retail news in context, analysis with attitude

MNB Archive Search

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

    Published on: March 7, 2011

    by Kevin Coupe

    The New York Times reported over the weekend that in the Big Apple, the old saw that “the customer is always right,” has been reflected in some quarters with another rule: “when wrong, the customer can take a flying leap.”

    According to the story, “New York has spawned a breed of hard-line restaurants and cafes that are saying no. No to pouring takeout espressos, or grinding more than a pound of coffee at a time. No to taming the intensity of a magma-spicy dish. And most of all, no to the 21st-century conviction that everything can be accessorized to the customer’s taste.”

    In essence, what this comes down to is that at least some chefs have decided to fly in the face of the axiom that says “the customer is always right,” and instead say that “in certain cases, when the customer is wrong, the customer can take a flying leap.” It is an unusual stance to take in a service-based economy, and an even more unusual stance to take during a time when patrons are displaying recessionary impulses.

    The debate actually reminds me of the great movie Big Night, in which two brothers who own an Italian restaurant in New Jersey during the late fifties argue about what to serve the customers. One brother doesn’t want to make them stereotypical food like spaghetti and meatballs; he wants to be more artistic and serve risotto. The other brother argues that if customers want spaghetti and meatballs you should serve them spaghetti and meatballs, because it is spaghetti and meatballs that pay the bills. Big Night is the art vs. commerce debate played out in a wonderful movie, and now we’re seeing it played out for real in the New York City restaurant scene.

    But the chefs’ stance actually is more than that. It is a statement that a patrons should expect more than food and ambience when they go out to eat - they should also expect intelligence about the food being served, and should expect to be educated as well as fed. This won't work everywhere, of course, and not all restaurant patrons will accept such conditions. But what these chefs actually are looking to establish is a great sense of trust between them and their customers ... which is what all retailers should aim for - and it will be interesting to see if their resolve pans out or flames out.

    Either way, it’ll be an eye-opener.
    KC's View:

    Published on: March 7, 2011

    The Los Angeles Times reports that Southern California’s three leading supermarket chains has come to an agreement with the United Food and Commercial Workers (UFCW) that will extend their expiring contract for one month, until the end of March.

    The contract negotiations have the potential of impacting about 62,000 grocery workers at Ralphs, Albertsons and Vons/Pavilions stores in Southern California, and come seven years after a strike/lockout in the same market that affected more than 800 stores for 141 days.

    According to the story, “Labor and grocery officials declined to comment Friday on the specific issues being negotiated, saying only that the discussions included employee wages, healthcare benefits and pensions.”
    KC's View:
    Last week, I wrote that I could not imagine that after the events of seven years ago, either side would let it get to the point where another strike/lockout would take place. Which led one MNB user to write:

    While no retailer would ever choose a strike or lockout over a satisfactorily negotiated union contract that takes care of staff and allows for a profitable business model, it has become more difficult to reach that goal today.

    New non union food retail continues to expand without resistance from those that have the most at stake. When the compensation gap widens, and work restrictions in a union shop give non union stores a competitive advantage for selling like products, something has to give.

    The companies that you've mentioned must remain profitable, or eventually union jobs will be lost to surviving non union stores. I don't think it's any more complex than that.


    I agree, and I don't think it is that complicated.  My feeling is that everybody has to have skin in the game, and that unions miss the boat completely when they forget that putting stores at a disadvantage is not good for them long-term.  It seems that unions miss that boat a lot.

    But I also think that chains need to share the wealth in good times if they want cooperation from unions in hard times.

    Published on: March 7, 2011

    The Wall Street Journal reports that objections are being raised to an effort by the troubled and bankrupt Great Atlantic & Pacific Tea Co. (A&P) to “ask a bankruptcy judge to approve $1.76 million in payments to four of its top executives, part of a $6.8 million ‘key employee retention plan’ that covers 146 non-union employees.”

    According to the story, “creditors, unions and the U.S. Trustee's office all (object) to what they say amounts to ‘retention’ rather than ‘incentive’ packages ... Lawyers for the United Food & Commercial Workers Union call the bonus requests ‘astounding’ considering the short time since the bankruptcy filing to evaluate A&P's performance, and also the fact that the grocery chain hasn't presented a one-year business plan to the court.”

    Indeed, the Journal confirms that “despite lining up its bankruptcy financing, A&P has little else in place and has begun rejecting leases of its poorer-performing stores in earnest.”
    KC's View:
    Listen, I don’t expect every executive who comes in to try to save a dying company to take a salary of $1 a year, like Steve Jobs did at Apple. Just like I don’t expect every executive who comes in to save a company to get Steve Jobs-like results.

    But...at a time when a company no doubt will be looking for some concessions and lot of cooperation from employees during very trying times, at the very least this looks insensitive.

    Get the job done, and bonuses ought to be paid. But at this point, it just looks like feathering one’s own nest.

    Published on: March 7, 2011

    USA Today reports that the National Pork Board has announced that pork no longer will be known as “the other white meat,” but henceforth will be marketed with the following phrase: "Pork: Be Inspired."

    According to the story, “Board officials said after nearly 25 years, it was time to move on from the old message that compared pork to chicken and instead try to increase sales by focusing on the estimated 82 million Americans who already eat pork.”

    The story notes that “pork remains behind beef and chicken in consumption, according to the USDA. Americans ate about 61 pounds of beef per capita last year and about 80 pounds of chicken. While beef consumption has been gradually declining and pork consumption has remained flat, chicken consumption has increased in the past two decades, the USDA data shows.”
    KC's View:
    Maybe it was time for a new slogan - I actually thought they’d retired “the other white meat” as a slogan years ago.

    Published on: March 7, 2011

    The Wall Street Journal reports on how the National Cattlemen's Beef Association, which represents beef producers, launched a “Masters of Beef Advocacy” (MBA) program two years ago: “The course trains ranchers, feedlot operators, butchers, chefs—anyone, really, who loves a good, thick rib-eye—in the fine art of promoting and defending red meat.

    “Nearly 2,000 graduates have completed the program. The cattlemen aim to train at least 20,000 more, in the hope of building a forceful counterweight to the animal-rights advocates who denounce beef production as inhumane, and the vegetarian activists who reject beef consumption as unhealthy.

    “The advocacy effort comes at a tough time for the beef industry. Beef consumption in the U.S. plunged from a high of 94 pounds a person in 1976 to less than 62 pounds in 2009, according to the American Meat Institute, a trade group representing beef processors.”

    According to the story, “School districts across the country have adopted ‘Meatless Mondays’ and are dishing out bean burritos in lieu of burgers. And this winter, the U.S. Department of Agriculture issued new dietary guidelines advising consumers to replace some of the meat in their diet with seafood.

    “Meanwhile, veggie evangelists at People for the Ethical Treatment of Animals have turned heads with ever-more-racy campaigns, including sending models clad only in strategically placed leaves of lettuce to hand out tofu hot dogs on street corners nationwide.”

    However, “beef has its own celebrity backers - actor Matthew McConaughey has done radio spots - but industry strategists decided that the best way to promote the product was to put the men and women who produce beef front and center. Their goal: convince skeptical consumers that the shrink-wrapped sirloin tips in the supermarket aren't artery-clogging commodities mass-produced on factory farms, but wholesome meals turned out with great care by hard-working families.”
    KC's View:
    I guess the thing that gets me about all this discussion is that it seems so absolutist. I wish we could get to the point where the people at PETA could promote their agenda without demonizing everybody who disagrees with them.

    Here’s where I stand ... and I have the suspicion that a lot of people are just like me:

    I like eating meat. I have no moral, ethical or nutritional problem with it. But I also like eating seafood, love pasta, am okay with fruits, and will even nibble on a veggie and put soy milk on my cereal from time to time. My goal is great taste first, decent nutrition second ... and I want as many food-related experiences as possible. I don’t mind when people explain their positions to me, but don’t lecture me and don’t demean my choices...and I promise not to demean yours.

    Published on: March 7, 2011

    Good piece in the New York Times over the weekend comparing the shopping experiences at Amazon vs. Costco:

    “The older you get, the more valuable your time seems. And going to Costco, even though it’s just a couple of miles from my home, is generally a two-hour round trip by the time the driving, the shopping, the waiting in line, the loading of the car and the unloading back home are done. In 2007, meanwhile, Amazon.com introduced a service called Subscribe & Save. The premise is simple: If you agree to get a recurring shipment of an item, Amazon will cut 15 percent off its normal price and send it to you every one, two, three or six months without charging the standard shipping rate.”
    However, in analyzing the numbers over a period of time, the Times columnist concludes that it is hard to draw hard and fast conclusions. Costco seems to be cheaper with a more limited selection; Amazon offers the convenience of automatic fulfillment and a broader selection, albeit mostly in large sizes that may not be for everyone.

    “With a larger family, you’d be buying more at Costco, so the savings in dollars could be bigger,” the Times writes. “And if you can afford to do a year’s shopping at once (and have the place to store everything you buy), you can greatly cut down the time you lose to the Costco chore each year. Also, if there is a Costco next door to places you often go, you don’t have to make a special trip.

    “Costco often sends out coupons that can yield $20 or $30 in savings per trip. That’s a good thing, since it allows you to potentially win back the $50 or more that most people pay in annual membership dues. The company also has a generous return policy.

    “At Amazon, meanwhile, you have many more choices than you do at Costco, where your favorite brand of shampoo is probably not available.

    “Amazon also doesn’t do such a great job of tempting you to buy household goods you don’t need. At Costco, you need to resist the siren call of, say, the red velvet cake or that funky Dyson bladeless fan.”
    KC's View:
    The real lesson here is that both Amazon and Costco offer specific value propositions that are preferred by specific customers at specific times. Neither one is right or wrong, or even better or worse. They are just specific and offer clearly stated differential advantages...and never would be accused of occupying the mushy middle ... which is what most retailers need to avoid.

    Published on: March 7, 2011

    USA Today has an interview with Starbucks CEO Howard Schultz, in which he looks at where the company is putting its energies these days ... which is how to expand from a coffee company to a CPG company. Some excerpts:

    • “Over the past 18 months, the company has transformed itself through reinvention. New store design. New products. Via. Mobile payment. EGifting. We're more relevant in social and digital media. Over the past 18 months, we've become more relevant to our core customer and younger audience. The maturation of the company has enabled this. These are the best of times for Starbucks.”

    • “Starbucks has reinvented the dormant, stale category of instant coffee. Via has over $200 million in annual revenue. It has 30,000 points of distribution outside of our own stores. Beyond coffee, Via will become a portfolio of other things. The future of Via is not only what it is today. Other coffee products and other things will emerge from the technology we created.”

    • “We're deeply committed to creating a consumer product business with a wide variety of other food and beverage products. If you look at the history of Frappuccino and Via, both brands benefited by being built first inside Starbucks stores. No national retailer has created this capability into grocery. And no Coke or Pepsi has created a national retail company. We'll be the first company to operate on both channels and integrate it with a significant rewards program. I can't tell you what we're going to sell ... we're developing a world-class consumer products business that will give us the capability to build brands and distribute them ourselves into grocery stores. By the end of 2011, besides the rewards you get on the Starbucks Cards in Starbucks stores, you'll get them at the grocery store ... What we're going to do is first introduce products to our stores before we introduce them to the grocery trade. If you look at coffee, tea, food and juice, we think there are inherent opportunities. If you look at health bars or grab-and-go products that are in our stores, we think we can significantly enhance them and make them more widely available.”
    KC's View:
    There’s nothing like ambition. And ego to go along with it. Or vice-versa.

    I have no idea whether this grand ambition will work or not, but I cannot shake the feeling that Starbucks’ vision may be a little grandiose this time around. Like when the company wanted to become a lifestyle enterprise publishing books and producing CDs and movies.

    I have no idea whether this will work. But from a strategy point of view, I am uneasy. (For example, I can’t wait to see how Starbucks is going to award points to consumers based on products they buy at supermarkets, and how they're going to get supermarkets to cooperate with this.)

    Published on: March 7, 2011

    The Wall Street Journal had an interesting piece over the weekend about all the available packaging that one can now find wine in: “Today's wine-packaging breakthroughs include metal barrels, plastic bottles, cardboard boxes, aluminum cans and even test tubes (available only in France, at least for now). Winemakers proclaim the ecological friendliness (smaller carbon footprint!) and the economy (cheaper than glass!) of some of these new formats, but ... Do they make a wine look better, taste better, last longer or, for that matter, express a regional identity?”

    While the evaluations of these various packaging formats were all over the map, one of the more interesting “innovations” actually was a blast from the past, and discussed on the Journal website.

    It is something called “The Carmine,” and it actually is a three-liter “finger hook wine jug made by the Francis Ford Coppola winemaking team. They prefer to call it a “vessel” rather than a “jug,” and that’s not where the innovation ends. According to the story, “There wasn’t a label, just a scrolled bit of paper and a pencil tied to the top. It’s a special blend of Sonoma Cabernet and Malbec, available only at the winery ... The scrolled paper represented scores. Coppola’s father Carmine, for whom the vessel is named, was a composer.”

    The story goes on: “Only a few hundred bottles of The Carmine were produced, and each costs $142. That may sound pricey but there are plans for Carmine owners to be able to visit the winery to have their vessel refilled. This will only cost $50, though the refill program isn’t up and running as yet. It will be in place in the next month or two.”
    KC's View:
    I certainly like the idea of The Carmine better than boxed wine. To me, wine is magical, and has the opportunity to make even an everyday meal a little bit magical. For me, that includes both taste and packaging...and I hate the idea of diminishing the magic via box or even test tube. (Test tube? Oy!)

    Published on: March 7, 2011

    According to the quarterly retail research report issued by the United Fresh Produce Association, “weekly dollar sales and per store volume of fresh produce grew in the fourth quarter of 2010, when compared with the same period in 2009. The average price of produce at supermarkets in Q4 2010 also increased.”

    Highlights of this quarter’s report include:

    • An increase in weekly dollar sales of 3.1 percent for fruit.

    • Increases of 11.6 percent in volume and 8.4 percent in sales for the value-added fruits category.

    • Increases of 1.6 percent in volume and 4.1 percent in sales for the value-added vegetables category.

    • Weekly volume and dollar sales growth for six of the top 10 items in the vegetable category.

    • Increases in weekly dollar sales for seven of the top 10 items in the fruit category.
    KC's View:

    Published on: March 7, 2011

    • The Wall Street Journal reports that Campbell Soup Co. CEO Douglas R. Conant plans to undergo surgery today “as a follow-up to a July 2009 automobile accident and Chief Operating Officer Denise Morrison will oversee the company's day-to-day operations in his absence.

    “Morrison is slated to take over the role permanently when Conant steps down at the end of the company's fiscal year in July.” Conant is expected to be out of the office for several weeks.

    Advertising Age reports that “Unilever has named former Coca-Cola Co. marketer Marc Mathieu as its No. 2 global marketing executive ... rounding out a redesign of the global marketing team for the world's second-biggest advertising spender.”

    According to the story, Mathieu, who helped to develop the “Coke Side Of Life” campaign, “will oversee Unilever's global corporate branding effort; marketing training, including the Unilever Marketing Academy; marketing services; agency relations; and return on marketing investment.”
    KC's View:

    Published on: March 7, 2011

    ...will return. I promise.
    KC's View:

    Published on: March 7, 2011

    By John McIndoe, Senior Vice President, Marketing, SymphonyIRI Group, Inc.

    Digital marketing campaigns have rapidly grown to become just as important as traditional campaigns. At some companies, in fact, digital media spending has surpassed funds devoted to traditional media campaigns. For an increasing number of companies, digital media delivers both a high ROI and is becoming responsible for an increasing percentage of sales. In addition to digital media working very well for companies, there is often a synergistic benefit from executing traditional and digital campaigns in an integrated manner.

    This raises the burning question: how to maximize the benefit of integrating online and offline campaigns? While this is new territory for many marketers, three best practices have emerged:

    Do not underestimate the slope of the learning curve – Finding a “digital sweet spot;” i.e., the right mix of online media, won’t happen overnight and will require an investment in experimentation. Many companies have enjoyed a leap in digital media performance as they mature their practices in this space. One way of accelerating this learning curve is to apply lessons learned from years of traditional media. Unfortunately, many companies try to build their digital media capabilities in a silo and succumb to the urge to re-invent their communication strategy just because they are using a digital media vehicle.

    Quantifying both the online and offline impact is critical – Online media does have an offline business impact, and, for many companies, this impact is significant. If the marketer is only measuring the online impact of digital media, then he/she is missing half and in many cases more than half of the impact.

    Understand the multi-stage and synergistic impact allows you to apply credit to the responsible media – Across almost every industry, traditional media can contribute significantly to a consumer’s engagement with search and microsites. Clearly defining the objective of each campaign, the expected results and how you will measure it is critical.

    Online media has established itself as a powerful tool in the marketer’s toolbox that can deliver a very high ROI while driving a significant amount of sales. The real opportunity for marketers centers on finding their “digital sweet spot” and executing their campaigns in an integrated fashion across traditional and digital media. To achieve optimal results, companies need experienced teams that understand how to maximize the potential of each medium, powerful analytics that include econometric data to get a “real world” picture of the business and effective measurement systems to evaluate the ROI of these integrated programs.

    To answer these and other pressing questions on the minds of everyone from c-level executives to marketing managers, the SymphonyIRI Group Summit 2011 conference, this year titled, “Gaining the Competitive Edge,” is taking place this March 28-30 at the Fontainebleau Hotel in Miami Beach, Florida. The three-day event is designed exclusively for senior executives in CPG, retail and healthcare. Among the prestigious group of speakers are senior executives from ConAgra, CVS, Henkel, Moody’s, PepsiCo, Univision and Walmart. Summit 2011 also includes group workshops, intimate roundtables, evening events, and of course, many networking opportunities....not to mention an session on “E-Grocery: The Next Generation,” moderated by MNB’s own Kevin Coupe.

    To find out more details and to register for Summit 2011, please click here
    .
    KC's View: