelosi.

    Now, some of you realized that I was actually referring to the only person that I know of who a) has admitted on national television that she experimented with witchcraft when she was young, and b) is running for the US Senate.

    Listen, we all have youthful indiscretions that probably would be better off not seeing the light of day. And I generally feel that people ought to be judged on the stuff they say and do as adults, not on that other stuff. I even apply that to this particular Senate candidate - she ought to be judged on what she says and does and knows.

    But I also think that once you’ve admitted this stuff, you have to be willing to put up with some gentle teasing on the subject. At least one MNB user seemed to agree with me on that:

    So I'm sure you'll get a lot of flack about your slanted liberal view for putting up your comment about a witch on the Senate steps, but I just had to tell you that it's the funniest thing I've read today.

    Of course it'd probably be more amusing if it wasn't based partially in truth.


    BTW...I also generally feel that companies should be sensitive to not hurting people’s feelings with insensitive ad campaigns, products labels, and the like.

    But in this case, I think that Lost Abbey has made a mistake. Last I checked - unless someone has rewritten the history books - the burning at the stake of witches is a historical fact. And they should have made that defense, and run the risk that the witches community in the US is not so large that it could have an enormous impact on sales.

    Then again, maybe management was simply afraid of being turned into toads.




    Finally, I like what MNB user Lance Hollis McMillan had to say about the designated hitter rule:

    A pitcher who steps on the mound and to the plate is an honest pitcher indeed. End of debate.

    Agreed.

    I cannot, however, agree with this sacrilegious statement from MNB user Bill Jensen:

    Kevin, don't worry about your comment about the Giants. It was baseball, and not really a major sport anymore. In fact, if you need more sleep, just watch...some baseball!

    No way.

    I’ll repeat the line from the late, great Robert B. Parker:

    “Baseball is the most important thing that doesn’t matter.”
    KC's View:

    Published on: October 28, 2010

    In the first game of the 2010 Major League Baseball World Series, the expected pitchers duel between Tim Lincecum and Cliff Lee never developed, as the San Francisco Giants held on to defeat the Texas Rangers 11-7.

    The Giants take a 1-0 lead in the best-of-seven series.
    KC's View: