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    Published on: November 10, 2010

    The technology blog ReadWriteWeb.com has an interesting piece about what it calls “the internet of things,” in which “objects in the real world are connected to the Web.”

    A prime example of this, it says, is the food industry, and the tangible advantages that technology can provide to products that use technology to be more transparent. Here’s the question that ReadWriteWeb.com poses:

    Given the choice of two similar food products, but one has more data about how safe it is - as a consumer, which would you choose? That's an opportunity for food companies to gain an advantage over their competition.

    And, the blog goes on:

    The back story of a particular food item is valuable to consumers, too, for reasons such as managing health to being able to make moral or ethical judgments ... As a diabetic (type 1), I'm more careful than most people about what I eat. So I can't wait for the day when I'll be able to scan a food item with my smart phone and find out if it's a healthier option for me than a competing product.

    Here’s the eye-opener:

    This is a huge opportunity for the food industry. Compete on the quality of the data you provide; and win.

    In other words, it is not just about the product. It is about the narrative that goes with the product, which for many people will be as important as the item itself.

    And that’s our Wednesday Eye-Opener, with a tip of the hat to ReadWriteWeb.com.

    - Kevin Coupe
    KC's View:

    Published on: November 10, 2010

    The New York Times reports this morning that it isn’t just the likes of Walmart and Target that are looking at small stores as the next big retail trend.

    Indeed, the story suggests that a number of companies - from department stores like Bloomingdales to specialty stores like Nike and Charlotte Russe - are “among a growing number of retailers thinking small — chopping off big chunks of stores or moving to more efficient spaces. The change reflects two trends in the retail world: Chains looking for new ways to cut costs in the sour economy, and consumers demanding a less sprawling shopping experience as they spend with greater purpose ... The smaller stores help clean retailers’ balance sheets. Rents drop, and smaller amounts of inventory cost less. Retailers can also reduce payroll costs because fewer employees are needed.”

    “The customer walks in the door, and often sees a huge selection of stuff in a multibrand store, and can’t figure out what to buy and ends up buying nothing,” Paco Underhill, founder/CEO of Envirosell, tells the Times. “We have reached the apogee of the big box, meaning that we can’t grow the store or the shopping mall any bigger, or get any more time or money out of somebody’s pockets.”
    KC's View:
    All of which makes sense. Until it doesn’t anymore.

    The most important thing to keep in mind about these kinds of trend declarations is that everything changes. Constantly. Nothing is forever.

    So small is in for the moment, and the moment could last a long time or be short-lived. But that doesn’t mean you don’t try to cash in on and exploit the trend. It just means you have to be nimble and open-minded enough to feel the shifts happen before they actually do.

    Published on: November 10, 2010

    Marketing Daily reports on a new trends analysis published by Mintel, in which it looks at the issues that it believes will influence “product development and marketing strategies in 2011.”

    One of the major shifts, the study suggests, will be a switch to overt - as opposed to covert - marketing of formulation changes that are made because of obesity and nutrition issues, though Mintel notes that “ overt marketing of formulation changes will continue to depend on the ingredient and the geographic region.”

    The study predicts that because more than four out of 10 consumers believe that high fructose corn syrup (HFCS) contributes to the nation’s obesity epidemic, it is likely that HFCS-free will become a major labeling attribute for many manufacturers.

    Among the other trends likely to be seen in the coming year, according to Mintel:

    • Marketing professional, or professional-strength products to amateurs for at-home usage.

    • Simplicity will rule. The easier to understand and prepare, the better.

    • “Econo-chic.” Luxury will be in demand again, but only in selected categories, as people look for affordable treats that will make up for other cutbacks and appeal to their aspirational desires.

    • Instant gratification. People will continue to look for magic foods, beverages, pills, creams or whatever...as long as they think that these items will have an immediate impact on their physical, spiritual or economic well-being.

    • Sustainability...as long as it doesn’t cost more. People want to be green, but they don’t want to spend a lot of green getting there.
    KC's View:
    When you look at all these trends, what they all seem to have in common is a belief in the consumer desire for authenticity ... or at least the perception of authenticity (which, if you can fake it, can be a powerful marketing weapon).

    But I think you also could say that they reflect a continuing willingness on the part of the consumer to kid him or herself. Self-delusion (which is sort of the same as faked authenticity) is a pervasive trait in 2010 America. People want to kid themselves that they need professional products even if they are rank amateurs, they want simple solutions to complex problems, they want instant gratification even if they know in their hearts it cannot last, and they want to claim to be environmentally minded even if they’re not willing to sacrifice to get there.

    Published on: November 10, 2010

    The Chicago Tribune reports that Target Corp. has “issued a new store policy that requires cashiers to temporarily hand-process customer coupons, following media reports that the discounter was shortchanging its customers nationwide. It promised a permanent fix within 10 days.”

    According to the story, cashiers at the company’s 1,750 stores have been instructed to hand process coupons one-by-one to make sure that the full value of each coupon is properly credited.
    The Tribune writes that Target “for months has been crediting customers for only a fraction of the face value of certain manufacturer coupons. One of the biggest problems involved coupons that require purchasing multiple items.”

    Target has blamed its scanners for the mistake.
    KC's View:

    Published on: November 10, 2010

    The BBC reports that Marc Bolland, the new CEO at Marks & Spencer, has pledged to grow the company through the opening of new stores and franchises outside the UK, while streamlining the product offerings currently in stores.

    According to the story, “In food, the aim is to become a ‘specialist high-quality retailer’. Key changes will include cutting the range of non-M&S branded foodstuffs - only recently introduced to the stores - from 400 lines to 100.

    “These would mainly consist of products which the company itself could not replicate - such as Marmite.

    “Mr Bolland said he would be adding another 100 ‘distinctive international brands’ which would be exclusive to M&S.”
    KC's View:

    Published on: November 10, 2010

    The 2010 edition of the Customer and Channel Management (CCM) Survey is out from The Nielsen Company, McKinsey and Company, and the Grocery Manufacturers Association (GMA), reporting that manufacturer/supplier companies that “made the right bets for growth, built better capabilities, and collaborated more effectively with their top retail customers” were able to emerge from the recessionary environment “better and stronger than their peers, with share gains, growth, and margin expansion to show for it.”

    The survey “revealed that CPG manufacturers that outperformed their category peers implemented winning practices in several critical dimensions” Among them:

    • “Sales strategy winners were able to achieve faster sales growth than their category peers while decreasing selling costs (as a percentage of net sales). Net sales for these winners grew by almost 3 percentage points more than the average growth for their category, and they invested 8 percent less than the category average to achieve this growth.”

    • “Pricing winners were able to increase their unit prices by 3 percentage points more than the average unit-price increase for their category and grow their category share by 2 percent.”

    • “Trade investment winners achieved higher market share and gross margin growth than others, with greater impact from their trade investment efforts by capturing 11 percentage points higher sales lift from each promotional price point reduction and a 14 percentage point higher sales lift from merchandising than their category peers.”

    • “While most manufacturers believe that their strategic collaboration efforts are effective, only 20 percent of these efforts achieve significant impact. This group achieved, on average, a sales lift that was 11 percentage points higher than other collaboration efforts.”

    • “Complexity-management winners were able to decrease their number of stock-keeping units (SKUs) while increasing market share. On average, these winners realized an 8 percent greater reduction in SKUs and 5 percent higher sales than others in their category, and they increased overall category size.”

    Among the recommendations made in the report:

    • “Make big, forward-looking bets to unlock growth. The survey revealed that winners are seeking to solidify gains made during the crisis and preparing for even stronger performance coming out of this period; 70 percent of these top performers (versus 17 percent of others) are reshaping their go-to-market models.

    “Accordingly, in the next 12 to 24 months, more than half of the winners plan to boost their field sales organizations and merchandising resources, and one-third of winning companies also plan to increase their use of brokers and to combine broker and retailer resources to reach more outlets. To ensure that their bets are aligned with changing high-growth opportunities, winners continually evaluate resource investments by channel and customer.”

    • “Build a strong sales leadership team, next-generation capabilities, and cross-functional collaboration. Winners ensure that they staff the right sales leadership resources to ensure future growth, emphasizing deep category expertise, customer knowledge, and a strong strategic perspective.”

    • “Create customer-focused account teams as part of a winning sales organization. While all survey respondents deploy sales teams of similar sizes, winners' teams have a high percentage of customer aligned functional experts in areas such as pricing, category management, and trade marketing versus their category peers.

    “As we have seen in the past, winners also tailor their customer teams to the unique needs of each priority retailer. In addition, winning CPG organizations report a high level of collaboration and more effective relationships between sales and other key internal functions including marketing, finance, and supply chain. In contrast, in the grocery channel, winners deploy more of these functional experts to support their retailers.”
    KC's View:

    Published on: November 10, 2010

    Advertising Age reports that a number of fast food companies have issued prepared responses to charges in a recent Yale University study suggesting that “children's exposure to fast-food TV ads is increasing, even for ads from McDonald's and Burger King, which have pledged to reduce unhealthy marketing to children. Compared with 2007, in 2009 children aged 6-11 saw 26% more ads for McDonald's and 10% more for Burger King.”

    The advertising journal opines that while McDonald’s and Burger King claim in their responses that they are offering healthier options and are not marketing more to children, they did not back up their words with statistics or any sort of proof.
    KC's View:
    If fast feeders actually are being disingenuous about their promises to reduce marketing of unhealthy foods to kids, then this ought to be fertile ground on which the supermarket industry can grow sales - making the point that it offers more and healthier options than the fast food chains.

    Published on: November 10, 2010

    The Associated Press reports on a new retail trend that is empowered by the internet and smart phone technology - the ability of stores to push discounts that only last for a few hours, and that demand instant action - or reaction - by the shopper, who has presumably given the store permission to provide information about these short-lived deals.

    According to the story, “Merchants are offering this shorter time frame as they try to break through the clutter of discounts. They typically don't announce the sale in advance and aim to surprise shoppers by posting the discount on the Web or by sending an e-mail to customers.”
    KC's View:
    This just makes so much sense, and strikes me as so easy to test.

    If you are a supermarket, you can send out a text or email at 4 pm, informing people who have given you their mobile number or email address that such and such a deal will be available in the store from 5 pm until 8 pm. And then, you wait and see what happens. You try a bunch of different combinations and different timing, just to see what works. But if you are offering a real value, and not abusing the privilege, you can really connect to the shopper.

    Stores not doing this are ignoring a major opportunity...and leaving the door open for the competition to do it.

    Published on: November 10, 2010

    The Boston Globe has an interesting piece about a Beantown company called Organic Renaissance, a food exchange that “has built a system for distributing food from small companies and farmers that has taken advantage of the locavore movement.”

    Essentially, Organic Renaissance makes it possible for small companies to provide product to big retailers such as Whole Foods, providing transportation infrastructure that family-owned dairy farms, for example, might not have.

    “The company has seven vehicles and six full-time employees, but expects to hire 27 more over the next year,” the Globe writes. “It has leased space in a 300,000-square-foot hydro-powered warehouse in Athol to be close to the state’s 8,000 farms. For now, the space is being used for storage.

    “Adding advanced technology to the locavore equation has caught the attention of state agencies, which have given financial support to Organic Renaissance. In September, it received a $950,000 loan from MassDevelopment, Western Massachusetts Enterprise Fund, and North Central Massachusetts Development Corp.”
    KC's View:
    Just an interesting view, IMHO, of how new businesses can grow out of consumer trends.

    Published on: November 10, 2010

    USA Today reports this morning that as yet more evidence that sea salt is the ingredient of the moment, Wendy’s this week “ will unveil Natural-Cut Sea Salt Fries — revamped french fries of 100% russet potatoes, cut with the skin on, sprinkled with sea salt ... Wendy's, which continues to lose share to McDonald's, is in the midst of a companywide move to stress the wholesomeness of its food. It opted to fix the fries by using better potatoes cut a new way — and sprinkled with sea salt.”

    The story goes on, “The move comes as sea salt has set consumer hearts aflutter and invaded American pantries. In 2010, 1,350 new products with sea salt as an ingredient have been introduced, research giant Mintel says. The percentage of all foods and beverages with sea salt jumped from 5% in 2006 to more than 8% in 2010, Mintel says.”

    Inevitably, there are naysayers: “Nutritionist Marion Nestle is unimpressed, saying sea salt tastes the same as common table salt, costs more and has the same sodium. ‘The hype for sea salt is amazing. What a hoax’.”
    KC's View:
    I love Marion Nestle. I’ve met her, I think she’s really interesting, and she plays a critically important function, drawing attention to things that some folks would rather not see put under the spotlight.

    But man, she’s a buzz kill.

    Published on: November 10, 2010

    • The troubled Great Atlantic & Pacific Tea Co. (A&P) announced that in a sale-leaseback arrangement, it has sold six Pathmark stores to Winstanley Enterprises LLC for $89.8 million.

    The move comes as A&P tries to improve its balance sheet and get some kind - or any kind - of competitive momentum.

    Bloomberg reports that the Grocery Manufacturers Association, the American Petroleum Institute and other groups have filed a lawsuit against the US Environmental Protection Agency (EPA), challenging its decision “to allow more corn-based ethanol in gasoline.” The various groups maintain that “EPA lacked the authority to make the decision and will result in higher food costs.”

    • As expected, Amazon.com will pay $500 million in cash and assume another $45 million in debt and other obligations to acquire Quidsi, which owns Diapers.com and several other e-tailing sites.

    “Customers have a strong interest in baby care and health and beauty products,” Amazon spokeswoman Mary Osako said in a prepared statement. “We believe that Quidsi’s offerings are a great complement to Amazon’s baby and health and beauty businesses.”

    In other words, to extend its online retailing domination into yet another category.

    • Also as expected, Sara Lee Corp. confirmed that it is selling its North American Fresh Bakery unit to baking company Grupo Bimbo for $959 million. According to published reports, the deal includes 41 U.S. plants, but lets Sara Lee keep the right to sell its branded brand frozen desserts and meat products such as sliced deli meats.
    KC's View:

    Published on: November 10, 2010

    • Dean Food announced that its CFO, Jack Callahan, has resigned to accept a job with another, as yet unnamed public company.

    He will be succeeded by Shaun Mara, currently senior vice president and chief accounting officer.
    KC's View:

    Published on: November 10, 2010

    ...will return.
    KC's View: