retail news in context, analysis with attitude

Published on: February 22, 2011

Did you see the story in the Wall Street Journal yesterday bemoaning the state of American males, specifically those in their twenties?

The piece framed the issue this way:

“Not so long ago, the average American man in his 20s had achieved most of the milestones of adulthood: a high-school diploma, financial independence, marriage and children. Today, most men in their 20s hang out in a novel sort of limbo, a hybrid state of semi-hormonal adolescence and responsible self-reliance. This ‘pre-adulthood’ has much to recommend it, especially for the college-educated. But it's time to state what has become obvious to legions of frustrated young women: It doesn't bring out the best in men.”

According to the story, “Pre-adulthood represents a momentous sociological development. It's no exaggeration to say that having large numbers of single young men and women living independently, while also having enough disposable income to avoid ever messing up their kitchens, is something entirely new in human experience. Yes, at other points in Western history young people have waited well into their 20s to marry, and yes, office girls and bachelor lawyers have been working and finding amusement in cities for more than a century. But their numbers and their money supply were always relatively small. Today's pre-adults are a different matter.

“They are a major demographic event.

“What also makes pre-adulthood something new is its radical reversal of the sexual hierarchy. Among pre-adults, women are the first sex. They graduate from college in greater numbers (among Americans ages 25 to 34, 34% of women now have a bachelor's degree but just 27% of men), and they have higher GPAs. As most professors tell it, they also have more confidence and drive. These strengths carry women through their 20s, when they are more likely than men to be in grad school and making strides in the workplace. In a number of cities, they are even out-earning their brothers and boyfriends.”

In some ways, the story suggests, pre-adulthood is like adolescence, only older.

Some other fascinating excerpts from the piece:

• “The past decades' economic expansion and the digital revolution have transformed the high end labor market into a fierce competition for the most stimulating, creative and glamorous jobs. Fields that attract ambitious young men and women often require years of moving between school and internships, between internships and jobs, laterally and horizontally between jobs, and between cities in the U.S. and abroad. The knowledge economy gives the educated young an unprecedented opportunity to think about work in personal terms. They are looking not just for jobs but for ‘careers,’ work in which they can exercise their talents and express their deepest passions. They expect their careers to give shape to their identity. For today's pre-adults, ‘what you do’ is almost synonymous with ‘who you are,’ and starting a family is seldom part of the picture.”

• For these pre-adults, the story suggests, “marriage and parenthood come in many forms, or can be skipped altogether. In 1970, just 16% of Americans ages 25 to 29 had never been married; today that's true of an astonishing 55% of the age group. In the U.S., the mean age at first marriage has been climbing toward 30 (a point past which it has already gone in much of Europe). It is no wonder that so many young Americans suffer through a ‘quarter-life crisis,’ a period of depression and worry over their future.”

• “Relatively affluent, free of family responsibilities, and entertained by an array of media devoted to his every pleasure, the single young man can live in pig heaven—and often does. Women put up with him for a while, but then in fear and disgust either give up on any idea of a husband and kids or just go to a sperm bank and get the DNA without the troublesome man. But these rational choices on the part of women only serve to legitimize men's attachment to the sand box. Why should they grow up? No one needs them anyway. There's nothing they have to do. They might as well just have another beer.”

For marketers, this kind of thing must be frustrating because it means that yet another demographic segment has been formally identified ... and now must be marketed to.

For parents of these pre-adults, this kind of story almost certainly must provoke some soul-searching, as we wonder exactly what we did wrong, what exactly we did that allowed our male children to luxuriate in this limbo.

And as for the male pre-adults themselves... this kind of story must make them wonder exactly what the problem is, anyway.

And that is an Eye-Opener.

Published on: February 22, 2011

Walmart said this morning that while its Q4 net income was up 27 percent, to $6.06 billion from $4.76 billion, and its Q4 total sales rose 2.4 percent to $116.3 billion, its US sales declined 0.5 percent in the quarter, and the same-store sales for the period - which includes the holiday shopping season - was down 1.1 percent excluding fuel sales.

"We are pleased with Wal-Mart's strong earnings performance for both the fourth quarter and the full year," said Mike Duke, the company's president and CEO, in a statement. "At the same time, we are disappointed by Wal-Mart U.S. fourth quarter sales."

And, he aded, "Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results.”

Published on: February 22, 2011

The Philadelphia Inquirer reports on the issues that Supervalu is facing with its Acme Markets business in Pennsylvania. The company knows it needs to lower prices and is doing so, even though it isn;t easy for the debt-loaded Supervalu to shoulder narrower margins.

At the same time, the competition on either side is giving it fits: “Year after year, Acme has lost sales to ShopRite, Giant, Wegmans, Wal-Mart, and others, struggling against customer perception of high prices when compared with competing chains offering attractive ‘value,’ as they call it in the industry.

“In particular, ShopRite is renowned locally for its aggressive pricing. Wegmans has wooed onetime Acme customers with splashy new mega-stores that flaunt gourmet foods alongside grocery standbys.”

At the same time, the Chicago Tribune reports that Supervalu “is opening five Save-A-Lot discount grocery stores on the South Side this week,” the beginning of a 30-store Save-A-Lot offensive that it plans for Chicago over the next five years.

According to the Tribune, “Targeting areas like the South Side is a new phenomenon for grocers. Inner cities have been so neglected that the term ‘food desert’ was coined to describe the lack of available fresh produce. But with competition fierce and 43 million Americans on food stamps, companies like Supervalu see an opportunity to put smaller stores in urban areas where Walmart and other megastores have had a tougher time securing approvals.”

Published on: February 22, 2011

The Washington Post had a story the other day about how a Wegmans in Maryland’s Price George’s County has turned into “Club Wegmans” - one of the most popular places in the area for singles to meet.

“Singles hook up in front of bins of fresh produce; couples gather for dates in the grocery store's sit-down restaurant; and shoppers sway to music from overhead speakers, singing along with Prince, Luther Vandross and Teena Mariem” the Post writes.

“‘[One] Saturday night, I saw a couple hand-dancing to a Rafael Saadiq song,’ said Ayana Douglas, the store manager, who plays R&B and smooth jazz on the store's sound system. ‘The couple was getting their boogie on.’

“Douglas brought in a live jazz band during the store's grand opening in October. After getting requests for more live music, she has decided to occasionally bring bands in on Friday nights.”

As the paper writes, “In the competitive grocery industry, today's stores have expanded far beyond being places where people run in for a quick gallon of milk or to fill the weekly shopping list. In some ways, they have come full circle to the general stores of old: They're community gathering spaces that enlarge the idea of one-stop shopping. WiFi encourages people to linger with their laptops. Flat-panel televisions lure locals to watch the news or a basketball game. Fireplaces and comfortable chairs invite book clubs to meet.”

And, as one woman tells the Post, “"Men will meet [a woman] anywhere. Especially when you don't have to spend any money.”

Published on: February 22, 2011

The Chicago Tribune reports that “merchants from Gucci to J.C. Penney are experimenting with ways to use electronic tablets in their stores to boost sales and dazzle jaded shoppers.

“No retailer has the formula quite figured out yet, so most have limited their tests to just a few stores. But experts predict that within the next year iPads and other electronic tablets will make their way into all manner of merchants, from supermarkets to mattress stores to luxury jewelers.”

Among the in-store uses: “Retailers are using iPads as mobile catalogs so sales clerks and shoppers can browse inventory not available on store shelves. They are fastening the tablets to counters so shoppers can design their own products. They are arming sales associates with the electronic clipboards to gathering customer data. And they are testing the device's potential as a portable cash register.”

And, the story goes on: “Deloitte predicts that in 2011 more than 1 in 4 electronic tablets sold will be bought by businesses. And the New York-based consulting firm forecasts the figure to rise in 2012 and beyond. Retailers are among the most likely early adopters of the device, Deloitte said in a January report, projecting that retailers will purchase and deploy more electronic tablets than any other industry this year.”

Published on: February 22, 2011

QSR reports on a Mintel study saying that Italian, Mexican and Chinese cuisines have become so mainstream that many people hardly consider them to be ethnic anymore, and that the real growth is coming from less-known ethnic foods - such as Thai and Caribbean foods - that are seen as more exotic.

According to the story, “This increase in product launches may be due to the wide variety of outlets consumers have at their disposal to learn more about ethnic foods that aren’t common to their ethnic background. In fact, 26 percent of ethnic food-lovers say they were introduced to the cuisine by TV programs, newspapers, or magazines that feature cuisine from other countries.

“Twenty-three percent of ethnic food users say they were spurred to try them after reading cookbooks that include recipes for dishes that are popular in other countries. Additionally, 18 percent developed a taste for ethnic chow after traveling abroad and 25 percent say they were introduced to their favorite ethnic fare because they live in a diverse neighborhood where the food and ingredients are readily available.”

Published on: February 22, 2011

The New York Times reports on the relationship that some 300 small Mexican corn farmers have with PepsiCo, “which guarantees the price it will pay for their crops upfront. The deal enables the small farmers to secure credit to buy seeds and fertilizers, crop insurance and equipment.” It also allows the farmers to avoid trekking north to the US, where they would work illegally in the hope of making a living to support their families.

“PepsiCo’s work with the corn farmers reflects a relatively new approach by corporations trying to maintain a business edge while helping out small communities and farmers,” the Times writes. “Begun as a pilot project by the foundation affiliated with the company’s Sabritas snack foods division, it is expanding to about 850 farmers to develop a local source of sunflower oil, which the company needs to improve the nutritional quality of its products ... The social benefits of the corn program are obvious in higher incomes that have improved nutritional and educational standards among the participating farmers, not to mention its impact on illegal immigration and possibly even the reduction of marijuana production.”

PepsiCo is not alone in this approach, the Times notes: “A growing number of major companies have adopted similar business tacks aimed at profitability that also prove to be economically and socially beneficial for needy people. One of the earliest examples was Danone’s development of a vitamin-enhanced yogurt product that sells for 11 cents in Bangladesh. The product is profit-neutral, but has given the company valuable insights into the 2.5 billion potential consumers who live on less than $2.50 a day.”

Published on: February 22, 2011

• The Minneapolis / St. Paul Business Journal reports that speculation in that market is focusing on the possibility that Walmart could spend as much as $1 billion to open 50 stores there during the next five to eight years.

According to the story, “ That influx would put new pressure on both Target Corp. and Eden Prairie-based Supervalu Inc., both of whom enjoy the home-court advantage now.”

Published on: February 22, 2011

The Denver Post reports that Kroger-owned King Soopers “is rolling out a new line of car-shaped carts that feature animated videos to keep children occupied while Mom or Dad gets the shopping done in peace ... The price parents pay is a series of commercial messages broadcast from the carts on separate video screens viewable by adults.”

The retailer expects to have three of the video-equipped carts in each of its 29 Denver stores by the end of the month; the story says that “the carts are intended to be revenue-neutral for King Soopers. An outside vendor supplies the carts, the video programming and the product advertising.”

While some parents feel they are being over-saturated with ads, others say that they are willing to put up with the ads in order to keep their kids quiet.

As for the law of (perhaps) unintended consequences, the Post writes that “an ironic result could be that the merchandising practice of placing kid-oriented products on lower shelves where they're most visible to young eyes will be diminished by the distracting videos, said marketing professor Darrin Duber-Smith of Metropolitan State College of Denver.”

Published on: February 22, 2011

Interesting piece in the Denver Post about Sunflower Farmers Market, which has been hit with two very different challenges in the last two weeks - the arrest on charges of child prostitution and subsequent resignation of Michael Gilliand, the company’s CEO, and then the announcement that competitor Sprouts Farmers Market will merge with Henry's Farmers, a move that will result “in Sprouts becoming a 98-store chain with deeper pockets and a sharper eye on growth, Sprouts officials said.”

Published on: February 22, 2011

USA Today reports that the Center for Science in the Public Interest (CSPI) has filed a petition with the US Food and Drug Administration (FDA) charging that the caramel coloring used in cola drinks “contains two cancer-causing chemicals and asking that it be banned.”

The state of California already has scheduled a hearing on the matter, and could require a label on cola drinks advising of the potential health hazard.

"To accept any risk whatsoever from a purely cosmetic coloring just doesn't make sense," says Michael Jacobson, CSPI’s director.

The American Beverage Association said there's no evidence the chemicals cause cancer in humans, and called the petition "nothing more than another attempt to scare consumers by an advocacy group long-dedicated to attacking the food and beverage industry." And the Grocery Manufacturers Association (GMA) also released a statement saying that there is no scientific evidence to support the CSPI claims.

Published on: February 22, 2011

CPG Matters reports that “Kraft Foods is experimenting with a grocery store kiosk that uses facial recognition to determine a consumer's gender - and other things - and then to recommend products for dinner. But the kiosk also integrates with a mobile app, where its recommendations can be based on what consumers already planned to buy (shopping list access), and records everything into that customer's CRM file.”

Published on: February 22, 2011

As expected, Blockbuster Inc. said yesterday that the company is for sale, “after a previous bankruptcy reorganization plan collapsed and its business continued to deteriorate over the holidays,” as the Los Angeles Times reports.

Yesterday, the company submitted a plan “for an auction process to U.S. Bankruptcy Court in New York. A holding company formed by four of its largest creditors - Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Varde Partners - has put in an opening ‘stalking horse’ bid of $290 million.

“The offer is intended to draw other buyers and create a floor on a price. If no other bids are submitted, however, the four creditors would end up controlling the DVD rental and sales company.”

Published on: February 22, 2011

• The Edmonds, Washington, location of PCC Natural Markets (PCC), the natural foods retail cooperative, has earned two of the most prestigious certifications awarded to buildings for features and operations that support human and environmental health. The Edmonds PCC is now LEED Platinum and Salmon-Safe certified, and is said to be the only grocery store in the nation to have earned both honors.

LEED is the rating system developed by the U.S. Green Building Council (USGBC) through which the design, construction and operation of buildings are evaluated. Certification is awarded at Certified, Silver, Gold, or Platinum levels and is based on achievement in each of six environmental categories.

Oregon-based Salmon-Safe was founded as a program to help farmers restore salmon streams in the Pacific Northwest and is the only certification program in the country specifically dedicated to protecting water quality and habitat for salmon.

“Our transformation of a long-vacant building into a showcase of features and systems that protect and conserve natural resources demonstrates PCC’s commitment to operating stores that are as healthy for customers and employees as the products we sell,” said Tracy Wolpert, PCC’s CEO.

• In Minnesota, the Star Tribune has a piece about Cargill Inc., reporting that over just the past nine months, “the company has unveiled more than $1.5 billion worth of transactions, ranging from the $800 million buyout of an Australian grain trading operation to a $30 million investment in a new plant in Russia that will churn out Chicken McNuggets for McDonald's.

“As it scouts the world for its best business opportunities, Cargill is concentrating on areas where growth is heating up fastest -- often in distant countries like Brazil and Indonesia.”

Cargill’s last deal - divesting its 64 percent stake in a fertilizer manufacturer - has allowed it to virtually retire its corporate debt, and give it enough money for global acquisitions and investments. The goal, according to the story, is to have enough money to create a balanced global portfolio that targets high-growth nations as both customers and suppliers.

• Advertising Age reports that Dr Pepper is coming out with a new soda, “Dr Pepper 10,” a reduced-calorie soft drink that “is unapologetically targeting men, a bold move in a category that has had its fair share of marketing missteps. Coke Zero and Pepsi Max, both billed as full flavored sodas with zero calories, had difficulty nailing down the right message for a diet product that's meant to appeal to men.

“Aware of those missteps, Dr Pepper is rolling out an extensive test campaign for the new product, its packaging and marketing ... The packaging and marketing are both heavy on masculinity, but also clearly state the brand proposition.”

USA Today reports that Kraft is coming out with a new product called “MiO,” which is described as a “liquid water enhancer” that allows people to drip zero-calorie flavorings - such as Berry Pomegranate and Strawberry Watermelon - into their water bottles. One $3.99 droplet-shaped bottle will provide approximately 24 servings of flavoring.

Published on: February 22, 2011

• Craig Sturken, Spartan Stores’ executive chairman, is retiring from that position, but will remain as non-executive chairman and an advisor to Spartan management.

Published on: February 22, 2011

Celebrating is optional but encouraged.

Published on: February 22, 2011

...will be posted on Wednesday this week. Your patience will be rewarded.

Published on: February 22, 2011

Last week, MNB took note of a Chicago Tribune report on a study done by a Chicago coupon blogger, Jill Cataldo, in which she claims to have found 761 products being sold at a Dominick’s past their expiration dates - with some of the dates going back to 2008. And the complaint, based on two shopping trips to Dominick’s, has generated a number of complaints on Dominick’s Facebook page.

Dominick’s, owned by Safeway, issued the following statement in response: "While expiration dates on food products are largely based on quality, not food safety, that does not diminish the fact that we are displeased with the out-of-date products found at our stores. This is not indicative of how we do business. A high-level and highest-priority team has been assembled to immediately address these issues."

I commented:

I wish Dominick’s had been a little less equivocating in its statement, but at least they addressed it immediately. My feeling is that they need to make sure that the problem is fixed within 24 hours - every product on every shelf needs to be checked, and out-of-date products need to be pulled immediately.

And, BTW...every other store ought to do the same thing. because you know this isn’t just a Dominick’s issue. They just got the first blast of bad publicity ... and there will be a lot of reporters and bloggers visiting stores all around the country over the next few days, checking to see how pervasive the problem is.

Get busy, folks.

MNB user Frank S. Klisanich added:

And get ready suppliers…… every supplier will soon receive debits that will accompany the products destroyed that are out of code.

Another MNB user wrote:

Trust me this is a nationwide chain wide thing. If pushed to clean this up the CPG companies better be ready for tons of stuff to go to reclamation centers and for “damages” to go up to help pay for all this out of code product. If you think the big chains are bad look at the independence.  One note, Target has their OWN team to go thru food item by item or a regular based and check the dating on product and taken action on it as need. Something not done in the food industry.

And, from another MNB user:

In addition to her work on her website, Jill Cataldo is also providing a weekly newspaper column on couponing for Lee Enterprises, whose corporate headquarters are here in Davenport.   I'm not sure how many of Lee's newspapers are carrying her column, but she seems to be getting a fair amount of attention here as the local paper's focus has shifted to helping its readers find ways to save money.  

While I certainly don't agree with everything she says (especially her attempts to describe the use of manufacturers' trade allowances!), she obviously has accumulated some devotees.   It will be interesting to see if her comments regarding this subject find their way into her newspaper column.

MNB user Craig Espelien chimed in:

While 761 items found with out of date codes sounds like a lot, it is really not too bad (okay – having some from 2008 is REALLY bad).  The challenge here is that with labor cuts in the stores, there is less and less time to properly rotate the product.  With fewer and fewer sales reps calling on the store, there are fewer additional eyes on what is happening.  This comes down to the person who is ordering product and creating a plan for running a section/category sub-category down every so often to make sure things get rotated (having started as a stocker, believe me when I tell you that rarely will a stocker rotate anything if there are more than six on the shelf – they are measure by how quickly they stock not how nice the shelf looks).

The biggest offenders (outside of perishable like meat): Salad dressing (pourable and spoonable), Peanut butter, Yogurt, Peg cheese (what a pain to rotate), Frozen dinners, entrees and appetizers, and Baking nuts.

This is a blocking and tackling fix that store management has to embrace and plan for – but the business continues to make it more difficult to get it done.  Dominick’s response was a bit weak – making the statement that it is not really bad does nothing for consumer confidence.

MNB user Pat Patterson wrote:

I think in the old days the out of date product question was handled by product rotation, stock to the back and pull the older stuff to the front.  Failure to do so points to a poor clerical training and little, if any, management follow through.

An area not mentioned in the article is milk.  A nearby major chain store constantly has milk with mixed intermingled dates in their case; occasionally out of dates show up on the back of the shelf..  I have pointed this out the unit manager so many  times he won’t talk to me anymore.

Just because a concept is old doesn't mean that it isn't effective.  Managers, get out of the office and move to the floor.  You can't manage if you don't know what's happening.

And, another MNB user wrote:

There is NO chain or singular food retailer that is free from the challenge of rotation. Some manage it better than others.

None of these responses, by the way, have done anything to make me feel better about the situation.

It just seems to me that if you are going to be in the food business, you better be able to handle the basics...like making sure food is not on the shelf past its coded date. If you can’t handle that, maybe you ought to go sell shoes.