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    Published on: February 17, 2011

    by Kevin Coupe

    Content Guy’s Note: Below is a commentary on the same subject as the video piece, but it isn’t word-for-word the same. You can look at both, or is up to you. I look forward to hearing from you.

    Earlier this week, the Wall Street Journal had a story about the Tappan Zee Bridge, a 55-year old bridge that crosses the Hudson River, connecting Westchester and Rockland Counties, north of New York City. The point of the story may have been architectural and governmental, but the lesson was certainly applicable to business.

    Here are the basic facts.

    The Tappan Zee Bridge was opened in 1955, after being built at a cost of $640 million (in today’s dollars). Some 140,000 cars a day go across it ... and after more than five decades of usage, the bridge is judged to be structurally deficient; it has some of the same problems as the Minnesota bridge that collapsed in 2007, killing 13 people.

    Now, the Tappan Zee is not in danger of falling down anytime soon. But it does need replacement - which could cost somewhere between $8 billion and $16 billion, depending on what kind of bridge they build. The problem is that New York State doesn’t have the money to build a new bridge, and so at least some folks are considering the possibility that a bridge built and controlled by the private sector might be the best way to go.

    And while the government debates these options - a process that is likely to take years - the state has to keep repairing the bridge. Roughly $150 million has been spent on upkeep just over the past five years, and an equal amount it likely to be spent over the next two or three years.

    No matter how you look at it, the options seem to be bad and worse.

    Here’s the business lesson. Thirty years ago, I began my writing career as a reporter for the Rockland Journal News, and I used to cross the Tappan Zee Bridge twice a day for more than two years. And I vividly remember that even then - three decades ago - people were talking about the fact that there was too much traffic for the Tappan Zee to handle, that they either needed to build a companion or replacement bridge.

    Faced with a bad situation, the people in charge of the Tappan Zee Bridge punted. They simply avoided making a tough decision, and now, all these years later, the situation is worse, the costs are higher, and the same tough decisions need to be made.

    The scenarios and problems we face in business - and in life - rarely get better or easier to deal with when we ignore or delay them. We just end up facing obsolescence or irrelevance ... or the whole damn structure falls down.

    And that’s what’s on my mind this morning. As always, I want to know what is on yours.
    KC's View:

    Published on: February 17, 2011

    by Kevin Coupe

    “She” is the pronoun that, even to this day, is used by most food retailers to describe their customers ... even though there is evidence that more men are food shopping than ever before, in part because of evolving gender roles and in part because the recession was harder on men than women, which forced the issue.

    Now, Advertising Age reports that “for the first time in American history there are now a million more female college graduates than male. As recently as 2000 it was the opposite: There were a million more men than women with a bachelor's or graduate degree ... For all types of higher education, the number of women earning degrees is rising faster than the number of men earning the same degree. But it looks like men, who are almost always outnumbered by women in college classes, are dropping out of college at a somewhat higher rate than women.’

    The story goes on: “It is pretty clear that in a global, information-based economy where most of the higher paying new jobs will require some degree of higher education, women will have an advantage. As that advantage grows, the pay gap between men and women will most likely diminish, with possible consequences for family formation.”

    Could this mean that women will be doing less food shopping than ever? Maybe.

    Then again, it is possible that women won’t give up any of their responsibilities, and will shoulder more and more.

    (It’s like they used to say about Ginger Rogers...that she had a harder job than Fred Astaire because everything that he did, she had to do backwards and in heels.)

    But at the very least, this shift in demographics need to be understood and dealt with - because while women have always been smarter than men, now they’re going to be better educated, too.

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

    Published on: February 17, 2011

    Donald E. Becker, executive vice president of The Kroger Co. and a four-decade veteran of the company, passed away unexpectedly yesterday in Cincinnati after suffering an aneurysm. He was 62 years old.

    "We are deeply saddened to lose Don, our dear friend and extraordinary leader," said David B. Dillon, Kroger's Chairman and Chief Executive Officer. "Don leaves a legacy of enthusiasm and passion for doing what's right for our customers and our associates. He touched the lives of countless people in our company as well as throughout our industry and community. He was a true 'people person' who mentored many associates at every level of our business. Our thoughts and prayers go out to his wife, Lynn; daughter, Mackenzie; son-in-law, CJ; grandson, Becker; and all of his family and friends at this difficult time."

    "He was an innovative leader who led our merchandising and procurement teams through great expansion and change," said Rodney McMullen, Kroger's President and Chief Operating Officer. "Don's deep industry knowledge and strong leadership skills engaged and inspired those around him. He was a great teacher and friend who was also eager to learn from others. We will all miss him deeply."

    Don joined Kroger in 1969 as a clerk in the Cincinnati/Dayton Division. During his career, he held a number of leadership positions, including Vice President of the Cincinnati/Dayton Division and President of the Central Division. He was promoted to Senior Vice President in 2000 and to Executive Vice President in 2004. In his role as Executive Vice President, Don led the company's merchandising and procurement for grocery, perishables, drug/GM and pharmacy. He also had responsibility for advertising, consumer research & customer loyalty; manufacturing & corporate brands; customer insights & strategy; supply chain; and supplier diversity. The Cincinnati/Dayton Division and The Little Clinic also reported to Don. Don was passionate about inclusion and diversity and served as co-chair of Kroger's first General Office Cultural Council.
    KC's View:

    Published on: February 17, 2011

    Sprouts Farmers Market and Henry's Farmers Market, two companies originally founded by the Boney Family that have operated under separate owners for almost a decade, announced the execution of definitive agreements to combine operations under the majority ownership and sponsorship of Apollo Management, L.P., one of the world’s leading private equity firms.  

    The combined company will operate under the Sprouts Farmers Market name and will be one of the largest players in the fast-growing "farmers market" specialty segment of the retail food industry, as well as one of the largest grocers in the Western U.S. with annual revenues in excess of $1 billion.  The transaction is expected to close early in the second quarter 2011.

    According to the announcement, “the combined company will be managed from an operating perspective by the Boney family and will eventually operate all stores under the single name Sprouts Farmers Market.  The new company will have 98 stores and more than 7,000 employees at the time the transaction is closed.  The combined company plans to open up to 10 additional new stores during 2011 ... The combination of the Sprouts and Henry’s businesses will occur through an equity investment and recapitalization of the existing Sprouts business by Apollo.  A concurrent purchase of the Henry’s business will be made from Commerce, California based Smart & Final Holdings Corp., an Apollo portfolio company since 2007.  Sagent Advisors acted as financial advisors to Sprouts.  Following the transaction, Apollo will be the majority owner of Sprouts and will continue to be the principal equity owner of Smart & Final Holdings.”

    Andrew S. Jhawar, a Senior Partner at Apollo and Co-Head of Apollo's Consumer and Retail Industry Group said, “After the combination, Sprouts will be one of the largest, growth oriented specialty retailers in the U.S. with a focus on natural and organic products.  Apollo looks forward to supporting the management team's vision for significant future new store growth across the country.”

    Stan Boney, Chairman of the Board at Sprouts said, "The combination of Sprouts and Henry's is an exciting chapter in our family's lives, and we look forward to continuing to deliver on our mission of helping America eat healthier, live longer and spend less. Apollo is one of the most experienced and successful private equity firms in the nation and we are excited about their support for our business model and look forward to working together with Andy and his team."

    Apollo Management, L.P. and its subsidiaries are affiliates of Apollo Global Management, LLC. Apollo’s investments in retail and consumer-oriented businesses have included Smart & Final, Claire’s Stores, CKE Restaurants, General Nutrition Centers, AMC Entertainment, Rent-A-Center, Ralphs Grocery Company, Dominick’s Supermarkets, Zale Corporation and Proffitt’s Department Stores.
    KC's View:
    Look to see more of these kinds of deals. Money is a little looser than it has been, and family-owned companies know that competing is only going to get tougher in coming months and years. So if they can find a way of maximize their ROI and keep their stores operating by selling to private equity companies - or bigger chains - they are going to do it.

    Published on: February 17, 2011

    USA Today reports that a new restaurant chain - called “Stacked: Food Well Built” - opening its first three units in Southern California will feature iPads on the tables that allow patrons to “look at meal options; design their own burgers, pizzas and salads; and, if they want, use the iPads to pay for the meals.”

    This innovation is seen as attractive to a specific demographic: “Young people, in particular, want to see more technology in restaurants, says Hudson Riehle, research chief at the National Restaurant Association. In a recent survey, two of three 18- to 34-year-olds said they'd favor restaurants with high-tech gear.”

    The iPads are in metal frames that are designed to keep them relatively safe in what can be a chaotic environment; they also are equipped with alarms that will go off if people try to take them from the restaurants.

    According to the story, “Others have tried iPads. Restaurants by Delta Air Lines gates at New York's John F. Kennedy and LaGuardia airport installed iPads at tables that let guests custom-order meals. Bone's Restaurant in Atlanta uses iPads for its wine list. Co-owner Richard Lewis says wine sales jumped 20% since the iPads were added six months ago.

    “Someday, they'll be at all restaurants, Lewis says. ‘It's the future’.”
    KC's View:
    I’ve always believed in the Calvin Trillin restaurant rule - that the quality of a restaurant’s food is usually in direct inverse proportion to the view ... and that goes double for restaurants on top of buildings, and quadruple for revolving restaurants on top of buildings.

    Which is a long way around to my point - that iPads in restaurants are fine, but I’m actually more interested in the quality of the food.

    Same goes for technology in supermarkets. it is a good thing, it can be a differential marketing advantage and it can make a store relevant to the younger generation. But the food has to be good.

    Published on: February 17, 2011

    As expected, troubled bookstore chain Borders filed for bankruptcy protection yesterday, saying that it will close 200 stores, or roughly one-third of its fleet.

    The company has hired liquidators to handle going-out-of-business sales at those stores, beginning this Saturday.

    According to the Detroit Free Press, “The move comes after lengthy turnaround efforts -- including layoffs, numerous store closings and arrangements with creditors -- have failed to keep the company above water. Borders has 6,100 full-time employees and 11,400 part-time
    employees. It has shed thousands of store and corporate employees over the past few years. About 6,000 workers could lose their jobs in the current restructuring.”

    Among the units to be closed are high profile flagship stores on Chicago’s Miracle Mile, and adjacent to San Francisco’s Union Square.

    Borders President Mike Edwards said he hopes to reposition Borders to be "a potentially vibrant national retailer of books and other products."
    KC's View:
    I feel bad for the people working at stores about to be liquidated. Among the worst experiences of my professional life were going-out-of-business sales run by liquidators at two men’s clothing stores where I worked part-time in the seventies and eighties. The British Stock Exchange in Marina del Rey, California, and County Boys’ and Men’s Shop in Scarsdale, NY....RIP.)

    Just awful experiences.

    But I may feel worse for the people staying at Borders ... because, as the Free Press notes, management there doesn’t seem to know what the next iteration should be.

    Published on: February 17, 2011

    The Indianapolis Star reports that Marsh Supermarkets has come to an agreement with the National Labor Relations Board (NLRB), agreeing to pay $42,500 to two fired workers and promising “not to interfere with further employee attempts to organize in a labor union.” The workers, however, will not be rehired.

    According to the story, the agreement came “shortly before a hearing was to begin on administrative charges that Marsh managers violated labor laws by attempting to thwart union efforts.”

    Marsh released a statement saying that “Marsh has consistently maintained that we did not violate the (federal labor laws) and insisted on including a non-admissions statement in the settlement as well as no reinstatement” for the fired employees.
    KC's View:

    Published on: February 17, 2011

    In California, the Modesto Bee reports that Save Mart Supermarkets will eliminate 103 distribution center jobs from facilities “in Merced, Roseville and Vacaville, as well as in its labor relations department.
    KC's View:

    Published on: February 17, 2011

    Crain’s Chicago Business reports that PepsiCo plans to largely phase out its familiar Tropicana orange juice cartons and replace them with clear bottles, a move that the story suggests could help the brand compete better against Coke’s Simply Orange brand.

    According to the story, “It is ‘a natural step’ after the company got a positive response selling its lower-calorie Trop50 juice in clear bottles, Tropicana spokeswoman Gina Judge said.”

    And, Crain’s notes, “This is not the first change to Tropicana's packaging. Last year, it trimmed the size of its cartons to 59 ounces from 64 ounces to offset higher costs.

    “In 2009, the company replaced the orange and straw logo with a glass of orange juice, but quickly brought back the old logo after sales plunged.”
    KC's View:
    They can change the packaging, but they’d better find a way to keep the “straw sticking out of the orange” logo.

    Published on: February 17, 2011

    The Bergen Record reports that the troubled and bankrupt Great Atlantic & Pacific Tea Co. (A&P), one day after it announced that it wants to close 32 stores, said that it has hired a half-dozen new merchandising and marketing executives.

    According to the story, the new executives are:

    • Marie Robinson, formerly of Smart & Final, Walmart and Toys R Us, is the new senior vice president of supply and logistics.

    • Nancy Gaddy, formerly of Winn-Dixie, is the new vice president of deli and bakery.

    • Kevin Broe, formerly of Supervalu, is the new vice president of own brands.

    • Harry Giglio, previously an executive at Weis Markets and Stop & Shop, is the new vice president of meat and seafood.

    • Bob Weidner, previously of Supervalu-owned Jewel and Prism, is the new vice president of customer experience and space management.

    • And Corey Pearson, formerly of Supervalu, is the new vice president of pricing and analytics.
    KC's View:
    Good luck to all of them. And I mean that sincerely.

    Published on: February 17, 2011

    Michael Sansolo had an Eye-Opener yesterday about how “the whole can be less than the sum of the parts and whenever it happens, it’s instructive.

    “Apparently, it is happening right now on the great white way of Broadway, where the most expensive musical ever - Spiderman: Turn Off The Dark - is turning into an epic lesson. On paper, the musical should be a surefire winner. Its subject is a comic book character that is well known and loved, so much so that the franchise has produced three high grossing movies (with a fourth, a reboot, currently in production). The show’s director is a Broadway luminary. Bono and The Edge, the heart of the mega-group U2, supply the music.

    “In other words, Spiderman is a can’t miss success. Except it apparently isn’t all that good. The show has gained a stunning amount of notoriety for the spate of injuries suffered by various actors as they fly around and above the audience on cables. There have been so many mishaps that the show’s official opening has been postponed time and again.”

    Sansolo concluded: “There is a great object lesson in this. Spiderman was blessed with all the best ingredients, but still came out flat. It’s like a perfectly designed store or product that seems to be blessed in every way except customer appeal. It’s why we all have to keep asking ourselves tough questions and remind ourselves that there is no sure thing. EVER!”

    MNB user Dave Henry responded:

    Saw it in December. Had to go alone as my wife and friends wanted no part of it ! Thought the first act and storyline was very good. Second act needed a lot of work. No technical problems that night. The music was terrific (full disclosure - I am a Huge U2 fan ). Hope they at least produce a soundtrack. Several friends tell me reworked second act much better. Despite the critics, it may survive.

    MNB user Ramesh Murthy wrote:

    I took my family of 6 to see it January (my original tickets were for Thanksgiving Day weekend, but those performances were canceled), primarily because my youngest (3 yrs old) is such a fan of Spiderman.

    We spent quite a bit to have “premier” seats and when it was all over, the overall reviews from the family was quite positive – and by the way, the theatre audience really seemed to enjoy it – there was an almost “electric” buzz from the moment the show started. My 3 year old was glued to his seat watching the play from start to finish (How many things can keep a 3 yr old engrossed for 2 hours?). Truth be told, I was not one of the most positive reviewers of the production (loved the technical effects but found the story and music a little flat) but I have to say it was a great time.

    I think that there is a slightly different lesson to be learned from all of this, other than the sure thing. The lesson is that sometimes breaking the status quo and pushing the envelope of what is possible may take longer than you thought – but you need to have the conviction of your beliefs.  What the folks who are putting on Spiderman are trying to do is go beyond what has been deemed possible in the setting of a theatre. In all fairness to them, most shows have their previews off-Broadway (and outside the spotlight), but that was not possible in this case because they actually had to make structural modifications to the theatre to accommodate the set and special effects of the play. The problem I have with the critics is that they are not willing to acknowledge that a production of this ambition is going to have some (if not many) start-up problems and will take some time to fine tune.  It is probably true that in Broadway time, this production has been taking too long to get going – but I believe that the producers, writers, etc. have been taking the feedback and working to get the story and music on par with the technical elements. Maybe they shouldn’t be charging full price, but I am fairly certain that the shows are sold out now for some time. In the end, we were very thrilled that we had a chance to see this musical because we felt that we were experiencing a “game-changer” for what people might be able to do in the theatre setting.

    MNB user James Bingham wrote:

    The interesting message here is that the critics hate it but apparently those who have seen it (the normal people) love it.  It will be interesting to see how the masses view the disruptive product versus the supposed experts.

    Having been a critic, let me just suggest that the critics - quite fairly, in my view - felt that people were paying full price for preview tickets to a show that clearly is a work in progress.

    I don’t know about you, but if I’m going to pay good money to see a Broadway show, I want to see a finished product - I don't want to see actors on cables getting all tangled up so they have to stop the show to untangle them (As happened last week.)

    I do think that some people are attracted to the freak show nature of it - just like millions of people will tune into “reality television” programs that specialize in people being humiliated in public, just like people will slow down to look at a car wreck or stop to watch a building fire.

    And just to be clear, I love the theater. I’d go weekly if I could afford it and had the time. And one of the best times I ever had in the theater was the preview performance I saw of “Spamalot.”

    So I come to this with an open mind.

    On the subject of Safeway’s new nutrition labeling program, MNB user Mark Dickerson wrote:

    I applaud Safeway for their efforts but it is like putting lipstick on a pig saying the choices will be healthier.

    If they wanted to help consumers make informed choices I suggest they put a red tag in front of each food product that contains artificial colors, flavors, or preservatives.

    This would dispel any myth that upwards of 90% of the products they sell are choices for a healthy lifestyle.

    Food additives are soft kill agents approved as safe in order to reduce populations and to drive up the medical needs of the public.

    The marriage of state and corporate powers in this country has gotten so out of hand that there are no longer any true protections.

    The FDA has approved so many known carcinogens, toxins, and excitotoxins that is stands as proof the revolving door between corporations and the very agencies they regulate is a form of collusive delayed pay off.

    How many people have you seen in the past year or two suddenly get sick with cancer, autoimmune or other degenerative disorders, lost their hair prematurely, or experienced infertility? I’ve lost count.

    These are all the result of 20, 30 to 40 or more years of ingesting harmful food additives, unsafe medicines, harmful vaccine adjuvants, sodium fluoride, and volatile organic compounds.

    The combined cocktail of chemicals deemed “safe” by the FDA or USDA have an additive effect over a lifetime and we are now seeing epic die offs as a result.

    Let’s see you try and go to print with a story of this nature.

    It will never happen, KC.

    Why? Because the guilty parties involved have infiltrated the media and there has been a gag order on any truth getting out that would damage sales of big pharma, the AMA, CPG, Agribusiness, big banks….. the list goes on and on.

    All in cahoots all slowly reducing the population.

    I’d love to contribute to one of your columns.

    First of all, you just did.

    Second of all, I never got the gag order from the conspirators. Damn! I hate it when I get overlooked.

    Another MNB user wrote:

    There are so many “less than healthy” items stocked all over the usual grocery store, and shoppers know it. When a grocery store sets out tags that identify a “healthy” item, using whatever standards they use, and places these ”healthy” items amongst the “less than healthy” items…how can the consumer trust the grocer, when he has proven for decades that he is interested in their money and not their health. It’s a matter of trust. And the grocer is up to bat.

    We posted an email yesterday from an MNB user who felt that there were certain kinds of stories - like the “Chick-fil-A/gay marriage” and the “CEO arrested for child prostitution” stories - that I ought to stay away from if I want to protect my brand.

    I disagreed. I think that doing those stories is critical to the MNB brand.

    One MNB user wrote:

    When I saw the news about the CEO of Wild Oats, my first thought was, “I wonder how Kevin Coupe is going to address this horrible story?”  How’s that for personal brand?  And as far as how he or she “needs to help you” seems awfully close to late week’s “Christian businessman” who “wants to help you understand” life as God has created it.

    Never forget - the people who write are people who care. Even if we disagree, we have that is common.

    Another thing we have in common - a sense of humor, as reflected in this email from MNB user Geoff Harper:

    As you say, MNB may not be for everyone, but if you are still laughing after four hours, call your doctor.

    That’s my new ad line!
    KC's View: