retail news in context, analysis with attitude

Published on: January 13, 2011

Now available on iTunes…

To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las


Hi, I’m Kevin Coupe, and this is MNB Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.

There’s been some discussion here on the site this week about the importance of providing relevant services to consumers, especially as they get older and have more need of various kinds of assistance and less need of stuff. That sort of plays into my continuing refrain - that to be successful in the 21st century, retailers need to be not just a source of product, but a resource for information. And I recently ran into a situation that illustrates both the problem and the solution.

You may have noticed that last week there was no MNB Radio podcast. The reason is simple. Early in the week, I bought and downloaded onto my laptop the new edition of iLife, which contains the Garage Band program, which is what I use each week to do MNB Radio. It always has been simple to use, making the process of recording and editing the podcasts fairly simple, even for someone like me who has no facility for such things.

But last week, a couple of hours before deadline as I went to edit my MNB Radio piece, I found that the new Garage Band program did not work the same way as the old one...and I couldn’t figure out how to edit the damn thing, no matter where I looked online for assistance. So, we went without. It was a perfect example of having the latest, new and improved product, but since I had no idea how to use it, the product was useless to me.

Until this week, when I made an appointment for some One-To-One training at the Apple Store, and they showed me how to do what I needed to do in about five minutes ... and then spent the rest of the hour helping me with my iPad and various other questions I had. It was a perfect example of providing a relevant service that made the product useful ... and especially helpful to people in my demographic - which is to say, people who love using Apple products but possess a personality flaw that keeps them from intuitively figuring out the solutions to computer problems.

As always, Apple solved the problem, as it almost always does with its Genius Bar and One-to-One services. It is a perfect model of what many 21st century retailers need to do in order to remain relevant and compelling to their shoppers - providing not just product, but being an accessible resource for information.

I have to go now. I need to edit this podcast into usable form, and then start researching the new Verizon iPhone, which I am really, really looking forward to.

For MNB Radio, I’m Kevin Coupe.

Published on: January 13, 2011

by Michael Sansolo

There was little to learn about success in the Denver Broncos’ recent dismal season. But in the off season, the Broncos may be showing a few things to the business and sporting community.

At the end of the season, Denver hired legendary quarterback John Elway to restore the glory days of the franchise. He may not do it on the field, but Elway clearly bears watching. As Yahoo sports is reporting, Elway is taking communication with Broncos’ fans to a whole new level.

It’s no big deal that Elway is sharing thoughts on Twitter as that’s happening everywhere these days. It’s the content of those thoughts that is so shocking. For instance, the Broncos need a head coach for next season and Elway has talked about some of the candidates. He even posted an update this week when one candidate’s interview was delayed by a snowstorm. He’s talked about different players, offering his thoughts on what they are doing right and where they can improve. In a big way, Elway is directly challenging the usual secretive culture of the National Football League where everything is a closely guarded secret.

There’s always the risk of too much information, but Yahoo’s sports columnists said that is old thinking. They see the outreach effort providing a huge benefit. The NFL lives on television revenue and Elway is making fans even more loyal to the team and the league.

When he played, Elway was always worth watching and is widely regarded as one of the greatest quarterbacks to ever play the game. As an executive experimenting with customer outreach to a level never before seen in his business, Elway might have an even larger impact. And, in that way, he may provide a lesson for businesses far from professional football.

That seems like a pretty good eye opener for today.

Published on: January 13, 2011

Interesting piece in the Houston Chronicle about the growth of store-within-a-store concepts, noting that Kroger is opening New York-based Murray’s Cheese Shops inside some of its Houston stores. The story notes that the trend extends beyond supermarkets, with JC Penney opening Sephora shops, Sears opening Edwin Watts Golf Shops (complete with an indoor driving range), and Macy’s opening Sunglass Huts boutiques.

According to the story, “The arrangement can work well for both parties. The smaller store gets to be in a high-traffic retail spot while helping the surrounding store differentiate itself from competitors ... The trend now gaining traction in the U.S. has been popular for years in Asia, particularly in high-end Asian department stores, said Richard McFarland, an associate professor of marketing at Kansas State University who has researched stores within stores. Europe also has many of such concepts.”

In Kroger case, the company “partnered with Greenwich Village-based Murray's Cheese shops to bring them inside some of its locations. Each store-within-a-store carries specialty cheeses, as well as cured meats, cheese condiments such as crackers, fig paste, nuts and olives. An on-site cheese master slices samples for customers from a cheese wheel.

“Murray's Cheese gives the large grocer a point of differentiation, Kroger spokeswoman Rebecca King said.

“Murray's has two stand-alone cheese boutiques, both in New York. Company vice president Liz Thorpe said the partnership with Kroger gives it national reach.”

Published on: January 13, 2011

Tesco-owned Fresh & Easy Neighborhood Markets announced that it will finally begin opening stores in Northern California, a move that has been delayed in part by the state’s dismal economy, and in part because the company felt the need to tweak the small-store concept that it originally brought to Southern California, Arizona and Nevada.

The 11 stores are in San Jose (2), Danville, Pacifica, Concord, Vacaville, Modesto, Walnut Creek, Pleasanton, Hayward, and Napa, and will open between March 2 and April 27. There also are two stores planned for San Francisco, though no dates yet have been set for those debuts.

“Opening our first Northern California stores is another big step in our expansion plans, and we look forward to bringing fresh, wholesome food at affordable prices to these neighborhoods,” said Fresh & Easy CEOTim Mason in a prepared statement. “We’re thrilled by the response we’ve already seen on our website for these new job positions and we are proud to bring more good jobs to the area.”

Published on: January 13, 2011

The Business Journal reports that Roundy’s plans to open up three of its new, upscale Mariano’s Fresh Market units in Illinois during2011, following the opening of a single version of the format in Arlington Heights. According to the story, six locations actually have been identified as sites for Mariano’s, but just apparently just three of them will be built this year.

Published on: January 13, 2011

The Chicago Tribune reports that “Walgreen Co. plans to expand its fresh food offerings in several hundred stores in coming years, company chief executive officer Greg Wasson told shareholders this afternoon.” Wasson said that the company plans to evolve from a “retail drugstore to a retail ‘health and daily living store.’”

“Our intent is to own outright the strategic territory of ‘well,’” Wasson told shareholders. “Our goal is to help people live well, stay well and get well.”

Published on: January 13, 2011

The Chicago Tribune reports that 23 “Kmart stores in Illinois and three other markets are testing financial centers where consumers can cash checks and pay bills. Kmart joins Walmart in offering basic services to consumers who have little if any access to traditional banks.” The story notes that Walmart has money centers in about 40 percent of its 3,000 US supercenters, which are designed to cater to the roughly 10 percent of the US population that does not have banking relationships.

"We're looking at how to better utilize the real estate in our stores and to better serve our customers," said Shannelle Armstrong, spokeswoman for Kmart parent company Sears Holdings.

The story goes on: “The Kmart initiative, which also includes money transfers and money orders, is headed by Susan Ehrlich, president of Hoffman Estates-based Sears Financial Services. On Monday she was named to the Federal Reserve Board's consumer advisory council, which advises the board on its duties under the Consumer Credit Protection Act and on other matters related to consumer financial services.”

Published on: January 13, 2011

• Ahold-owned online grocer Peapod announced yesterday that it has developed a new iPad application, which it said “features a product search browser, lists weekly specials, tracks items and updated sales from previous purchases, acknowledges frequently bought items to add to orders, as well as (allowing) iPad users to view items in a list or grid format.”

Published on: January 13, 2011

The New York Times reports on Procter & Gamble’s male-oriented website, ManoftheHouse.com, which is designed to offer family men advice on a wide range of subjects - from romance to cooking, cleaning to grooming, exercise to child-rearing.

The move follows similarly themed websites aimed at women and teenaged girls, which P&G has found to be successful and extending its marketing message through a content-driven venue.

There is some skepticism about the site, with a few analysts suggesting that men are more interested in single subject publications as opposed to broadly themed efforts. But P&G believes that by “speaking to the whole man,” it can take advantage of of an untapped marketing opportunity.

Published on: January 13, 2011

Oregon Attorney General John Kroger said yesterday that his office has filed a lawsuit charging that “Johnson & Johnson and two subsidiaries exposed consumers to defective supplies of Motrin by delaying public disclosure of the problem for more than a year. The Department of Justice said rather than an immediate public recall of the Motrin, Johnson & Johnson and its subsidiaries allegedly attempted to quietly remove Motrin containers from store shelves. The ‘phantom recall’ failed to notify consumers who had already purchased the defective product and exposed additional consumers by delaying public disclosure for more than a year.”

According to the announcement, “McNeil-PPC and McNeil Healthcare, subsidiaries of Johnson & Johnson, discovered in late 2008 that supplies of Motrin sold in 8- and 24-caplet containers were defective. The containers were sold at gas stations, truck stops and convenience stores. Company tests indicated that certain Motrin supplies failed to dissolve properly and, as a result, consumers might not receive the expected dose of ibuprofen. Company documents submitted to the U.S. FDA says that could lead to "a worsening of pain, fever or inflammation". McNeil notified the FDA. But instead of disclosing the existence of the defective Motrin to the public and conducting a recall, McNeil allegedly hired contractors to go into stores in early 2009 to secretly buy the product without telling wholesalers, retailers or the public.

“Buyers were instructed not to tell retailers the purpose of their purchases, according to company documents.”

The New York Times this morning reports that Johnson & Johnson’s responded to the lawsuit in an email to a reporter, saying: “McNeil’s actions were consistent with applicable law and there was no health or safety risk to consumers associated with this limited recall.”

Published on: January 13, 2011

Yesterday, due to an editing error, we inadvertently misquoted Supervalu CEO Craig Herkert’s comments about the possibility of selling one of the company’s banners.

Yesterday the quote read: “Today's market is a buyer's market, not a seller's. If there are opportunities to do some things that are beneficial, we'll certainly evaluate them, but we do feel under pressure that we must divest of any particular assets at this point."

What it should have said is: “Today's market is a buyer's market, not a seller's. If there are opportunities to do some things that are beneficial, we'll certainly evaluate them, but we don’t feel under pressure that we must divest of any particular assets at this point."

Published on: January 13, 2011

• Weis Markets announced Mike Mignola, a company regional vice president, has been named Vice President for Merchandising, charged with overseeing the development and execution of sales programs and initiatives.

Published on: January 13, 2011

Responses to yesterday’s news and commentary about Supervalu’s continuing issues...

One MNB user wrote:

I think the Titanic deck chair analogy about Supervalu misses the mark. They are like the Vikings this year. Everything got old at once. You can have a game plan but if your competition is stronger and faster and leaner than you are then you are in trouble. Waiving old players (stores) without stronger replacements will not strengthen the team. Supervalu’s debt keeps them out of the free agent market. Their bandaged ragtag team is now being picked apart by a new batch of skill position retailers both in and out of their class of trade.
 
(Changing metaphors)

Supervalu is poorly positioned with its three business groups (Retail, wholesale & hard discounting) and has few transformational resources. (CEO) Craig Herkert has the controls of a company that is in a classic Jim Collins “Doom Loop”.   Will Herkert be another Chesley Sullenberger and safely land the assets or will he more closely resemble Max Pruss?  We should know quickly.

FYI...Max Pruss was the captain of the Hindenburg.

Another MNB user wrote:

Kevin, as a former Albertsons/SVU employee, I read your comments today with interest. Then I reflected back on the sale of a once great company called Albertsons, and recalled that the "under performing assets", about 850 stores, were sold to Cerberus Capital Management for somewhere around 1.2Bn.

I was shocked to see that the current market value (shares outstanding X current share price) for SVU is currently 1.64Bn.....which means that for about 25% more than Cerberus paid for the "under performing assets" one could buy all of the "premium assets" (about 1600 stores), plus the original SVU banners (like Cub, Save A Lot, Shoppers, etc) plus the wholesale business.

I don't think Herkert is thinking about sales of individual banners, I think he's imagining someone buying them ALL.  Even at a 40% premium, someone could pick up a $40Bn revenue stream for $2.2 Bn, and at that investment level could really afford to be competitive and relevant.  Of course there is the sticky issue with lenders, but it makes for an interesting discussion.

From another MNB user:

Ever since SuperValu started down that treacherous path from voluntary wholesaler to chain retailer, it has been bad news after bad news. That path—from wholesaling to retailing—is a rough road when a company tries to do both. Examples that this path meets a dead-end: Fleming. ScotLad. Next victim is likely Supervalu.

I hope the remaining independent grocers that Supervalu supplies have another wholesaler’s number on their speed-dial.

And another MNB user chimed in:

Thanks for the brief on Supervalu’s upcoming summit for its top 400 manufacturers re pricing.  Reminds me of the meetings Fleming used to call where they would haul all the manufacturers in and give them Hell for just about anything they could think of.  This just so cracks me up.  We get letters, mostly from the big guys like SV, annually, reminding us that we MUST insure that they receive equal discounts/promotions in relation to other customers.  Yet, when it comes to pricing, they want a lower price than anyone else.  Does SV really think their manufacturers are singling them out for price increases and not passing the same along to their other customers as well?  Can they not conceive that some of their lower priced competitors have more efficient distribution/purchasing systems and actually pass on any cost savings to the consumer?

For obvious reasons, pls don't use my name, but when I read this line from Supervalu - “The company will host a vendor summit later this month with its top 400 manufacturers to negotiate more effective partnerships and better pricing” - it made me chuckle. The combination of "vendor summit" and "negotiate" and "effective partnerships" is nothing more than a clever way of saying Supervalu is going to try and shake down their suppliers even more than they already have. We have walked away from Supervalu business because we can't make money. There is nothing resembling a "partnership" at Supervalu. We are having troubles getting good people to even want to work on the business. They see it as a career dead-end.




I got a lot of email yesterday about the exchange between an MNB user and me regarding the toxicity of the current political discourse, and how it is reflected in - even if it did not cause - last weekend’s shootings in Tucson. I’m not going to run them all, because I don’t want to belabor the discussion ... they pretty much all agreed with me, and decried this particular person’s perception of the climate, which seemed to hinge on his being an aggrieved victim.

But there is one email I would like to run ...because it makes the whole discussion worthwhile. It refers to my posting a segment of the speech that Robert F. Kennedy gave in Indianapolis on the evening of Martin Luther King’s assassination, in which he successfully called for calm at a time when violence and rioting easily could have broken out.

Thank you for reminding us of the words of RFK.  His words are very appropriate for the Tucson situation.  My 12 year old son is working on his citizen of the nation merit badge.  Saturday he was given the assignment to watch the nightly national news for one week.  We do not subscribe to cable TV.  We get network channels but the TV does not have a significant role in our house.  So for four-nights straight the TV has been turned on and we watch ABC put on their 30 minute news cast mostly focused on Tucson.

Since we do not let cable 24 hr news crap pipe into our home and we rarely watch network news, we were first uncomfortable pushing this weeks news on to our sons and we were struggling with how to put it into perspective for 10 and 12 year old boys.

I brought yesterdays MNB segment on RFK to the dinner table last night.  We past it around the table, each member of the family reading a section.  It made my wife and me feel better that we put a healthy perspective on the violence for our boys.

Who knows how much sunk in.  I like to think quite a bit.  I couldn't have said it better to them and I was thankful to have something so meaningful to give them.

It was my pleasure. For those of who who missed it, here are some of the relevant passages:

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...

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.

“Make gentle the life of this world.” Wouldn’t it be nice...