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    Published on: March 15, 2011

    by Michael Sansolo

    There are few things more instructive in this industry than walking a store with a terrific operator. In the course of a few aisles it becomes apparent how even complex issues like shifting demographics connect seamlessly to on-shelf merchandising.

    My recent lesson in the collision of issues came courtesy of Paula Correy, senior vice president of Hy-Vee’s Western Division. Paula is impressive for countless reasons, but nothing more so than her ability to balance the experience of a woman and mother with selling products.

    Paula talked about how the coming of spring means merchandising opportunities that range into countless categories. While seasonality is gone for so many products thanks to global sourcing (which might change thanks to localization), it’s getting more pronounced in new areas. The changing season, Paula explained, means it’s time for marketing a different palette of make-up and nail polish that fit the season; or even scented candles that match the aromas of spring, not winter.

    While that seems so obvious, I wonder how many retailers have women in positions of power to make certain end-caps reflect the list of needs that Paula spouted off effortlessly. A male merchandiser might certainly know everything she said, but having women in management ranks sure does make a difference.

    The importance of reflecting the face of the American shopper goes way beyond women and is growing larger and tougher by the moment. Some of this may bother you, but the reality is that change is coming fast.

    Last week a study from the US military that found today’s officers are significantly older, whiter and more likely male than the entire military population overall. Some of you might find that study provocation for an angry email supporting merit based promotion in the military and you’d be right. All organizations - particularly the military - need leadership to flow from the best and brightest.

    But think about the long-term trend the study highlighted. For the military to recruit and retain the best, it needs officers who can relate to and lead the enlisted. No doubt the military will be putting extra effort into finding and keeping the best female and minority candidates, so that tomorrow’s officers look more like tomorrow’s soldiers and can lead an army of the future.

    For all industries, that means even more competition for the next generation of leaders, especially minorities and women. And we need to get moving quickly. Hopefully, you are watching release of census data, which is showing far more change than anyone anticipated.

    Pay attention to the news from California and Texas, where the number of Hispanics is growing quicker than ever. In Texas, there is clear surprise as to just how much of the state’s growth is coming from the Hispanic community. The simple truth is that our two most populous states are quickly moving to minority/majority status - where no demographic group tops 50 percent. But the change doesn’t stop at the border states. Last week there was a story from central Pennsylvania, where Hispanic populations are growing in small cities that are home to affordable housing and reasonable commutes to larger cities in the Northeast.

    The challenge is simple: as the population changes, our leadership ranks need to change and we’ll be competing for new talent with the military and more. Of course we can learn to sell and serve these emerging groups of shoppers. But having your own Paula Correy pointing out the potential for you, instead of against you seems like a much better path.

    Start looking now.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: March 15, 2011

    by Kevin Coupe

    This morning’s submission isn’t as much about keeping your eyes open as keeping your mouth shut - or, at least knowing that everything and anything you say is, for all practical purposes, on the record.

    Aflac the health insurance company, announced yesterday that it has fired Gilbert Gottfried, who provides the voice of its trademark duck here in the US. The reason? Gottfried - who in addition to his kid-friendly voiceover work (he was the voice if Iago the bird in Aladdin), also is a particularly abrasive and foul-mouthed comedian - posted a series of tasteless jokes about Japan, the tsunami and earthquake on Twitter over the weekend.

    Aflac wasted no time in making the decision. The company reportedly does as much as three-quarters of its business in Japan, and insures one out of four households there; Aflac’s CEO, Daniel Amos, reportedly flew to Japan over the weekend to show support for the company’s employees and customers. (It isn’t hard to imagine that Aflac will be writing a lot of checks to people whose lives are forever affected not just by the natural disasters, but the resultant problems at Japan’s nuclear reactors, which seem to be getting worse with every passing hour.)

    It is yet another demonstration of the simple reality that one has to know what is appropriate and what is not. While that’s always been the case, the current Facebook/Twitter/YouTube environment means that virtually everything we say and do is out there for the world to see and react to, and like it or not, if you offend the wrong person’s sensitivities, it can have an incalculable impact on your business.

    We learned it with Groupon a few weeks ago, when some folks saw its Super Bowl commercials as being inappropriately edgy. And now, we learn it yet again ... though, to be fair, Gottfried’s transgressions seem particularly nasty and pointless.

    There’s another great business lesson here.

    It probably is a pretty good bet that Gottfried’s jokes became a lot more public when he got fired, but Aflac nevertheless was both swift and decisive in its moves. The company could have just said nothing, and waited to see what would happen. It could have just that the jokes did not represent its own views, and waited to see what would happen. But somebody at Aflac was smarter that that, and knew that if you have a problem - or even a potential problem - you cannot afford to wait these days to make your move. Momentum can be your worst enemy at times like these.

    By the way, it wasn’t just comedians who were losing jobs over tasteless Japanese jokes.

    The New York Post this morning reports that “the press secretary to Haley Barbour, Mississippi governor and likely Republican presidential contender, resigned after writing on a Web site that Otis Redding's classic ‘(Sittin' on) The Dock of the Bay,’ was ‘not a big hit in Japan right now’.”

    You have to know when to keep your mouth shut.

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

    Published on: March 15, 2011

    Delhaize America said that it will convert 15 Bloom stores operating in Greenville, South Carolina, and Charlotte, North Carolina, to its Food Lion banner. The one other Bloom store in those markets will close.

    Tammy DeBoer, vice president of Bloom, said, "We appreciate the loyalty of our Bloom guests; however, we are confident our Food Lion banner will best meet the needs of our customers at these locations. Our stores will remain open as we transition into Food Lion stores as quickly as possible."

    Delhaize said that it will continue expanding the Bloom banner in the Virginia and Washington, DC, markets, where appropriate.
    KC's View:
    The advantage of having different banners and approaches is that you can mix and match as needed. It seems to me that this confirms the wisdom of the development of the Bloom format, because it gives Delhaize options that it would not have if it operated a one-size-fits-all concept.

    Published on: March 15, 2011

    The Washington Post reports that in the final days before the US Food and Drug Administration (FDA) publishes new rules covering the disclosure of calorie counts of food products, lobbyists for the supermarket industry and the nation’s movie theater chains are gearing up for a fight over who will be covered by the new regulations.

    As the Post notes, new FDA regulations, as mandated by the health care law passed last year by Congress, may require that fresh food counters in supermarkets and movie theater concession stands - as well as chain restaurants - must post calorie counts for the foods they sell. The new rules are due out by March 23.

    According to the story, “Sen. Tom Harkin (D-Iowa) ... aimed for a broad definition of retail food operations that included movie theaters and grocery stores because people often buy prepared meals at the establishments, said spokeswoman Justine Sessions. Only prepared food such as popcorn and hot dogs sold at concession stands may be subject to the labeling requirements because packaged food already has nutritional labels.”

    “Grocery stores ... shouldn't be subject to the rule, said Erik Lieberman, regulatory counsel for the Food Marketing Institute, a trade group representing chains including Safeway Inc.
    ‘There's no indication that the Congress ever intended to regulate supermarkets,’ he said.

    And Patrick Corcoran, a spokesman for the National Association of Theatre Owners, a trade group, said, "In the basic history of the bill there is no real intent to include movie theaters that we could discern."

    The Post notes that if the FDA regulations do cover movie theaters, they would have to “disclose that their popcorn contains as many as 1,460 calories, or equal to almost three Big Macs.”
    KC's View:
    My friends in both the supermarket and movie theater industries are going to disagree with me on this, but I think transparency means transparency. it isn’t always easy, and it may not serve the immediate interests of business, but in the long-term, I think that being up front about the products you sell is in the best interests of business because it is in the best interests of the shopper.

    I know I’m going to get emails saying that this yet again is the “nanny state” flexing its muscles. But that’s nonsense. This isn’t the government saying what people should eat - it is just the government saying that people ought to be able to know what they are eating.

    If you’re not willing to tell people what they’re eating, what does that say about the stuff you are selling?

    Published on: March 15, 2011

    Interesting piece in Forbes the other day about Graeter’s Ice Cream, which the piece notes, has been making ice cream essentially the same way for 140 years, and in the process becoming an institution in the Cincinnati area, where its products are made and primarily sold.

    The story continues: “Soon, ice cream lovers nationwide will know what Cinncinnatians already do:  Graeter’s is about to increase production fivefold and gain national distribution.  By the end of the year, Graeter’s will be sold in almost four thousand retail outlets, of which 2,000 will Krogers-owned stores.”

    The company is hoping that it will avoid the pitfalls of such expansion by observing three basic rules:

    • “Their new factory has been designed to create efficiencies before and after the making of the ice cream – but the archaic ice cream making process itself will remain unchanged.”

    • “There is no marketing advantage like a product advantage.” CEO Richard Graeter says, “Our success is based in the fact that no one else is crazy enough to make ice cream as laboriously as we make it. And even if they wanted to, their production is not set up to do it.”

    • “Details can be defining ... Graeter’s chocolate chips are as delectably old-fashioned as the ice cream itself.” In a world where frozen blueberry waffles often don;t have real blueberries in them, that can be an enormous advantage.

    In addition, Graeter’s seems intent on letting the product speak for itself, and let its fans do the selling; it has no intention of developing a marketing/communications apparatus on the scale of those run by other super-premium brands.
    KC's View:
    You can count me among those who love Graeter’s, and I wish them luck with this endeavor.

    The general rule should be this. Look at everything Krispy Kreme tried to do when it expanded a few years ago, and then do the opposite.

    Published on: March 15, 2011

    The Network of Executive Women (NEW) announced yesterday that Joan M. Toth, the diversity organization’s longtime executive director, has been named NEW’s president/CEO.

    At the same time, NEW’s top elected official - Michelle Gloeckler, senior vice president, merchandising execution, at Walmart Stores - has been named Network chair. She had held the title of president before today’s announcement.

    “This change brings the Network in compliance with regulations and is consistent with other not-for-profit organizations. The change also aligns us with best practices and better expresses the way we work,” Gloeckler said. “Joan leads our day-to-day operations, while our chair, vice chair and other elected leaders develop strategy for the Network’s future growth and development. As we celebrate our 10th anniversary, this change reflects the Network’s growth from a small group of industry players into one of the industry’s major mission-driven organizations.”

    President-Elect Julie Hamilton, senior vice president of global customer and commercial leadership for The Coca-Cola Company, is now the Network’s vice chair. Immediate past president Alison Kenney Paul, vice chairman and U.S. retail leader for Deloitte, has been given the new title of past chair.

    NEW currently is a 3,300-member organization with 70 national sponsors and 17 regional groups in the United States and Canada.
    KC's View:

    Published on: March 15, 2011

    The Wall Street Journal reports that the new Apple iPad 2, which went on sale late last Friday, sold out in virtually all of its stores in major US metropolitan areas, and is now backordered on the company’s website for delivery in three to four weeks.

    Apple has not yet released sales figures, and the iPad 2 also is being carried by Walmart, best Buy and Target - all of which said that the product was selling briskly. Some reports suggest that Apple could have sold more than a half-million of the devices in just the first three days, and some analysts are suggesting that the company could sell as many as 30 million iPads globally in 2011.

    The company has described the new iPad 2 as being thinner, lighter and more powerful than the previous one, though with the same 10-hour battery life, and has a camera in the front and back for video conferencing, taking photos and videos. The price ranges from $499 to $829, the same as the original iPad.
    KC's View:
    There are a couple of broad business lessons here.

    The iPad 2 is a victory not just of technology, but of marketing. Apple didn’t pre-orders for the new version, which it did for the original, meaning that if you wanted one early, you had to get on line. This meant that the lines outside Apple Stores were often even longer than they were for the original iPad, which guaranteed press coverage, which helped to create even longer lines.

    Regardless of the marketing acumen that went into launching the new version of the iPad, the success of the launch demonstrates that there is a real interest among consumers in what Apple CEO Steve Jobs refers to as “post-PC” technology. If consumers really are thinking differently about how they use computers, and even how those computers should function, then this means that retailers need to think long and hard about how they are going to interact with this new breed of shopper and satisfy a new generation of expectations.

    This represents the victory of “me first” thinking over “me, too” thinking.

    Which reminds me...

    The Seattle Post Intelligencer the other day took note of the fact that Microsoft will no longer make new versions of its Zune music player, which was designed to compete with the iPod, “though the company’s music and video services will live on in Windows Phone 7, Xbox 360 and on PCs.”

    The PI went on: “No big surprise, considering the Zune — and all the other non-Apple music players — have trailed so far behind the iPod that it’s been almost laughable ... Microsoft released the first Zune player in 2006 - five full years after the first iPod. By that time, Apple had all but solidified its leadership in the market, but Microsoft was adamant it could make some waves. It, well, didn’t.”

    “Me, too” thinking at its best.

    Published on: March 15, 2011

    • PepsiCo announced that it has created a new plastic bottle that is made entirely out of plant materials, and does not look or feel any different than its current bottles, which are 30 percent plant-based.

    According to the announcement, the new bottles are made from switch grass, pine bark, corn husks and other materials.” The company said it plans to make bottles from “orange peels, potato scraps and other leftovers from its food business.”

    Bloomberg reports that Facebook “is planning to test a service that will let consumers buy discounted one-time offers as it looks for new ways to boost sales and attract local business customers.”

    In other words, it is hoping to out-Groupon Groupon.

    According to the story, “The service will let people share discounted offers with their friends, Facebook said in an e-mailed statement. Part of the company’s Deals program, the service will be introduced first in five cities, including Atlanta, San Francisco, San Diego, Dallas and Austin, Texas.”
    KC's View:

    Published on: March 15, 2011

    • Weis Markets announced that Dan Koch has joined the company as Vice President of Fresh Merchandising, overseeing the chain’s Fresh Departments including Meat, Produce, Bakery, Deli/Food Service, Seafood and Floral. Prior to joining Weis Markets, Koch was Vice President of Deli/Food Service/Bakery for Price Chopper in Schenectady, New York.

    • Kraft Foods CFO Timothy McLevish reportedly is stepping down to “pursue opportunities in general management.” He will be succeeded by David Brearton, current executive vice president of operations.
    KC's View:

    Published on: March 15, 2011

    Responding to our recent story about Walmart’s decision to rapidly roll out its small-store Express format, one MNB user wrote:

    Is it just me or is there trouble ahead for Family Dollar and Dollar General?   With Walmart's buying power and distribution efficiencies, I think it can do a better job in a small format than Family Dollar or the usually messy-looking, understaffed Dollar General outlets.


    The other potential victim of all this expansion could be Supervalu’s Save-A-Lot stores. CEO Craig Herkert, a former Walmart exec, seems to feel that these stores are the future of the company, but now his former employer may have eyes on the same target. Save-A-Lot has a size advantage, but Walmart seems a lot more nimble...

    Hey! Maybe Walmart could buy the Save-A-Lot stores from Supervalu. It may be the most marketable commodity that Herkert has these days...

    MNB had a story yesterday about how banks are at least considering the imposition of limits on debit card transactions as a way of retaliating over swipe fee regulations that could be imposed by the Federal Reserve.

    MNB user Chris O’Brien wrote:

    Great thoughts on the new swipe fee regulations in your Monday Morning Eye Opener. Looking at this from a consumer’s standpoint, here’s one (admittedly pessimistic) scenario: banks will find other ways to protect their revenue stream by charging consumers all sorts of vaguely understood and semi-hidden fees. Meanwhile, most retailers will silently pocket the savings from swipe fee regulation and enjoy a bump to their bottom line. Like you say, though, the rare retailer who publicly and genuinely advocates for the consumer could reap lasting benefits in the long run.

    MNB user Terry Shirley wrote:

    Just wondering how much debit transactions cut down on bad-check loss for retailers and all the related collections expense??  Doesn’t the retailer also get some benefit here in terms of increased checkstand productivity (I hate to get behind someone that is writing a check!)

    MNB user Randy Friedlander responded:

    Any effort by banks to impose checking account fees to compensate for lost swipe revenue would result in either (a) consumers flocking to virtual online banks who are less likely to charge such fees, or (b) major retailers like Amazon or Walmart expanding their retail banking businesses.  Every business in every other industry (except perhaps government) has had to slash costs and improve efficiency in order to compete.  It’s the banks’ turn.

    MNB user Bob Grandpre wrote:

    It’s my money and when I need it the bank says I can’t have it? What’s up with that? I’ll go back to using cash.

    Maybe there will be a run on mattresses, as people look for alternatives to savings accounts.

    On the subject of Peapod entering the Manhattan market and competing with FreshDirect, one MNB user wrote:

    Somehow Peapod needs to build a partnership with the cities in which they operate, many of whom are challenged with lack of inner city stores and folks in need of help to service, Perhaps if Peapod demonstrated or agreed to service (or donated delivery service?) to a percentage or number seniors and/or handicapped, or low income shut ins, they can come to an "understanding" on the ticket front with their cities - a win/win for many and maybe even a tax benefit for Peapod in the process.

    Responding to the piece yesterday about former Tesco CEO Sir Terry Leahy saying that supermarkets can be a force for good and “social mobility,” MNB user Ernie Monschein wrote:

    “We take people with no qualifications, we take people from the finest universities, but it’s what you do in the organization, what kind of person you are, how hard you work, you can get right to the top.” - Sir Terry Leahy

    Although I haven’t heard of food retailers referred to as “engines of social mobility”, perhaps more than any other industry, the food industry has always been and will continue to be an engine for economic mobility. This is no secret within the industry as evidenced by so many industry executives who, through innovative thinking, smart management and hard work, started as baggers or stock clerks and rapidly moved up through the organization; often to run the company.  We all know many examples of this model – a young man or woman gets a job at the local grocery while in school never intending to make the food industry more than just a part time job. They get noticed by a savvy manager, get promoted to department manager or selected to join the company’s store manager training program, and off they go. A few years later they’re running a store, get promoted to DM or move to headquarters in sales and merchandising or human resources.  We’ve all seen it or been part of this progression ourselves.

    Unfortunately, the retail food industry has not always been successful communicating this model to the general public to promote the industry as a chosen rather than an accidental career. It’s not through a lack of trying on the part of individual companies with varying degrees of success.  What’s needed is an industry-wide campaign communicated widely to the American public.  We have such a great story to tell. Whether it is social mobility or economic mobility Leahy’s comment sums up the industry’s greatest asset.

    MNB user Craig Ryder wrote:

    I think we are maybe stretching things a little far by suggesting that you are ‘doing good by feeding people’ when working in a supermarket. I would say however that here in the UK, Sir Terry Leahy’s  Tesco has helped give more people than ever the chance to buy healthier, fresher food. His Tesco Express c-store formats have helped drive out the high price, low quality corner shop operators whose business model was to extract as much cash as possible out of local shoppers who had no shopping choice. His small stores generally triple product choice, offer a decent range of fresh and chilled items and give everyone the chance to eat healthily. Whether they do is of course up to the individual!

    I’m not sure that the “feeding people” message is a stretch. At least, it shouldn’t be.

    If I operated a food store, that would be my central message to everyone who worked there - we’re all in the business of feeding people. That’s marketing to the highest common denominator, not the lowest.
    KC's View: