retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: January 5, 2011

    by Kevin Coupe

    Here are two recent headlines that are eye-opening in that they suggest - with seemingly contrary views of the world - where 2011 shopper could be headed.

    On the one hand, there were numerous stories over the holidays about how some experts are predicting that before too long, we’ll all be paying $5 per gallon for gasoline, raising the cost of filling up our cars and keeping them on the road. This came on the heels of news that the average cost of a gallon of gasoline in the US had topped $3 - which was amusing to people in places like Connecticut who have been paying more than that for months.

    At the very least, the $5 per gallon projections suggested two repercussions. One, people will have less disposable income to spend on other things. Two, car companies will have to redouble their efforts to sell cars that get better mileage.

    The other headline appeared just this week in the New York Times: “Mocked as Uncool, the Minivan Rises Again.” This story suggested that car companies are reintroducing the minivan - a family favorite before it was replaced in the population’s heart by the more rugged-appearing SUV - with ad campaigns that stress both their sportiness and functionality. But it also may be that a re-emergence of the minivan is due to a back-to-basics consumer mood ... that the 2011 shopper, battered by several years of recession and possessing reduced expectations and less enchantment with artifice, is looking for something different.

    While rising gas prices and the promotion of more big cars might seem to be working at cross purposes, they could together point to the direction in which the 2011 shopper is headed. More value-oriented (which is different from being low price-oriented), with less disposable income to spend, and more focused on functionality and (in some cases) family. Add to that the simple reality that people are better informed than ever, expecting a level of transparency from the institutions with which they do business, and you start to get a picture of the US consumer.

    Or, at least some US consumers. It isn’t a homogeneous group. But there may be certain inevitabilities around which retailers and manufacturers can start to build their strategic and tactical plans.

    And that’s our Wednesday Eye-Opener.
    KC's View:

    Published on: January 5, 2011

    There was a wonderful piece in the Wall Street Journal the other entitled “The War on Good Taste,” in which the author lamented calls by organizations such as the Physicians Committee for Responsible Medicine - which he said “was founded to promote animal rights, and its horror of bacon and butter has less to do with concern over our arteries than with dismay at the grisly fate of pigs and the unjust captivity of cows” - to change Americans’ eating habits.

    Not that eating healthier is a bad thing. And eating to survive doesn’t require feasting on dessert, or bacon, or using butter. “But most of us would prefer to do more than just survive,” the Journalpiece says. “What's the point of civilization, as Fran Lebowitz has suggested, if not to enjoy linguine with clam sauce?”

    The story goes on: “There are those who would not only vilify foods considered less than salubrious, but prohibit them. And what a ridiculous spectacle it is. Perhaps if Mayor Michael Bloomberg spent less time keeping salt off our tables and more time getting salt on the streets, New York roads might have been passable” during last week’s blizzard.”
    KC's View:
    The thing I don’t understand is why the choice between good taste and healthy eating keeps getting presented as mutually exclusive alternatives. They strike me as a false set of choices - that the best way to live (IMHO) is to try to eat as intelligently as possible, which means knowing something about the stuff you put in your mouth, to exercise regularly and strenuously, and to understand the role and pleasures of indulgence.

    What’s the line from the Jimmy Buffett song?

    Commit a little mortal sin ... It's good for the soul.

    Same goes for dessert. And butter.

    It isn’t a case of either/or. It is - or should be - all about moderation and intelligence.

    Published on: January 5, 2011

    The Boston Globe reports on the growth of self-checkout technology in the US, noting that “we’ve gotten used to pumping our own gas, printing our own airplane tickets, and answering our own questions on companies’ FAQ pages. Now, increasingly, we’re being urged to check ourselves out of stores ... Self-checkout machines have been around long enough for researchers to study how people react to them. Studies by the IHL Group, a Tennessee-based research firm, found that less than half, 41 percent, of people like self-service machines. On the other hand, a mere 8 percent of the 2,700 people surveyed online from 2005 through 2008 said they would not use the technology.”

    According to the story, “Retailers say they like self-scanners because they’re cost-cutters that can speed shoppers through the checkout process and allow management to redeploy cashiers to jobs that can’t be done by a machine. Although some may think that the self-checkout system is more susceptible to theft, studies show otherwise. Theft deterrents on the self-checkout machines include integrated cameras, scales, security tags, and, in some cases, laser analysis of dimensions of the products, according to Greg Buzek, president of IHL Group.”
    KC's View:
    The conclusion seems to be that while a lot of people may not like or even resent the growth of self-scanning, a large percentage of shoppers see them as either an acceptable or necessary evil. The next big step will be to mobile checkout - allowing people to check themselves out as they shop, using either equipment provided by the store or their own smart phones to scan the products they are buying, avoiding checkout lanes altogether.

    Published on: January 5, 2011

    The Financial Times reports that “is stepping up its expansion in the European Union with an enlarged network of distribution centres and a drive to sell into new markets.

    “The push is part of efforts over the past year by Amazon to build its business outside North America, which accounted for 45 per cent of its sales of $7.5bn during its most recent quarter. Of the 11 new distribution centres the retailer added in 2010 to its previous global network of about 40 sites, only two were in the US ... Three were in Europe, five in China and one in Japan.”
    KC's View:

    Published on: January 5, 2011 reports on a JP Morgan analysis suggesting that 2011 “e-commerce revenue will grow to $680 billion worldwide up 18.9 percent from 2010 revenue. Online retail commerce in the U.S. alone will grow 13.2 percent to $187 billion. J.P. Morgan anticipates that global e-commerce revenue will hit a whopping $963 billion by 2013.

    “The number of people who shop online keeps increasing, with 38 percent buying at least once per month. And the percentage of people who don’t shop online declined to 12 percent in 2010 from 20 percent in 2007. Higher income consumers shop online the most often, with 34 percent of those making $100,000 or more shopping online at least three times per month.”
    KC's View:
    Check out the email in “Your Views” with one assessment of the online shopping experience, and you’ll see why online keeps growing.

    Published on: January 5, 2011

    Reuters reports that “hopes for a supermarket recovery have been pushed back yet again while Wall Street rethinks earnings expectations as food costs rise, unemployment remains high and consumer spending stays fragile.

    “The shares of Supervalu Inc., Safeway Inc., and Whole Foods Market Inc. were among the stock market's biggest losers on Tuesday after investment firms cut ratings on them ... Investors had hoped 2011 would usher in a big improvement in supermarket earnings, but such optimism is being dashed by costs, the jobless economic recovery and other factors, including a long-running price war and stiff competition from general merchandise retailers ranging from dollar stores to Wal-Mart Stores Inc.”

    • Consultancy Challenger, Gray & Christmas reports that “after reaching a seven-year high in 2009, downsizing activity in 2010 fell to its lowest level since 1997, as employers announced plans to eliminate 529,973 positions.  The year came to a close with the lowest monthly job-cut total since 2000.

    “Planned layoffs totaled 32,004 in December, down 34 percent from 48,711 in November, according to the 2010 year-end job-cut report released Wednesday ... December job cuts were 29 percent lower than the same month a year ago when 45,094 cuts were announced.”

    The report goes on: “The December decline marked a fitting end to 2010.  The 529,973 job cuts announced during the year were 59 percent fewer than the 1,288,030 layoffs recorded in 2009, the largest downsizing year since 2002 (1,466,823).  The 2010 total was the lowest since 434,350 job cuts were announced in 1997.”

    • The Los Angeles Times reports that IKEA no longer will sell or stock incandescent light bulbs in its U.S. stores, but rather will only offer longer-lasting and energy-efficient bulbs. The move comes ahead of federal legislation takes effect that will mandate more energy efficient light bulbs.
    KC's View:

    Published on: January 5, 2011

    Bloomberg reports that Andy Bond, part-time chairman of Walmart-owned Asda Group in the UK, has stepped down “less than a year after he was succeeded as chief executive officer by Chief Operating Officer Andy Clarke.”

    According to the story, “will leave the Bentonville, Arkansas-based retailer once it completes the acquisition of South Africa’s Massmart Holdings Ltd., Asda said today by e-mail. That is likely to take place by the end of March, it said.”

    Walmart is buying 51 percent of Massmart for $2.5 billion (US).

    • Michael J. Haaf, the longtime Senior Vice President of Sales, Marketing and Business Strategy for Food Lion, is moving to HVM LLC, which manages the 685-property Extended Stay Hotel chain, as the company’s Chief Marketing Officer, responsible for marketing, brand strategy and positioning, as well as sales and revenue management.
    KC's View:
    I’ve interviewed Mike Haaf a number of times, and liked him a lot. I wish him good luck in his new role and industry.

    Published on: January 5, 2011

    Fresh from its pre-Christmas victory in helping to put pressure on the US Congress to pass legislation providing health care funding to 9-11 first responders, “The Daily Show with Jon Stewart” found a new target when it returned to the air on Monday night: San Francisco’s ban on happy meals that contain toys but do not meet certain nutritional levels.

    You can watch the episode here . (It is the second segment.)
    KC's View:
    Yet more evidence that “The Daily Show” is better than almost anyone at puncturing pomposity wherever it finds it. Great stuff.

    Published on: January 5, 2011

    I love it when MNB users report in on their consumer experiences.

    For example, one MNB user offered this Christmas shopping anecdote, prompted by yesterday’s piece about Amazon:

    This is a HERO tribute to Amazon ...  We had ordered a  red Toshiba laptop as a gift directly from Toshiba about 3 weeks before Christmas, an exact duplicate of one that my husband had and loved for its light weight (about 3+ lbs.) and speed. 3 days before Christmas, noting it had not arrived yet, we checked with Toshiba and they acknowledged that they were out of stock, the order had been cancelled and yes, they failed to notify us of that. Sorry about that (we were not the first to complain, it sounded like).   And we could talk to the sales dept about ordering a different one but it would not be made until about 2 weeks after Christmas. What to do? 

    After making calls to big box retailers (that often left us on hold endlessly while they checked and even abandoned the call), my husband said ‘let’s order from Amazon’ and see if we can get it by Christmas. I was skeptical.  We went online on Dec. 23rd, saw that it was available on Amazon and if ordered within the next 3 hours, it would be delivered on dec. 24. We placed the order about 4 pm on the 23rd and had it at our doorstep at noon on the 24th.  It was even the right color (red).  Forever grateful to Amazon!

    I believe firmly that this kind of service and responsiveness raises the bar for all retailers, and sets expectations for the consumer believes is both possible and acceptable.

    And then, there was this email on a different subject from another MNB user:

    I had an experience I wanted to share. Was in Atlanta at "Bones" a very nice and established Steak House in Buckhead. For the very first time in my experience, when the waiter brought the wine list he handed me an iPad! Showed me how to use it and I could navigate through thousands of bottles sorting on Varietal, Region, Price, etc. It operated smoothly and quickly, and the pictures and descriptions that went along with the entries were enticing. As a wine lover and a gadget lover, I thought you would want to hear about it. Maybe you've seen this applied elsewhere?

    I haven’t had it happen to me, but I have been reading about it. The iPad may not be an inexpensive as a printed wine list, but it certainly is a lot cooler ... not to mention easier to update and a lot more facile at providing detailed and relevant information.

    The larger lesson, I think, is one faced by companies manufacturing kiosks and other information-providing hardware for retail environments.

    The fact is, more and more of are going to have access to this kind of equipment - iPads, iPhones and other smart phones - that means we will in essence be carrying kiosks and information-providing hardware with us into stores and restaurants. There ids a pretty good argument that retailers ought to be in the software-providing business, making their information adaptable to any equipment that I might have in my pocket.

    That’s not to say there won’t be a place for unique equipment in some locations. But the ubiquity of these devices is changing the game.
    KC's View: