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    Published on: December 14, 2010


    by Michael Sansolo

    Ignore for a second the on-going political debate about tax cuts and shift to this: how much money does it take for people to feel well off? And if so, what does that tell you about your shoppers and their desire to find value.

    The Washington Post ran an article this past weekend examining the financial fortunes of families earning $250,000 per year, the threshold of wealth that was the fulcrum of the recent tax cut debate. There was a time that couples earning a quarter of a million dollars a year were easily classified as upper class economically or simply rich. The Post carefully examined the cost of living for these families in the Washington, DC, area and in other relatively affluent areas around the country to see how well they are really doing today.

    The bottom line was that even at $250,000 people can struggle.

    Simple statistics tell us that the vast majority of you reading this article today might have little sympathy for these families because you earn far less than $250,000 per year and are having struggles of your own. As the Post says, “By any measure, a $250,000 household income is substantial. It is six times the national average household income and just 2.9% of couples earn that much.” In fact, most Americans have little hope of ever earning that much money in a year.

    In part, the challenges these families have balancing their costs are due in part to their lifestyles including the size of their homes, the quality of their cars and even some of the assorted costs of child care, education and more. Many of you would love to have those problems.

    But these are problems nonetheless and that means even well-off people struggle to achieve financial security. And that means they come into supermarkets, one of the expenses they, too, face each week, with some sense of economizing on their minds, which is the issue we have to consider.

    The sad truth is that every group of shoppers is coping with some sense of economic insecurity these days, which means that economizing and value hunting rule all the aisles. More than two years into the current economic situation the pressure we see from shoppers for price cutting, sales and budget shopping is only growing stronger. The Post article only reminds us that the situation impacts every demographic group as even the well-off feel stressed.

    What’s more, the situation could actually get worse. While there are some (but sadly few) positive economic signs for the coming year, there are many issues for worry heading into 2011. Prices are starting to rise on everything from petroleum to basic grains, all of which means there will be pressure for prices to rise on the vast majority of products in the supermarket.

    Yet, shoppers are likely to be more resistant than ever to higher prices, more willing to trade off to lower priced choices and more aware of where and when these changes have to be made. In other words, today’s tough competitive situation is only likely to get tougher.

    That’s probably not the news you were hoping for today, but that’s the news. The only question is what you’ll do about it in a time when even the wealthy feel insecure.


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: December 14, 2010

    President Barack Obama yesterday went to a District of Columbia elementary school to sign the Healthy, Hunger-Free Kids Act of 2010, which, provides an additional $4.5 billion over 10 years to child nutrition programs, offers a six cent increase to the $2.68 reimbursement rate that schools get from the federal government for free school meals, and authorizes the US Department of Agriculture (USDA) to set standards for all food sold in public school buildings.

    "At a very basic level, this act is about doing what's right for our children," President Obama said before signing the legislation.

    First Lady Michelle Obama, who has championed a national anti-obesity campaign, added, "We can all agree that in the wealthiest nation on earth all children should have the basic nutrition they need to learn and grow and to pursue their dreams. Because in the end, nothing is more important than the health and well-being of our children. Nothing.” The First Lady added, according to the Associated Press, that “a group of former generals and military officials ... said unhealthy school lunches are a national security threat because weight problems are now the leading medical reason that recruits are rejected.”

    However, not everyone agrees with the need for the legislation. While supporters say that the bill is deficit-neutral, opponents say that it is yet another case of government overreach and the creation of a “nanny state.”
    KC's View:
    We’ve certainly seen plenty of examples of the rhetoric on both sides of the issue here on MNB (and there are more today in “Your Views”). While I disagree with the people who oppose the bill, I respect their perspective ... though I do have a problem with the extent to which one or two people persist in using inflammatory language to describe people with whom they disagree. (Much of this stuff doesn’t make MNB, simply because my goal is to raise the level of discourse, not let it sink to the lowest common denominator.) What some people don’t seem willing to acknowledge is that even the people with whom they disagree have legitimate arguments and noble motives ... and that continues to be troubling.

    Here’s my feeling. I understand that this legislation is going to put a crimp in the efforts of people who want to bring cupcakes into their kids’ classrooms, or run bake sales. And that’s unfortunate, because those things are traditional parts of the American educational system.

    But we’re faced with a big problem in America. The problem has health implications, financial implications, even national security implications. And if we don’t address it, the problem will only get worse. As a matter of good public policy, I think we have a responsibility in the nation’s publicly funded educational institutions to raise the bar on the foods we offer our children, to teach them more about healthy nutrition, and, yes, provide them with more opportunities for physical exercise. Healthy body, healthy mind ... y’know?

    This doesn’t detract from parents’ responsibilities or options. Parents can feed their kids anything they want at home, can send them to school with bagged lunches can contain pretty much anything.

    But I repeat. This is a matter of good public policy. I believe in American exceptionalism, but only to the extent that we have to prove ourselves to be exceptional every day, and have to daily earn the right to be viewed as exceptional. And while it may seem minor, being exceptional extends to how we challenge our children to be broad-minded thinkers and intelligent consumers ... and this means every aspect of what they learn in school.

    Published on: December 14, 2010

    by Kevin Coupe

    PC Magazine published a study the other day suggesting that there are some demographic trends evident in who buys what smart phones.

    According to the story, “31 percent of women wanted to buy an Apple iOS device next, followed by 22.8 percent interested in a Google Android device. Among men, 32.6 percent were interested in an Android purchase while 28.6 desired an iOS phone ... Apple iOS was the most desired choice in every age range apart from one: 35-54 years olds. In this age group, more people preferred upgrading to an Android phone (27.4 percent) than an iOS device (26.3 percent).”

    (The iPhone and Android phones combine to dominate the market, preferred by 35 percent and 28 percent overall, leaving other competitors in the dust.)

    The good news for the smart phone industry: “29.7 percent of U.S. mobile phone users own a smartphone now, the highest recorded figure to date.”

    Speaking as a guy who (full disclosure) a) owns and loves his iPhone, and b) no longer is in that 35-54 demographic group (sigh!), I find this information interesting - especially the part saying that smart phones currently own almost a third of the US mobile phone market. What this says is the the application business is where the action is ... and that both retailers and manufacturers need to pay very close attention. Many applications are specifically designed to create transparency...and that affects how retailers and suppliers are perceived by consumers.

    There will be some, of course, who will engage in “real men use Android phones” rhetoric ... but that misses the point. People use technology that works for them, and there increasingly will be new and user-friendly technology that oozes relevance, and creates greater competition in the marketplace, which in turn will prompt the development of yet newer and more relevant technology. That’s good for everybody, even at it creates new challenges for business.
    KC's View:

    Published on: December 14, 2010

    As reported yesterday, the Great Atlantic & Pacific Tea Co. (A&P) filed for bankruptcy protection on Sunday, unable to cope with debt, facing declining sales and profits showing no sign of a turnaround, still adjusting to a game of executive suite musical chairs, dealing with increased competition from the likes of Walmart and Target, and looking for any and all ways to create breathing room that will allow it to survive.

    Among the additional details coming out about this story:

    • A&P says that while it has been trying to sell its Food Emporium division, it now plans to keep the banner “for the time being.”

    Bloomberg reports that analysts are speculating that the bankruptcy filing may prompt Ahold USA to make a bid for A&P’s Pathmark division; Ahold has said that it is in the market for appropriate acquisitions in the US.

    • The Philadelphia Business Journal reports that A&P is saying that for the moment, it plans no store closings as it works the way through bankruptcy.
    KC's View:
    If Ahold tries to make a play for some of A&P’s assets, one has to imagine that perhaps Delhaize also will get into the mix. And I wonder if Walmart might find some of A&P’s real estate to be interesting, especially if it plays into its small-store urban strategy.

    One thing seems sure. It is hard to believe that when this is over, A&P looks anything like it does right now ... if indeed it exists at all as an independent entity. Which it almost certainly won’t.

    Published on: December 14, 2010

    The Sydney Morning Herald reports that Costco plans to open a third store in Australia by 2012, following up on one opened in Melbourne in 2009 and a second currently being built in Sydney. No word yet on the location of the third store, but Brisbane is mentioned as a likely location.

    The move, according to the paper, heightens Costco’s “credentials as a new major force in retailing by tackling the dominance of sector heavyweights Woolworths and Coles.”

    According to the story, “The American giant has discovered it can reap faster growth rates from its offshore supermarkets than those in its home market, with premium profits coming out of Asia intensifying the company's appetite for further sites in the region as well as Australia ... Costco chief financial officer and executive vice-president Richard Galanti said the company hoped to open 27 stores over the next year, of which nine would be outside the US and Canada. Asia would be home to the bulk of the new international openings, with two each in South Korea and Taiwan, and three in Japan.”
    KC's View:
    Oprah and Costco. Which one will Australia thank us for more?

    Published on: December 14, 2010

    Crain’s New York Business reports that Walmart has released the results of a poll it commissioned saying that “New York City small business owners favor bringing Walmart to the five boroughs by a count of 62% to 27%.”

    According to the story, the pollster “randomly sampled 400 New York City small businesses with 50 employees or less and asked owners or senior executives whether they wanted Walmart to come to town. Support among small retailers was weakest, with 55% in favor versus 36% against. Service-oriented businesses favored a Walmart by 65% to 25% and commercial businesses were most adamant in their endorsement, at 75% to 19%.”

    The conclusion drawn by Walmart - small business owners believe that a Walmart expansion into New York City would help stimulate the economy.

    Crain’s writes, “The No. 1 reason respondents favored a Walmart in the city was because they thought it would create jobs, the survey showed. The other top benefit was that it would provide consumers with more choices and low-cost products. Fifty-eight percent of small business owners had a favorable impression of Walmart, 24% had a negative one, and 18% were unsure.”

    Not everybody is buying.

    Pat Purcell of the United Food and Commercial Workers (UFCW) tells the paper that he believes that the results can be attributed to selective polling, and that the results might be very different if Walmart “if the small businesses questioned were solely in neighborhoods like East New York, Brooklyn, where Walmart is considering a store.”

    And the New York Daily News reports that New York City Council Speaker Christine Quinn continues to oppose Walmart opening in the city. "Walmart is something I am not supportive of," Quinn told the paper. "I'm always going to stand with small businesses, and that's why I'm going to stay consistent in this position."

    Mayor Michael Bloomberg remains a vocal supporter of a Walmart entry into New York City. And, as reported yesterday, the retailer appears to be close to an agreement with the city’s construction unions that would trade guaranteed union jobs in any construction projects for political support that could bolster its chances.
    KC's View:
    I hate to paraphrase myself, but ... The real surprise would have been if Walmart had released a self-funded poll saying that it wasn’t welcome in New York.

    I have to believe that there may be a little more nuance to how small business owners feel about Walmart coming to New York. At the very least, I suspect that the folks who said they were in favor of the Bentonville Behemoth taking a bite of the Big Apple did so with some level of trepidation, hoping that they were not playing the role of Joe Boyd and that Walmart isn’t playing the role of Mr. Applegate.

    Published on: December 14, 2010

    The Financial Times reports that McDonald’s CEO Jim Skinner criticized yesterday legislation such as that passed in San Francisco that is designed to curtail the sale of Happy Meals by prohibiting the distribution of kids’ toys with meals that do not meet certain nutritional standards.

    Skinner said that proponents of such legislation are acting like “food police,” and were looking to undermine parental autonomy. And he showed no sign of backing away from the company’s traditional strategies.

    “We’ve seen many years of someone trying to dictate behavior through legislation,” he said. “Our Happy Meals have been supported by parents since the 1970s. The nutrition of Happy Meals, which include apples, meets FDA guidelines. We sell choices on the menu that make our customers feel better about their lifestyle.”
    KC's View:

    Published on: December 14, 2010

    Walmart announced that it is restructuring its Russian expansion plans, closing its Moscow office and saying that it no longer wants to build a retail operation there from scratch.

    Instead, the company said, it will remain open to an acquisition if an appropriate opportunity presents itself. But the suggestion is that there are no active negotiations taking place.

    "Since there is no clear acquisition partner in the near term, there is not a business reason to continue our Moscow representative office," Walmart International CEO said yesterday, according to the Wall Street Journal.

    According to the story, “Wal-Mart is among retailers from outside of Russia that have experienced challenges expanding in the country. The world's second-largest retailer, France's Carrefour SA, pulled out of Russia in 2009 after barely getting its feet wet, but other large foreign retailers like Germany's Metro Group, France's Groupe Auchan and Sweden's IKEA Group have operations in the country.”
    KC's View:

    Published on: December 14, 2010

    Bloomberg reports that the US Supreme Court “divided evenly Monday in a clash over the multibillion-dollar ‘gray market,’ leaving intact a ruling that lets manufacturers use copyright laws to keep some products out of discount stores.

    “The 4-4 high-court split, which doesn't set a nationwide precedent, upholds a federal appeals court decision favoring Swatch Group's Omega unit in a dispute with Issaquah-based Costco Wholesale over discounted Seamaster watches.

    “Retailers had sought to overturn the appeals-court ruling because it exposes them to lawsuits if they try to exploit worldwide price differences on foreign-made products by importing them through unauthorized channels.”

    • Walgreen said yesterday that “a list of customers' e-mail addresses has been breached and spam may have been sent out directing customers to enter personal data into outside Web sites. The company notified customers on Friday that their e-mail had been compromised, but said no other personal information was at risk.”

    • Interesting piece in the Los Angeles Times about how despite the growth of oatmeal as a breakfast offering from fast feeders such as Starbucks, Jamba Juice and now McDonald’s, Quaker - “the company most associated with the product” - is struggling. Analysts say that the company may have been distracted by other components of its business, including energy drinks and flavored waters, and that it needs to refocus its attention on its core product offering.
    KC's View:

    Published on: December 14, 2010

    Got the following email from an MNB user responding to the discussion of child nutrition issues:

    I read the commentary and immediately felt sympathy for the child of the MNB writer who makes his daughter always eats healthy.  It would seem at first glance that all people should do this, but I would like to give you a different perspective.

    I am a 42 year old female, only child.  My parents were hippies of the 60's who ate organic and grew their own vegetables, well before this was commonplace.  Every meal in our household was home made, heavily vegetarian and very, very healthy.  My mother very carefully watched what I ate, make sure my portion sizes were always correct, and made sure there was a green
    and red/yellow vegetable at every meal. Soda, processed cookies, crackers, fried food or anything else unhealthy or high in fat, salt, additives or sugar were never purchased or eaten.  The only "bad" things I was allowed to eat was Ice Cream (all natural of course) and home made goodies my mother made and these things were carefully measured (1/2 cup of ice cream or 1 or 2 goodies a day). During my school years I was very fit, and never suffered with any type of weight issue.

    After moving out of my parents house and going to college I discovered that not everyone eats organic, no one knew what wheat grass or wheat germ was and that fatty, salty, sugary substances taste wonderful!  I also had no idea what proper portion sizes were for many of the foods I had never been allowed. Over the next 20 years I proceeded to battle an obesity problem that eventually put me 120 pounds over my ideal weight.  And I firmly believe that if I had been able to have the "bad foods" in moderation I would have been less likely to become as overweight as I was.

    In 2008 I made the commitment to have Gastric by-pass surgery, and went thru months of therapy to relearn how to eat properly.  It has been three years since I had my surgery and I have lost and kept off the 120 lb.

    I have two daughters, one who knew me when I was heavy, and one who doesn't remember fat Mommy.  For both of them I stress eating well, lots of healthy snacks and no soda or sugary drinks. But I also take them to McDonald's, out for Ice Cream and bring home chips and cookies. My stress is on portion control and making sure they have eaten their fruits or vegetables before eating cookies or "junk".

    I pray that what I am doing will keep my daughters from going thru what I did, and to the author above I hope your daughter does not as well.  Please remember that to restrictive can sometimes backfire.


    I’ve always believed that the most important thing we can teach our kids is how to think. If we teach them to be autonomous human beings capable of making good judgments, then we do our jobs.

    That has to do with food...and a lot of other things.
    KC's View:

    Published on: December 14, 2010

    There were two Monday Night Football games this week, with the New York Giants defeating the Minnesota Vikings 21-3 (while playing in Detroit’s Ford Field because of snow-related roof problems at the Minneapolis Metrodome), and the Baltimore Ravens beating the Houston Texans 34-28.

    It is worth noting that the Giants-Vikings game, quarterback Brett Favre did not play - the first time he did not play after 297 consecutive starts, an individual football record that has to be seen as being on a par with Cal Ripken’s baseball streak of 2,632 consecutive games played.
    KC's View: