retail news in context, analysis with attitude

Published on: November 3, 2010

by Kate McMahon

Play it sweet, old-fashioned and hard-to-get.

What reads like a page from a 1950s sorority dating primer is spelling success for Pepsi Throwback.

It also points to the power of online consumer lobbying, the continuing debate over sugar vs. high fructose corn syrup (HFCS) as a preferred sweetener, and the appeal of nostalgia and “limited time only” offers.

PepsiCo introduced Pepsi Throwback, which is made with “real sugar” as opposed to the HFCS in regular Pepsi, for a limited release in December 2009. It was reintroduced this summer, and will be back again on the shelves again next year, eliciting a thumbs-up from enthusiastic bloggers, Twitterers and some 20,000 fans on three separate Facebook pages.

After the New Coke misstep, the notion of tinkering with a soft drink formula would seem like brand suicide. But Pepsi Throwback appears to have captured a new following without cannibalizing the signature Pepsi product. PepsiCo said the “groundswell” of support for Throwback with limited marketing was bringing new consumers to the carbonated beverage category. The sales numbers support that claim.

And it has certainly fueled the online Pepsi vs. Coke feud and arguments about which is the better sweetener.

Here are typical postings on consumer blogs:

“This makes me SOOO happy. I don't know about the rest of the world, but I know I can taste a difference, and when I found it I stocked up on Throwbacks.”

“For the first time in 30 years, I’m buying Pepsi, not Coke. I'm not a Pepsi fan, but the sugared Pepsi is far better than HFCS Coke is.”

This being the internet, the dissidents weighed in between breathless postings of Pepsi Throwback availability:

“This is NOT the old recipe, and it is NOT even the recipe from last year's Pepsi Throwback. What gives?”

Is there a taste difference between sugar and HFCS? Well, here’s the headline in the blog The Consumerist:

“AIN'T LIFE SWEET? Pepsi Has The Balls To Say What Coke Won't: HFCS Doesn't Taste Exactly The Same As Sugar”

The Consumerist quoted a Coca-Cola spokesperson who said there was “no perceptible taste difference” between Coke made with HFCS or the hard-to-find Mexican Coke made with sugar.

Pepsi, however, told The Consumerist that there was a taste difference, which some folks discern and others do not. “Some consumers prefer sucrose for taste reasons, others for nostalgia reasons or because they think of it as a more natural sweetener option.”

PepsiCo has also decided to extend the run of the sugar-laced Mountain Dew Throwback. Elsewhere, the debate over the health implications of HFCS vs. sugar continues, as products ranging from Heinz ketchup to Gatorade and some Sara Lee breads are offering versions with sugar instead of the corn-based sweetener.

I think it’s a safe bet that soda drinkers are more focused on taste than sugar metabolism rates on this front. PepsiCo’s attempt at a healthy soft drink, a higher-priced Pepsi Natural made with sugar, natural caramel and a kola nut extract, fell as flat as day old soda in the hot sun.

The clamor from consumers is clear … they want choices and they’ll make their demands heard online. The challenge for producers is more complicated … delivering choices without driving up costs or cluttering the grocery shelves.

Good luck with that.

Comments? Send me an email at kate@morningnewsbeat.com .

Published on: November 3, 2010

A decidedly non-partisan thought from yesterday’s mid-term elections...

On MSNBC, political commentator Patrick J. Buchanan likes to say that at least part of the problem faced by President Barack Obama stemmed from the appearance that “there is a lot of faculty lounge” in how he talks - he seems to be analyzing the US population from afar, as opposed to being part of it, as opposed to really “getting” what people need and want and feel and think.

And Peggy Noonan, of the Wall Street Journal, argued on “Morning Joe” a few hours ago that leaders of both parties need to recalibrate their thinking, to reconnect with the grassroots of their parties.

That may be part of what happened last night (though the election results certainly reflect a more complicated reality).

But Buchanan’s analysis certainly can apply to business, not just politicians.

Retailers need to always be sure not just to be connected to what’s really happening in their stores, and in the neighborhoods and communities served by their companies; in a highly competitive environment, they have to be part of those communities in a fundamental way.

In football terms, as well as political terms, that means having a good ground game. It means not just having a strategy, but supportive tactics and fundamental connections - and making sure that you serve the people every day.

Also on “Morning Joe,” commentator Mike Barnicle used a baseball metaphor - saying that US citizens have adopted a “free agency” approach to voting. They hire senators and representatives, and expect them to perform, and if they don’t, the next time around, they’ll hire someone else.

Same thing goes for how they choose retailers. Especially these days.

And that’s my Wednesday Eye-Opener.

- Kevin Coupe

Published on: November 3, 2010

Drug Store News reports that a new study, published in Health Affairs, suggests that in-store retail health clinics are saving patients between $279 and $460 per visit, compared to emergency room visits, and have the potential of saving people as much as $4.4 billion a year.

According to the story, “The Health Affairs article looked at data provided by retail clinics and urgent care centers in 2007 and compared it with emergency department visit data in 2006. The researchers used a list of health conditions that commonly are treated at retail clinics and urgent care facilities to determine the number of visits that could have been treated at alternative sites.”

The research, to be fair, was funded by Walgreens and its Take Care Health Systems division.

Published on: November 3, 2010

Having failed to sell the company several years ago, North Carolina-based Fresh Markets is looking to launch an initial public offering (IPO) that will help it fund growth from its current fleet of 100 stores to as many as 500 stores nationwide.

According to Investors Business Daily, Fresh Market’s family ownership is positioning itself as taking advantage of the same public mood that has allowed Whole Foods to grow despite the recessionary environment; though the growth plan also places the company directly into competition with the likes of Safeway, Kroger and Trader Joe’s.

The positives, as reported by Investors Business Daily: The stores feature “a European-style neighborhood grocer” that averages “21,000 square feet, the stores are about half the size of a typical U.S. supermarket. The chain says it offers more customer attention than a typical grocer. It focuses on perishable goods, which provide about two-thirds of sales, and says the freshness and quality of these goods differentiates Fresh Markets from other stores.”

The challenges: “Because of its emphasis on customer service, hiring and training the right personnel will be a key challenge. It also depends on word-of-mouth more than advertising, so any bad customer experiences could go viral.

“The expansion will take the company out of its home base and into unfamiliar markets. (Currently, Fresh Market operates 100 locations in 20 states, with nearly a quarter of them in Florida.) It will face new local economies and new regional competitors as it grows. Fresh Market's long-term debt totals about $94 million. It says it may incur more debt in the future to fund its expansion.”

Published on: November 3, 2010

The Grocery Manufacturers Association (GMA) announced that Dollar General Corporation, The Kroger Company, and CVS are the winners of its inaugural Retail Honors awards.  The companies were selected as winners by their manufacturer trading partners and will be honored in three distinct categories:  Retailer of the Year (Dollar General), Most Innovative Retailer (CVS/pharmacy) and Most Collaborative Retailer (Kroger).

“On behalf of our members, GMA is pleased to recognize those retail partners that have gone above and beyond to help create growth, customer loyalty and innovation in the marketplace,” said Denny Belcastro, GMA executive vice president of industry affairs and member services.  “Trading partner collaboration has never been more important given the current economic climate and these companies are leading the way by developing collective solutions that drive efficiency and growth.”

The Retail Honors program was established this year to provide an opportunity for GMA member companies to recognize their trading partners for sustained excellence in performance, collaboration and innovation.

Published on: November 3, 2010

USA Today reports that while about 50 percent of the nation’s elementary school children had access to “high-fat milk, sodas, sports drinks and fruit drinks” in school cafeterias, snack bars and vending machines, a new study from the Archives of Pediatrics & Adolescent Medicine; the same study indicates that only 16 percent of schoolchildren had access during that year to the water, 100% fruit or vegetable juice, non-fat or 1% milk that the Institute of Medicine recommends that kids should drink.

The study covered 2008-2009.

According to the story, “since the new study was done, bottlers have greatly reduced the shipment of high-calorie drinks (they don't usually supply milk) to schools, says Rob Wescott, a consultant for the American Beverage Association. The biggest drop has occurred in the past 12 months, he says.”

Margo Wootan, of the Center for Science in the Public Interest (CSPI), tells USA Today, “There has been improvement, but no school should have sugary drinks and high-fat milk.”

Published on: November 3, 2010

There is a wonderfully evocative piece in Food & Wine about Bi-Rite Market, in San Francisco’s Mission District, which has been transformed by owner Sam Mogannam, who bought it 13 years ago, “from a neighborhood convenience store into what is arguably America's most ambitious grocery.

“Bi-Rite embodies everything a food lover could hope for in a shop. It's one of the first markets in the country to grow some of its own organic produce: Sam plants herbs and Meyer lemons on the roof of the store alongside beehives for honey, and he raises heirloom vegetables on his farm in Sonoma (pastured eggs and grass-fed steer are in the works). Bi-Rite's butchers bring in whole heritage hogs each week to make bacon and salumi. The market is so highly regarded that Sam is working on a cookbook about the best way to shop at a grocery store, to be published next fall.

“Sam and his pastry-chef wife, Anne Walker, also own Bi-Rite Creamery across the street, turning local Straus Family Creamery products into amazing ice creams in flavors like honey-lavender, balsamic-strawberry and salted caramel. Down the street, they opened 18 Reasons, an event space where they hold gallery exhibitions, butchering classes and artisanal cheese–release parties.”

Published on: November 3, 2010

There is an interesting piece on Slate.com by Noreen Malone about a relatively new category of “relaxation beverages,” which essentially are the opposite of energy drinks - that are designed to help people relax and sleep, especially during a time of great political, cultural and economic anxiety.

The products tested - and the author emphasizes that this was an anecdotal, not scientific experiment - include everything from something called iChill (which is being marketed as a downer version of Five Hour Energy, and left the writer “drained and ineffective), Slow Cow (which seemed to have little effect), and Mary Jane (which is coyly marketed as having similar results as smoking marijuana).

And here’s how Malone summed up the experience:

“I doubt I'll try any of these beverages again. (If I were in desperate need of a quick sleep at an unusual time, I might reach for iChill, but I wouldn't feel good about it.) The whole situation—drinking a beverage I didn't enjoy that became the whole focus of my night, constantly monitoring myself for any signs of a change in wakefulness or mood ... I probably did sleep more readily than usual throughout the whole test, but I'm convinced that's perhaps 10 percent the beverages, 30 percent the placebo effect, and 60 percent because this experiment forced me into a routine—something sleep experts always recommend.

“The real problem with these beverages is that they're unregulated by the FDA, which makes me uneasy—and anxiety is the very reason I reached for ‘relaxation drinks’ in the first place.”

Published on: November 3, 2010

The Los Angeles Times reports that the San Francisco Board of Supervisors has voted - by a veto-proof margin - to ban the sale of kids’ meals that contain a toy as well as exceeding certain levels of calories, sugar and fat. In essence, the ban covers the sale of McDonald’s Happy Meals as they currently are constituted.

Observers said that McDonald’s - and other chains offering similar inducements to children - would have no choice but to reformulate their meals, charge separately for the toys, or just eliminate them completely.

McDonald’s responded to the ban by saying that the city is out of step with the American mainstream.

Published on: November 3, 2010

• ShopRite said this morning that it has “integrated Facebook’s ‘like’ button to bridge social media and online grocery shopping,” making it the “first retailer in the country to deploy Facebook’s like button on grocery products.”

According to the announcement, it works like this: “When consumers use ShopRite’s online grocery interface, called ShopRite from Home, they’ll see a ‘like’ button next to every product in the online store. Once a shopper clicks the ‘like’ button, the product will appear on the consumer’s Facebook wall. When that consumer’s Facebook friends see the link on the wall and click on it, they’ll be taken to ShopRite from Home where they can order the product instantly from their closest ShopRite store and have it ready for pick-up or delivery.”

The Facebook connection was developed for ShopRite by MyWebGrocer, which said that its goal “is to develop ever-deeper connections between consumers and retailers in the digital space, and Facebook’s ‘like’ button is the latest step in those continuing efforts.”

Full disclosure: MyWebGrocer is a longtime and valued MorningNewsBeat sponsor. For which we are grateful. As well as thrilled ... since its approach to extending connections is directly in synch with the MNB approach to life and business.

Published on: November 3, 2010

• The Wall Street Journal reports that “the U.S. Department of Agriculture unveiled Tuesday controversial plans to again approve genetically modified sugar beets in time for planting next year, a move that would nullify a federal court ruling in August that invalidated the original approval issued by the USDA five years ago.

“The USDA's proposal, published Tuesday, represents the preliminary stage of the process and will be followed by a 30-day comment period before the department makes a final decision. The USDA laid out three possible options in the proposal, including an option not to re approve the sugar beets, but said its preferred course of action would be to ‘authorize the commercial production’ of genetically modified sugar beets under strict regulations.

“The USDA remains in a legal battle with groups seeking to halt all production and planting of genetically modified sugar beets because of concerns that the plants contaminate nearby nonbiotech crops.”

• The Great Atlantic & Pacific Tea Co. (A&P) said yesterday that it has completed its sale of seven store locations in northern Connecticut to Big Y Foods, which it calls “part of a comprehensive turnaround strategy initially announced by the company in late July.”

Published on: November 3, 2010

MNB took note yesterday of a Washington Post report that if Republicans recapture control of the US Congress as a result of the mid-term elections (which they did in the US House of Representatives), they plan to deliver retribution to companies that have cooperated with the Obama administration. Specifically mentioned: Walmart.

I commented:

If the GOP actually pursues this strategy, then its control of Congress is likely to be short-lived...because this is precisely the crap that Americans will be rejecting by voting against the Democrats, who are perceived as having been arrogant and anti-compromise when they took control.

All this does is add to the incivility and insanity.

Walmart, and a lot of other companies, engaged with the Democrats because a) it would have been irresponsible not to, and b) because it is better to engage and influence than to be so rigid that nothing gets accomplished.

As much as this election cycle may be a repudiation of Democrats, it also is a repudiation of how politics is practiced in general. Politicians who focus on politics - as opposed to governance and the serious business of legislating and compromising - do so at their own peril.

MNB user Jim Keuth disagreed with my assessment. His email:

That is your view, which in my opinion is completely wrong. If you think small business like to pay more taxes or have a new health care tax, then you truly our out of touch with small businesses. American’s are making this change, not because it’s mid-term elections, but because Obama’s policies are not working.

What part of 10% unemployment don’t you understand? What part of a health care plan, that most Americans didn’t want, but he still rammed down our throats don’t you understand? How many small businesses are failing because of Obama’s policies? How many businesses want to invest their company’s money with new taxes coming? If you truly believe that the Republicans are arrogant you truly a loser because you don’t get it. I know one thing, I won’t read this “crap” you right anymore.

Well, that’s why I call it “KC’s View.”

You certainly are entitled to your opinion, and to express it. And not to read MNB if you choose not to.

Though I would argue that we all are better off when we read, watch and listen to not just the people with whom we agree, but with whom we disagree or who challenge our opinions and beliefs.

Another MNB user wrote:

I think you hit it, for those pols that don’t do what’s best for the country better start sending out resumes now to avoid the rush. The we won/you lost attitude is going to continue to be punished until we get a whole new crowd up there that are going to do the people’s work.  A good first step is to ban all earmarks forget the pork.

You’d think that banning all earmarks would be low hanging fruit.

Another MNB user wrote:

Absolutely agree!  The day we let politics run the way we run our businesses, we lose all freedom – including the freedom to vote without punishment.  I can only hope that the incoming GOP see the mistake this is.

MNB user Geoff Harper wrote:

We are all fed up with government and politics.  But this election is likely to be a reminder of a wonderful truth:  The System Works!

Not that all the things we are fed up with will get fixed.  But there are very few countries in the world where the people can kick the bums out.

I assume you are using the “throw the bums out” in a colloquial way.

But here’s what I view as an important step.

Don’t assume that the people with whom you disagree are “bums.” (Or “rednecks.” Or “fascists.” Or “socialists.” Or not patriots.)

MNB user Scott J. Proch questioned the whole premise:

As they say on Monday night… Come On MAN!!  Do you really believe articles like this?

A very predictable election day article from a publication like the Post.

I absolutely believe this story. There is no doubt in my mind of its veracity, because it seems completely in synch with the political tenor of our times. (And, it happens to match up with concerns that I’ve heard from various people and companies. Just because the story was in the Washington Post doesn’t mean that it isn’t so.)




MNB user Jim Perko responded to Michael Sansolo’s piece about taking a blind relative shopping, and what that revealed about the food shopping experience:

A Saint for what you did! 30 years ago I would bring my grandma shopping.  Northern Minnesota and with a new driver’s license – my dad gave me the car – to take his mom shopping.

She wasn’t blind, but asked me a lot of questions.  She had coupons from various stores and literally went back and forth to various stores to price compare.

The trip would take 7-8 hours.  The stores were 10 miles from her home, but all about a mile to mile and a half away from each other.

The agonizing feeling I had after the novelty of it all wore off comes back to me. But so does the fact that I bet I was a breath of fresh air to her - - my dad I am sure pushed her along.

I couldn’t help but feel that your relative appreciated your willingness to assist her and I bet she told all her friends the neat things you did!

I will go back and read your article - - - I day dreamed through the first read.

It made me feel good!




On the subject of the World series, I got the following email from a Texas MNB user:

It was the Giants year. They played great! Very proud of Rangers for getting to the World Series and beating the evil empire in ALCS.

I love any team that beats the Yankees.

And I agree with you about the Giants. It was destiny.



Had a story yesterday about a Dunkin’ Donuts that is rounding sales up and down, trying to eliminate the use of pennies, which strikes me as a common sense move, especially because it costs 1.7 cents to make a penny.

MNB user Joyce Mann wrote:

We lived in The Netherlands more than 20 years ago.  They calculate to the penny on their cash registers, but handle change in nickel increments by rounding up or down as needed.  It's a great system, and I heartily recommend it.

Another MNB user wrote:

The penny is not used at all here in the Netherlands and, although I felt robbed the first time I didn't get my 2 cents, everyone thinks it is a good thing.  Sometimes you are up and sometimes you are down, but on average all of the rounding works out in the end.

MNB user Deborah J. Maestu wrote:

Interesting concept - is it really because the penny costs too much to make or are we suffering from clerks who have a hard time counting out change?

Especially in the current economic climate with people living paycheck to paycheck, sometimes not making it to the next paycheck, there are probably a lot of consumers out there who sometimes have to count those pennies towards the end of the week to, say, get a gallon of gas or bus fare to get to work.  Sure, it will work out for them the times that the change gets rounded up, but its a definite problem when the change gets rounded down.

Will stores stop pricing things at $1.99, 2.99, etc.....will Uncle Sam go along with the concept and round taxes down (most likely up)?

I prefer exact change, thank you.

And MNB user Michael Freese wrote:

This Dunkin' is assuming it's employees can actually round up and down in giving change!!!

Go to any typical fast food establishment and give them 3 dollar bills and 2 extra pennies when the bill is $2.52. See how long it takes them to figure out your change.




In reporting yesterday about an Advertising Age story that Walmart seems to relying on Justin Bieber to help in its sales rebound, I joked:

I know this is the best way to show my age, but here’s my question.

What the hell is a Justin Bieber?

I know I can Google him, or check him out on Wikipedia. But I just don’t want to.

Just from the Ad Age piece, I gather he is a 16 year old male teen idol who is selling nail polish and a fragrance. Which is already too much information.

Man, did this prompt some emails...

MNB user Gerry Howatt wrote:

I thought you always preach that if you don’t stay up on the times, you’re bound to be behind them.

Sure, throw my words back at me.

MNB user Michael Schillo wrote:

You will get slammed by many on this, but how do you claim relevance in the business and not know who Justin Beiber is.

Really?

Part of a retailer’s success is being able to stay on top of current trends and react to them.  This would apply to you also.  Your comment “What the hell is a Justin Bieber” makes you sound like an cantankerous old coot who takes pride in not keeping up with the “young’ins”.

Come on Kevin.  Keep up with the times and perhaps less Jimmy Buffett and more topical artists.

You don’t have to like him, listen to him or even buy him…but at the very least you should know who he is.

Okay, let me be entirely clear about this.

I was indulging in a little hyperbole. Having a bit of fun. Making fun of my rapidly advancing age.

I’d heard Bieber’s name before, knew he was a singer, knew there was some sort of deal about his hair, and knew that he seems to be the current version of David Cassidy, Davy Jones or Bobby Sherman. (Boy, do those names date me...)

Here’s the deal, though.

I know nothing else about Justin Bieber. And I think I can be current without being immersed in the minutiae of the celebrity du jour. (And there are so, so many of them.)

I also know this.

Don’t pick on Jimmy Buffett.

One MNB user wrote:

Don’t feel bad Kevin.  I asked the same Bieber question myself a few months ago (I think he was coming to Green Bay or something) and people looked at me like I was Rip Van Wrinkles and just woke up after a 100 year nap.  I’m not sure exactly how he became so famous so fast.  He must have one heck of an agent.  There was also a UTube video of a little girl in love with him that got a lot of publicity.  Let’s hope he doesn’t end up in the same rehab camp as Lohan.

Another MNB user wrote:

Thank you for making me laugh out loud on an otherwise difficult day. I thought my granddaughter (age 10) was listening to a little girl sing and it turned out to be Justin B. Apparently his mom was posting YouTube videos of the little hottie singing popular songs and the right person saw him and turned him into a big star. Meanwhile, the rest of us just keep plugging away ...

MNB user Jeff Sandgren wrote:

Jenny McCoy, Social Media Manager at MTV News, recently told us that their BIGGEST day on the social media scene was when Justin retweeted one of her tweets.  I don’t understand rocket fuel, either; but I know that when you hit it, you launch.  Forget WWWMD, the mantra du jour is WWJBD?

Maybe I can get him to endorse MNB...

Though, to be honest, I’d rather have Buffett.