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 16, 2011

    by Kevin Coupe

    The more things change...well, these days, it seems that much is staying the same.

    Here are three nuggets from the news that point to the inevitability of change in all sorts of areas.

    • The Los Angeles Times reports this morning on a new study from the Pew Research Center saying that “more people said they got their news from the Web than a physical newspaper last year - the first time in history this has happened ... The Internet now trails only television among U.S. adults as a destination for news, and the trend line shows the gap closing.” And when the final 2010 numbers are in, it also is believed that it could be the first year in which n online ad revenue surpasses print newspaper ad revenue.

    USA Today reports this morning that while Atlanta’s Hartsfield-Jackson International Airport remains the world’s busiest, London’s Heathrow Airport now longer occupies the second position. The number two post now is held by Capital International Airport in Beijing, China - and expectations are that it won’t be long before Beijing’s facility will ascend to the top position. The shift in fortunes “highlights the rise of the Asia Pacific region which is on the cusp of becoming the biggest air travel market in the world, largely because of China's increasing economic dominance,” the paper writes.

    Bloomberg reports that for the first time, the United States has passed France as the world’s largest wine-consuming nation, “lifted by its larger population and an interest in wine-and-cheese culture among young Americans” that grew even during a recessionary period.

    “While the French still eclipse Americans in per-capita consumption, the U.S. wine industry is benefiting from a population of almost 311 million people - five times the size of France's - and more young people becoming interested in the drink. Marketers also are using social media to reach a new generation of consumers,” the story notes.

    (We have a way to go when it comes to per capita consumption domination. The story notes that “the French drank about 14 gallons per person on average in 2008, the latest year with figures available from the Wine Institute, a trade group in San Francisco. That compares with 2.6 gallons for Americans.”)

    The moral of the story is simple. Change comes to every business, every venue. You have to embrace the forces of change and make them work for you, not resist and fight against them. Resistance, as an alien species once ominously said, is futile.

    In other words ... keep your eyes open.
    KC's View:

    Published on: March 16, 2011

    A bipartisan group of nine US Senators, led by Sen. Jon Tester (D-Montana), is backing a new bill that would delay for two years mandated lower swipe fees for debit card transactions. The mandate is part of financial reform that passed the Congress and was signed into law by President Barack Obama last summer; the new bill calls for a two-year delay and a one-year study of what the impact of such a mandate would be.

    The Federal Reserve has proposed that swipe fees be set at 12 cents per transaction, compared to the current average of 44 cents per transaction that is currently charged by the banks.

    According to the New York Times, “The proposed rules have faced complaints and heavy lobbying from banks, credit unions and credit card companies, which say that cutting and capping fees mean that the fees will fail to cover the cost of processing the transactions and accounting for fraud ... Although there is growing uneasiness with the regulation, it is not at all clear the senators will succeed in upending the law, which easily passed the Senate last year and was a cause championed by a leading Democrat.”

    Retailers and consumer groups have largely supported the mandated limits on swipe fees, saying that the high fees and lack of regulation force retailers to raise prices to cover them. Lower fees, they say, will result in less expensive products, which would be stimulative to the economy.

    The Times continues: “The Federal Reserve did its own study of the debit fee market in preparing its proposal. But Mr. Tester said he believed that the Federal Reserve’s research on the issue did not take into account the costs of small community banks, which generally have higher per-transaction operating costs than do giant card issuers like Citigroup and Chase.

    “Smaller banks, those with less than $10 billion in assets, were exempt from the limits, but Ben S. Bernanke, chairman of the Fed, and Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, told a Senate hearing last month that they had doubts a two-tier system of debit fees was practical.”

    Trade associations representing various retailer groups were quick to respond to the new legislative proposal.

    • “The National Grocers Association (N.G.A.) is disappointed that a group of Senators has chosen to side with the big Wall Street banks over Main Street businesses and urges the Senate to reject efforts to pass this legislation,” said NGA President/CEO Peter Larkin. “The same big banks that received billions in tax payer bailouts are now asking Congress to support another bailout by trying to delay and kill a rule to reform anticompetitive debit swipe fees before it's even written. Each month of delay costs community-focused grocers, small businesses, and our customers $1 billion more a month.”

    • “Interfering with the process even before the final rule is written is nothing more than pandering to the giant banks,” said Jennifer Hatcher, senior vice president of government and public affairs at FMI. “Delaying swipe fee reform has consequences that will cost merchants and their customers $1 billion each month and will cost our economy 95,000 much-needed jobs each year.  Killing jobs isn’t what we were promised in November.”

    • “Congress should be standing by Main Street and not kowtowing to Visa, MasterCard and the big TARP banks that three years ago brought our economy to its knees and whose executives last year in just 9 months were paid more than $130 billion,” said NACS senior vice president of government relations Lyle Beckwith. And NACS President/CEO Hank Armour called the proposed delay “a slap in the face to small business owners and consumers across the country.”

    • “We are extremely surprised to see a bill introduced that favors Wall Street banks and price-fixing card companies over Main Street merchants and their customers,” National Retail Federation (NRF) Senior Vice President and General Counsel Mallory Duncan said. “Merchants are ready to pass lower swipe fees along to consumers in the form of discounts and other benefits as soon as reform goes into effect in July but we can’t do that if Congress lets bankers stand in the way.”

    “The banks and card companies claim they want to study swipe fee reform but the truth is they want to kill it,” Duncan continued. “Congress has already conducted more than half a dozen hearings on this issue, and the GAO and Federal Reserve have done studies of their own. The time for study is over. The time to reduce these fees and take bankers’ hands out of consumers’ pockets has come.”

    • “Despite the American people’s repeated disapproval of bank bailouts, the Tester bill is just that, this time at the expense of retailers and their consumers,” said Katherine Lugar, executive vice president for public affairs at the Retail Industry Leaders Association (RILA). “The past three years have been defined by the economic hardship caused by big bank recklessness and the $700 billion in taxpayer dollars used to bail them out. Yet, just as merchants and their consumers are about to finally see relief from the excessive debit card fees associated with the broken debit market, the biggest banks have launched a full scale campaign to take it away."
    KC's View:
    The best statement, IMHO, came from FMI member Mike Novak, a Montana supermarket retailer:

    “We invite our friend Senator Jon Tester to visit Mike’s Thriftway in Chester, Montana where he and Sharla have shopped many times.  We will open our books to him to show him what it is like to run a grocery store where the bank makes twice as much on an order as we do and the customer pays too much at a time when they don’t have any extra to pay.”

    If Tester does not take him up on that offer, he’s a fool. I wonder if banks - even “small community banks” - would be as willing to open their books to him and the other senators.

    It is amazing what millions of dollars in lobbying money can do.

    I have to imagine that even if the delay can get through the Senate and the House of Representatives, there is no way that it gets signed by President Obama - he cannot afford to be seen as backing the banks - and not consumers - as he goes into a presidential election cycle.

    What is amazing to me is how much anger and antipathy is expressed by the trade associations toward the financial services community. I’m glad; the banking community’s pure and unadulterated greed, facilitated by a lack of regulation and oversight, helped to create the financial mess that the country has been trying to extricate itself from for the past two years. Nobody has gone to jail, and it seems that there is little institutional memory.

    The game has been rigged in favor of the banks and the bankers for too long. To quote a certain politician, the time for change has come.

    Published on: March 16, 2011

    The Tampa Bay Business Examiner reports that Publix executives have found that the company’s new online shopping program, combined with curbside pickup of groceries at designated stores, has been better received than even they expected.

    According to the story, “The curbside pilot program began in September.  Execs at Publix didn’t need the entire year to figure out the new service is quite popular as customers drove much further than expected just to come to the store that offered the service ... Publix officials say they were quite surprised at some of the shopping data they collected from the test so far.  It turned out that soccer moms are not the only people using the service.  Officials have found that it’s been popular with those who are handicapped as well as those on a tight budget and people are flocking to the stores from miles away to enjoy the convenience.”

    Full disclosure: The Publix e-grocery initiative is powered by MyWebGrocer, which is a longtime and valued MNB sponsor.
    KC's View:
    The future of grocery shopping is, as I’ve said here many times before, tied up in an integrated model that offers customers what they want, when they want it, how they want it, where they want it, at a price they think is appropriate. This means offering online shopping as an alternative; not everybody will want it or use it, but not to offer it is to keep one’s eyes closed to the needs and desires of the next generation of shoppers, and to be non-competitive in a segment that is increasingly powerful.

    Published on: March 16, 2011

    The Bend Bulletin reports that Oregon-based C&K Markets, which operates 62 grocery stores and 13 pharmacies under a variety of banners, has switched wholesalers, from Unified Grocers to Supervalu.

    The new relationship begins next month.

    “By leveraging the strength of Supervalu’s buying power, we can access more competitive pricing on commodities and ultimately pass on the savings to our customers,” Doug Nidiffer, president and CEO of C&K, said in the news release.
    KC's View:
    Maybe.

    But a number of folks have mentioned to me that Supervalu, looking for a win at almost any cost, has been pulling out all the stops and spending a lot of incentive money to get a west coast retailer to switch to its distribution facilities. So C&K certainly is making a good short-term deal ... but time will tell if this makes sense in the long term.

    Supervalu hardly is the first wholesaler to “buy” business from retailers. But the people I talk to suggest that for Supervalu, this may not be a sustainable business strategy, and may not be good for anyone in the long run.

    Published on: March 16, 2011

    • The Chicago Sun Times reports that “continuing its aggressive push into Chicago, Wal-Mart Stores Inc. is expected to announce today two new locations on the South Side.

    “Sources said Wal-Mart plans to build a Neighborhood Market at 76th and Ashland. The store will be announced today at an event featuring Mayor Daley, the sources said. Also expected to be revealed is a site for a smaller Wal-Mart branded convenience store in the same West Englewood area.”

    The story continues: “The proposals show the company is following through on a promise to begin a billion-dollar expansion in Chicago. While it has covered Chicago’s suburbs with stores, Wal-Mart was barred from the city for years until it reached a compromise with labor leaders over wage standards.

    “Building stores in black communities could help Wal-Mart gain political support. It is challenging other retailers, especially grocers, that have bypassed minority areas.”
    KC's View:
    If Walmart really walks the walk, it will make the company’s argument to places like New York City that much more potent.

    Published on: March 16, 2011

    The Produce for Better Health Foundation (PBH) and Centers for Disease Control and Prevention (CDC) announced that they are developing a new brand message designed to support the existing “Fruits & Veggies-More Matters” initiative that was launched in 2007, but has not yet succeeded in getting the American public to eat enough fruits and vegetables.

    According to the announcement, “PBH and CDC have worked together to craft a positioning statement and new supporting brand messages that, along with the existing Fruits & Veggies-More Matters core brand messages, will be used in media distributions, public relations outreach, educational materials, and other points of contact with consumers, to encourage them to eat more nutritious fruits and vegetables.”

    The positioning statement and new supporting brand messages are:

    Make fruits & veggies about half of what you eat, every time you eat. A supporting statement for the 2010 Dietary Guidelines and Fruits & Veggies-More Matters that helps quantify for Americans how many daily servings of fruits and vegetables they should consume.
     
    Better Health Options. Combined with physical activity, eating the right amount of fruits and veggies can keep your family healthy and going strong.

    Good Nutrition “Eating and drinking colorful fruits and veggies provides a natural variety of vitamins, minerals, phytonutrients and fiber that allow you to be your best everyday.”
     
    Taste. “Fruits & veggies provide naturally flavorful tastes and textures that satisfy everyone's palate - alone or in recipes.”
     
    Simple to Do/Within Reach. “No points.  No complex program.  Fruits and veggies offer a great value - good for your budget, good for your body.”
    KC's View:

    Published on: March 16, 2011

    The Wall Street Journal reports that “beneath the radar, a range of specialty retailers are seeing sales shift online - and most of it is going to Amazon. A consumer survey by research firm TraQline shows that online sales have grown as a proportion of total sales in nearly every category since 2005, often by several percentage points. The most vulnerable categories are likely to include brand-name items that customers can easily recognize as identical and buy for less.”

    Among the categories that seem to be most affected is kitchen electrics, with Bed Bath & Beyond possibly feeling some impact because it does not seem to have profited from any shift to online sales. Home improvement retailers such as Home Depot and Lowes also don’t seem to be doing much business online, though they are certainly more vulnerable when it comes to items such as power tools than in categories like lumber.

    Still, the Journal writes, “as Internet sales continue to grow, companies need to bolster their offerings in areas that even Amazon hasn't yet discovered.”
    KC's View:
    See my POV attached to the story about Publix, above. Same deal.

    Published on: March 16, 2011

    The Los Angeles Times reports that “manufacturers are using a variety of grains –- flax, millet and quinoa among them –- to make products without gluten,” and the results of their labors were on display this week at the Natural Products Expo West in Anaheim.

    According to the piece, “Among the gluten-free choices were Van’s gluten-free frozen waffles; Glutino bread; Kinnikinnick Foods baking mixes; and Mina’s all-purpose mix in plain and chocolate. There were also breads, burritos, cereals, crackers and other products without gluten.” According to one observer, “one reason there are so many new gluten-free products is that ‘people were fed up’ with products that tasted more like cardboard than baked goods.”
    KC's View:

    Published on: March 16, 2011

    Trian Group, a NY-based hedge fund, has urged Family Dollar Stores to reconsider the $7.6 billion acquisition offer that it made for the retailer last month; Family Dollar rejected the bid as undervaluing the company.

    Trian, controlled by billionaire Nelson Peltz, currently controls about eight percent of Family Dollar’s stock.

    While the letter to Family Dollar’s board says that Trian is not looking to make a hostile takeover, it does want the retailer - if it continues to resist an acquisition - to commit to raising its performance level, especially sales per square foot, to be the same as Dollar General’s.
    KC's View:

    Published on: March 16, 2011

    • The Detroit News reports that Meijer, Inc. plans ton invest at least $75 million “to remodel 10 stores in Michigan and Ohio, including three in Metro Detroit — a move to keep the superstore chain competitive through updates and reduced costs.” The renovations are expected to be completed by the end of 2011, according to the report.

    Reuters reports that Netherlands-based Ahold has opened its first store in Belgium this week, “a move that could intensify competition for existing supermarket groups Delhaize, Colruyt, and Carrefour. The story says that the unit “is the first of what Ahold hopes will be a string of its Albert Heijn stores across Flanders, the Dutch-speaking north of Belgium.”

    • The Albert Lea Tribune reports that the Hy-Vee store in that community has begun offering “Blue Zone” checkouts, which have healthy snack, such as granola bars and dried fruit, rather than the candy offered at other lanes.

    The paper writes that “Hy-Vee dietitian Amy Pleimling said since the Blue Zones lane opened, the store has seen an average of a 42 percent increase on sales of items featured in the lane. She reported a 60 percent increase in the sales of soy nuts, a 30 percent increase in the sales of raw no-salt sunflower seeds, a 63 percent increase in the sales of dried peaches (no sugar added varieties) and a 16 percent increase in the sales of Sunsweet prunes.”

    • The Chicago Sun Times reports that “British lawmakers attacked Kraft Food Inc. Chief Executive Irene Rosenfeld on Tuesday for refusing to appear for the second time before an inquiry into the U.S. company’s takeover of chocolate maker Cadbury.

    “Rosenfeld’s absence dominated a hearing by the cross-party Business Select Committee into whether Northfield-based Kraft has kept promises it made after the takeover a year ago about protecting jobs in Britain ... Rosenfeld’s decision to spurn invitations to appear before the committee — either in person or via video link from the United States — has further strained Kraft’s already fraught political relations in Britain.”

    Kraft has maintained that it cannot promise to “extend guarantees about preserving manufacturing positions beyond next year,” the story notes.

    • Whole Foods announced that it has funded a total of $4 million in low-interest loans through its Local Producer Loan Program to help small, independent producers expand their businesses and bring more of their high quality, local products to market.

    Whole Foods Market first launched the program in 2007.

    • The Portland Business Journal reports that Kroger-owned Fred Meyer “has agreed to provide back pay and pension benefits to Oregon employees who were deployed for military service during the last seven years. The grocer will also modify its employment practices.

    “Under the settlement ... the store agreed to several stipulations after an investigation by the Oregon Department of Justice and the Oregon Department of Veterans’ Affairs. Veterans had complained that they had not received step increases and pension benefits during their periods of military deployment — a violation of the federal Uniformed Services Employment and Re employment Rights Act and state law.”

    Ironically, the Oregon Attorney General with which the Kroger-owned chain reached the agreement is named John Kroger.
    KC's View:

    Published on: March 16, 2011

    MNB yesterday took note of a Washington Post report 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 noted, 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.

    My comment:

    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?


    One MNB user responded:

    Those who complain about the listing of ingredients based on a government nanny state just don’t get it. The regulations give the consumer KNOWLEDGE, they do not mandate behavior.  How is that a bad thing?

    Another MNB user wrote:

    FMI's push to exempt grocery chains with 20 or more locations from having to post calorie counts for the food they serve reminds me of the Amazon/Brick-and-mortar store sales tax dispute.  The supermarkets compete with restaurants, especially those that have sit down seating.  The new Giant Eagle Market District store runs a very fine in-store "restaurant". 

    From another MNB user:

    Transparency is the only way to conduct business in the future!

    I attended Expo West this past weekend, and seminars on Genetic modification.  The push towards labeling foods sourced from genetically modified organisms is strong – the only resistance of course, is from the biotech industry, Monsanto, BASF and others.  The consumer wants to know.

    What I recently learned, is that even CERTIFIED ORGANIC products have traces of GMOs in them!  The crops that are 90% or more such as corn and soy, we now are finding them in organic products!  One manufacturer stood up and shared that they had tested their “organic” corn and found it to be 6% GMO.  There are several issues and it’s complex but the main thing going forward, for those who don’t want GMOs in their foods, is to support the Non GMO Project www.nongmoproject.org There is a list of manufacturers at this site.

    I do not work for any of these companies, I am speaking as a concerned consumer!  I feel “my” industry betrayed me by not making this clear when they became aware of it.  “My” industry being the natural products industry, that I have supported with purchasing dollars, passion and at times, worked in.


    Another MNB user chimed in:

    I’d rather know which grocery store products contain Genetically Modified corn and soybeans than how many calories are in my popcorn or my deli salad.

    Why not both? Or at least have both pieces of information available, in case you want to know?


    One other thing. There are a few folks who wish I’d get off the transparency bandwagon, who feel that I keep beating a dead horse.

    I’d suggest that as long as there are industries that resist transparency - at their own risk, IMHO - the horse ain’t dead, and I think it is my job to keep fighting the good fight. (Or at least preaching the good sermon. Whatever.)

    And, from another MNB user:

    I’ve found that I feel more strongly about this than I thought … and I am very much in favor of as much information as I can get about the foods I eat. I always seem to be counting calories, and if I know what’s in my popcorn & how much of it I can eat, I feel more in control. This obviously puts the responsibility right back on me the consumer and provides me with CHOICE.  Like most things, there are two sides to this, but I am in favor of personal responsibility based on accurate & available information (this goes for practically anything actually).

    Being inattentive & not searching out information put a lot of weight on me over the years. I’m hoping that paying attention & exercising a little responsibility will help me be  leaner & healthier … but I need the people who sell me food in any form and in any place to be my partner for this to work.


    I know what the movie theaters are afraid of, BTW. We already know the prices they charge at the concession stands, and if we know the calorie count for the popcorn, we’re all going to sneak in bags of Twizzlers under our coats.




    On the subject of Facebook going into direct competition with Groupon, one MNB user wrote:

    Groupon should have accepted Facebook’s buyout offer or at least negotiated until reasonable terms were worked out.  Groupon does not offer any point of differentiation other than they were first and now have a sizable mailing list.  Facebook can match the list, I am sure.  Also, Groupon needs a presence in every market they serve in order to come up with local offers.  That is fairly labor intensive.  I’m not saying they can’t make it, but I would think they are currently at their peak with a lot of competition on the horizon.
    KC's View: