retail news in context, analysis with attitude

Published on: January 11, 2011

by Michael Sansolo

Despite the darkness of today’s economic times and the endless pressure to sell everything inexpensively, there is a single phrase every company should remember every single day:

Cheap and value mean very different things.

Just in case you need a reminder, think about your car for a second. There may be all kinds of things you like or dislike about it, but I bet there is one way I could ensure that you’d never buy that model again. Imagine how you would feel if it had a reputation for bursting into flames. I’m betting you’d be looking for a new set of wheels pretty quickly.

Incredibly, spontaneous combustion is happening with some frequency to one particular car model and it provides a great lesson in true value. The car, called the Tata Nano, is produced in India and is widely considered the least expensive automobile on the planet. When it was introduced in 2009 it was seen as possibly revolutionizing transportation for low-income people around the planet.

But there’s that nagging problem: the cars occasionally burst into flames.

Actually, it doesn’t happen every day. However there are six documented cases out of thousands sold, but the image of a car engulfed in flames is hard to ignore. Especially when in one case an unfortunate family, just leaving a Tata motors’ new car showroom, barely escaped from their suddenly burning auto. The bottom line is that even with a sticker price of about $2,200, few people are willing to buy cars that just might incinerate themselves and their drivers.

Incredibly, the Nano’s problems don’t stop there. According to reports from India, poor marketing is also hampering sales of the Nano. (The slogan: “we blow up,” just doesn’t work I guess. Maybe they should try “Hot, Hot, Hot.”) There’s also increased competition from slightly more expensive cars (around $7,000) that push their superior quality and reliability. And middle class Indians see the Tata Nano as too cheap and therefore not a symbol of any status.

Say it again: Cheap and value mean very different things.

We understand that shoppers are stressed these days are every study that comes out repeats the same wisdom that consumers are hunting for value more than ever. Coupon use is up, deal buying is up and every report shows increased emphasis by shoppers on cashing in on deals. But the story of the Tata Nano has to give us pause.

First off, we have to remind ourselves as always that safety can trump all else. In the food industry it’s a lesson that we seem to understand. Food safety isn’t a luxury or a secondary concern. Food products simply must be safe or consumers aren’t going near them, so cost cutting in any area that endangers safety should be avoided in every way possible.

But let’s also learn a lesson from the companies competing with the Tata Nano, because they seem to be winning without racing to the bottom. Rather, they are finding a way to highlight the improved value of their products in a way that convinces the Indian car buyer to spend nearly four times more money.

It’s harder than ever to find a niche these days. It’s harder than ever to convince shoppers that the best value isn’t always the cheapest. Yet, there are companies who continue to find a way to do it by framing the value equation for the shopper in a way that helps them understand total cost.

If you don’t think it can be done, I understand there is a huge inventory of cars that aren’t selling over in Mumbai. You can probably pick one up for a song.

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 .

Published on: January 11, 2011

by Kevin Coupe

NEW YORK - At the National Retail Federation (NRF) Annual Convention & Expo here yesterday, there was an interesting exchange during one of the morning’s general sessions that made a provocative marketing point.

Andrew Higginson, the CEO of Retailing Services and Group Strategy Director at Tesco, said that his company had made the decision that it was a retailer and could sell virtually anything - products and services - relevant to its customers’ lives. It was at that moment that Peter Sachse, the CMO of Macy’s, said that “we only sell goods, we don’t sell any services,” and that “as we get older, we need fewer products and more services,” and so that this means that Macy’s needs to continually renew itself, focusing on younger consumers.

In its own way, this struck me as a kind of “aha!” moment - and laid out two challenges for retailers.

If retailers intend to cater to their customers from cradle to grave, then there needs to be an understanding of this continuum - that as we get older, we may need to buy less stuff, but need more support and services. Retailers will need to adjust and customize their strategies and tactics to these shifting priorities ... and not assume that people’s desire to buy “stuff” will stay the same as they age. This doesn’t necessarily mean offering financial services, for example, like Tesco does; but it certainly means offering expanded portfolios of health and nutrition services appropriate to an aging population.

On the other hand, if a retailer does not want to be in the “services” business to the extent that Tesco is, then it must be aggressive about getting younger, about looking at the consumer base that may be five years away from being the core and tracking their behavior and preferences. You can’t wait for that demographic to come to you...but rather have to move towards them.

Interestingly, Cathy Green Burns, the CEO of Food Lion, noted during the same session that her company is embarking on a program of greater personalization, focusing on establishing a more intimate understanding of and relationship with its shoppers. She wasn’t specifically addressing the points made by Higginson and Sachse, but the point was clear - greater customization is a requirement, a cost of doing business and being successful in the modern world.

It is all about goods and services, and the varying needs of individual shoppers.

That’s our Tuesday Eye-Opener.

Published on: January 11, 2011

The Washington Post reports that at the just-finished Consumer Electronics Show (CES) in Las Vegas, there as a clear emphasis on one demographic segment that was not front and center in previous editions.

Moms.

According to the story, CES “hosted a ‘Mommy Tech’ section with gadgets geared for fitness, online safety and ways to better organize the household. It was a recognition of research showing that moms spend half of a family's budget for consumer electronics, creating an estimated $822 million market that is only expected to increase as women seek more ways to stay in touch with the family and get more organized while on the go ... in and beyond the designated mom zone, there was much to appeal to frenetic moms in search of ways to help ease the morning breakfast and carpool rush, entertain the family and keep it safe and healthy.”

Here is how the Post frames the coming reality:

“Tablets such as those from Motorola, Toshiba, Dell and Research in Motion will be popular with mothers, who are adopting smart phones and other mobile devices faster than computers and televisions.

“At school, waiting in carpool lines and at sports practice, mothers can update family calendars on cloud-based software or retrieve a child's latest vaccination report, using a tablet screen far bigger than that of a smartphone.

“Indeed, the biggest theme at CES this year was how wireless Internet connections will change business and the lives of consumers.

“Televisions with Internet connections allow parents to organize family calendars and order eggs and books for delivery while watching the evening news. The walkie-talkie merged with video baby monitors so dads can soothe a little one to sleep from a different room. When ‘The Backyardigans’ finishes streaming to the back seat, moms can tell the car to load up the next episode while keeping both hands on the wheel.

“EBay wants to get moms to spend more money while on the go and showcased the free mobile app RedLaser, which allows smartphone users to snap a photo of a shopping bar code and then either buy the product on the auction site or compare how much it costs at local retailers.”

In a different story, by the way, the Post writes that more than 80 tablet-style devices were unveiled at CES this year:

“And for that we can thank Apple's iPad. With more than 10 million sold in just nine months, the already iconic touchscreen computer has a 90% awareness among consumers, as well as a robust purchase intent of 21% among the key 18- to 34-year-old demographic, according to a recent survey by Vision Critical. While a majority of consumers in a March version of the study admitted they were ‘not sure what they'd use it for,’ by a November follow-up they had come up with more than half a dozen needs for an iPad, including internet browsing, apps usage, photo and music viewing, social networking and shopping.”

Published on: January 11, 2011

Bloomberg reports that Whole Foods is rolling out “a new range of healthier prepared foods, nutritional scorecards and other changes as part of its resolution to lure shoppers who want to get healthy.” Among the innovations being introduced by the retailer are “adding healthier prepared foods and baked goods in stores nationwide that meet new criteria such as sprouted grain bread with no refined flour, added oil, refined sugar or processed ingredients”; “posting nutritional scorecards around markets to help shoppers choose foods with the most nutrients per calorie”; “employing a specialist in healthy eating at each store to provide tips, tours and demonstrations for customers”; and “increasing services such as wellness clubs and nutrition education.”

Published on: January 11, 2011

Crain’s New York Business reports that just days before the New York City Council “is expected to pillory Walmart at an oversight hearing, company officials launched a counter attack Monday in print, online, on the air and via direct mailings that focused largely on jobs ... Walmart also said it will start sending direct mail to residents of 10 City Council districts, including that of Councilman Charles Barron, an outspoken opponent who represents the East New York neighborhood where Walmart is considering space. All of the mail will go to voters in the Bronx, Queens and Brooklyn, which fits in with Walmart's stated strategy to focus on opening in areas where unemployment is high and fresh food options are low.”

According to the story, “All of the ads direct New Yorkers to WalmartNYC.com, a website launched Monday that seeks to build a community of supporters. The site includes various facts and figures about Walmart, a petition and select media coverage of the retailer. The site is patterned after one the retailer built in Chicago, where it engaged in an extensive battle for permission to open a second store. Potential supporters can also call a hotline to register their backing.”

At the same time, the New York Times reports that Walmart plans to skip the actual City Council hearing.

“What should be clear, especially in this week’s activities, is that we are not going to be idle while others try to tell our story for us, and build that story on misinformation,” said Steven Restivo, a Wal-Mart spokesman. “We know we have a good story to tell. And quite frankly, we owe it to New Yorkers to be proactive in telling it.”

Published on: January 11, 2011

Internet Retailer reports on a Kantar study of online shopping during the recent end-of-year holiday season, which found that “63.7% of consumers who shopped among 20 leading e-commerce sites in December say they shopped at Amazon.com, up from 55.1% a year ago.”

According to the story, “When survey respondents included multichannel retailers they shopped for gifts, offline as well as online, Amazon ranked No. 3, capturing 42.1% of shoppers. Wal-Mart (58.1%) and Target (45.9%) led the pack.”

Published on: January 11, 2011

Price Shopper Supermarkets has a special one-day promotion...and here’s how it described on Facebook:

“It's 1/11/11... your ‘clucky’ day! We are celebrating this special day by giving away 11,111 FREE Clux Delux chicken sandwiches! Click on the coupon tab to print your FREE Clux Delux breaded chicken sandwich coupon, but hurry, only the first 11,111 customers will be able to take advantage of this special offer!”

Published on: January 11, 2011

USA Today reports that “truckloads of Four Loko and other alcohol-laced energy drinks are being recycled into ethanol and other products after federal authorities told manufacturers the beverages were dangerous and caused users to become ‘wide-awake drunk’.

“Wholesalers from Virginia, North Carolina, Maryland and other East Coast states started sending cases of the high-alcohol, caffeinated malt beverages to MXI Environmental Services in Virginia after the U.S. Food and Drug Administration announced a crackdown on the sale of such beverages in November.”

According to the story, “FDA Commissioner Margaret Hamburg said at the time that consuming the drinks has led to alcohol poisoning, car accidents and assaults.

“Health experts have raised concerns that the caffeine can mask a person's perception of intoxication, leading them to drink more than they typically would before passing out. Many of those who consume the drinks are college-age and underage drinkers.”

Published on: January 11, 2011

• The Associated Press reports that Target “plans to remodel about 400 of its general merchandise stores across the nation in 2011, building upon the discounter’s latest strategy to bulk up its grocery offerings. That’s on top of the 350 general merchandise stores in the nation that Target remodeled last year in rolling out its ‘P Fresh’ concept, which typically increased its grocery offerings by 40 percent.

“At the same time, Target, which has about 1,750 stores in the nation, has scaled back new-store construction. The company was to open about a dozen new stores last year and anticipates opening 21 new stores in 2011, including one SuperTarget.”

• The Wall Street Journal reports that “Dr Pepper Snapple Group Inc., which owns Hawaiian Punch, is giving the fruity drink's iconic mascot a 21st-century facelift with new computer-generated design. Punchy's new three-dimensional surfer look, to be featured on packaging now being shipped and in Internet campaigns starting in February, will try to appeal more to the drink's target audience of 13-year-olds, who have grown up watching cartoons like Pixar Animation Studio's ‘Toy Story’.”

• The Business Courier reports that “Kroger Co. is evaluating a new self-checkout technology from Fujitsu that it says reduces checkout times, improves customer experience and reduces operational costs.” The system is being tested in a select number of stores, according to the story, and reportedly “has product identification rates of more than 98 percent and recognizes stacked items and side-by-side items even if barcodes are hidden.”

• CNBC reports that “food safety scientists are looking for faster ways to detect salmonella, E. coli, listeria and other pathogens within hours or minutes instead of days.

“The goal is to catch contaminated food before it leaves a processing facility, thereby averting costly recalls. It also could mean a longer shelf life for products, if companies don't have to wait as long for tests to show that food is safe before shipping it.

• Price Chopper Supermarkets announced its pending merger with Apple Community Pharmacy, located at 3 Hemphill Place in Malta, NY. The two family businesses will officially merge on January 15th, 2011, at which time Apple Pharmacy’s current owner, Robert Russell RPh, and his entire staff of 15, will become a part of the Price Chopper team.

• Bloomberg reports that the Great Atlantic & Pacific Tea Co. (A&P) “won approval of an $800 million loan over objections from bondholders who questioned the role of Yucaipa Cos. LLC.” which is one of the company’s largest shareholders.

“U.S. Bankruptcy Judge Robert Drain in White Plains, New York ... approved the loan after changes that set aside as much as $175,000 per month in legal fees for a trustee to certain notes.”

Published on: January 11, 2011

Filmmaker Peter Yates died over the weekend at age 81. He directed such well-known films as The Deep, The Hot Rock, The Friends of Eddie Coyle, and The Dresser, but is best known for two films in which speed was almost a character - Breaking Away, a coming of age story set in Indiana and involving bicycle racing, and Bullitt the iconic Steve McQueen film that set the standard for car chases.

Great story, BTW, in today’s LA Times about Bullitt:

“During the making of Bullitt, McQueen was more than willing to get behind the wheel of his police detective character's dark green Mustang fastback for the chase sequence with the bad guys in a Dodge Charger.

“In a 1992 Associated Press interview, Yates remembered McQueen as ‘a lot of macho,’ which became abundantly clear while directing one part of the chase.

“‘I was in the back of the Mustang and Steve was going about 120 mph,’ Yates recalled. ‘We came to the last downhill section and when we got to the top of the hill Steve was still going pretty fast. I tapped him on the shoulder and said, 'We can slow down now, we're almost out of film.' Steve very calmly said, 'We can't. There aren't any brakes’.

“The Mustang, according to the AP account, continued to race down the hill past the film crew and onto a main road before McQueen slowed it down by driving up an embankment.

“‘If it was anyone else, we might not have made it,’ Yates said.”

That’s a pretty good business metaphor - if you;re going to go fast, make sure you have the right guy behind the wheel.

Published on: January 11, 2011

Yesterday, commenting on a story about Safeway’s response to the assassination attempt over the weekend on Rep. Gabrielle Giffords (D-Arizona) in front of one of its Tucson stores while she participated in a “Congress On Your Corner” constituent outreach event, I wrote:

There is much we don’t know about this shooting, and it remains to be seen whether anyone will learn anything from what happened, and to what extent the toxic political discourse in this country contributed to these sad events.

I do think that, whatever the state of mind or emotional condition of the man who committed these crimes, there is phrase for what he did. It is, to be sure, a kind of terrorism. It doesn’t matter what the rationale or motivations were; he apparently described himself as a terrorist, and the shooting has been successful in making a lot of people afraid.

Ironic, on some sort of small scale, that last week I got a lot of grief from some MNB users because I made the observation (relevant to a different story) that not all Muslims are terrorists, and not all terrorists are Muslims. Loughner isn’t a Muslim, to the best of my knowledge, and neither were people like Timothy McVeigh, Terry Nichols,James W. Von Brunn or Andrew Joseph Stack III.

The point is this. There is evil all around. Categorization based on ideological over-simplification does not do it - or us - justice.

It was perhaps inevitable that I would then get the following email:

Seems very noteworthy that you left out Bill Ayers and all his Weathermen buddies on the list of domestic terrorists.  But then again, what do I know; now you and Rachel Maddow and Keith Olbermann have their sandman nut with which to pontificate against.

Go back and read my original comment. I didn’t blame anyone or even any political persuasion ... in fact, while I think questions have to be asked about who and/or what influenced the assassin’s thinking, one of the problems we have right now is that these questions are being posed in public forums without filters; it used to be that the questions would be posed in newsrooms, but wouldn’t make it on the air or into newspapers until they were answered with some degree of proof or certainty.

I have no idea what Rachel Maddow or Keith Olbermann said last night. I do know what Jon Stewart said - and you ought to check it out online, because he absolutely nailed it. http://www.thedailyshow.com/

I believe this. Every politician and pundit in America, regardless of their persuasion, ought to be thinking twice about what they say and write, and what they post on the internet.

And they ought to consider, as a source of inspiration, the words that Robert F. Kennedy uttered on the evening of April 4, 1968, in the city of Indianapolis, in largely improvised remarks designed to inform a largely African-American audience about the assassination of Martin Luther King Jr. His goal was to calm, to illuminate and inform, not incite.

He said, in part:

“What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence and lawlessness, but is love, and wisdom, and compassion toward one another, and a feeling of justice toward those who still suffer within our country, whether they be white or whether they be black.

“So I ask you tonight to return home, to say a prayer for the family of Martin Luther King -- yeah, it's true -- but more importantly to say a prayer for our own country, which all of us love -- a prayer for understanding and that compassion of which I spoke.

“We can do well in this country. We will have difficult times. We've had difficult times in the past, but we -- and we will have difficult times in the future. It is not the end of violence; it is not the end of lawlessness; and it's not the end of disorder.

“But the vast majority of white people and the vast majority of black people in this country want to live together, want to improve the quality of our life, and want justice for all human beings that abide in our land.

“And let's dedicate ourselves to what the Greeks wrote so many years ago: to tame the savageness of man and make gentle the life of this world. Let us dedicate ourselves to that, and say a prayer for our country and for our people.”

Published on: January 11, 2011

In the BCS title game last night, Auburn defeated Oregon 22-19 with a last-minute field goal, earning its first national championship since 1957.