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 17, 2011


    by Kevin Coupe

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

    When Rupert Murdoch’s News Corp. spent millions of dollars to put together The Daily, promoting it as the first national newspaper created specifically for the iPad and other tablet computers, it seemed like a good idea. But that assumed they were going to do it in a way that made sense editorially and creatively, and that they were going to create something that actually used the advantages of the iPad to make news coverage come alive in a timely and illuminating way.

    Unfortunately, they seem to have none of the above. And the result is a cautionary tale for every business looking to take advantage of 21st century technologies to light a fire under their 20th century business models.

    If you’ve ever used an iPad - and if you are a business leader in 21st century America, there is no excuse for not having at least played with one, so you know what all the excitement is about - you know that one of the advantages is the ability to finger swipe your way through content; everything quite literally is at your fingertips, and on the good sites, navigation is fairly intuitive.

    The Daily, however, is a mess. The layout is supposed to be along the lines of traditional newspaper sections, but the real advantage of the a site like The Daily ought to be the ability to drill down, to get more information and deeper analysis on the subjects that interest you. Not here...not at least as far as I can tell. And as a review in Advertising Age points out, sometimes The Daily is startlingly shallow - it gave three sentences to the 100th birthday of Ronald Reagan, and four sentences to the shark fin soup controversy.

    The pictures may be great, but they don’t really create a narrative, which is what The Daily needs to do in order to become compelling reading and an everyday habit for American newspaper junkies with an eye on their iPads.

    And here’s the biggest problem. The damn thing appears to be updated once a day - unlike the websites of, say, Google and Yahoo and the New York Times and the Washington Post and the Wall Street Journal and USA Today and even the New York Post - all of which provide updates on breaking news as they happen.

    No, it almost seems like the people who invented The Daily really didn’t understand the advantages of tablet computer technology and the internet - they’d read about them in a book somewhere (though probably not on a website), and thought they could impose order on chaos. Ignoring the fact that those of us who use the internet thrive on chaos, or at least have figured out how to create order ourselves, order that reflects out own priorities.

    Oddly enough, The Daily reminds me of nothing so much as AOL - which is what I first used when I learned about the internet, because it helped give focus to something I did not really understand. But that was a long time ago, and the world - and readers - have come a long way. The Daily is an anachronism. Worse, it’s useless.

    The lesson for other businesses is pretty simple. Just adopting certain technological attributes doesn’t make you relevant, or savvy, or even worth the customer’s attention. You have to do it right, you have to do it smart, and you have to think not just about the technology, but also about how the customer uses the technology, and what customers want from it. None of which the people behind The Daily seem to have done.

    The folks at The Daily keep telling me that my free subscription term is about to end, that pretty soon I’m going to have to start paying for it.

    I have no problem paying for internet content. I think it is entirely fair, and I have paid subscriptions to a number of online publications because I think the content warrants it. But for The Daily? No way.

    That’s what’s on my mind this Thursday morning. As always, I want to hear what is on your mind.
    KC's View:

    Published on: March 17, 2011

    by Kevin Coupe

    Everybody worries about the competition. But sometimes, the competition you really need to worry about is the competition that used to be your business partner, that used to be part of your supply chain, that used to stand shoulder-to-shoulder with you in catering to consumers. Or worse, that seemed to be in a different segment of the business altogether, before deciding that in order to grow, it needed to expand onto your territory.

    Think it can’t happen to you?

    That’s probably what the folks at HBO thought about Netflix, which over the past few years has helped to completely rewrite the rules of video rental, disrupting the supply chain that Blockbuster thought it dominated and, in the process, almost putting the once-giant video rental chain out of business.

    Netflix has been flexing its muscles in a variety of directions, moving aggressively to gain an advantage in the video streaming business. And now, it actually is competing with pay-cable channels such as HBO for original content - potentially rewriting some more rules in the process.

    The Wall Street Journal reports that Netflix “is in advanced talks to distribute a forthcoming television series directed by David Fincher and starring Kevin Spacey ... The discussions for the series - a political drama called ‘House of Cards’ based on a British miniseries - is part of a growing behind-the-scenes push by Netflix to secure from Hollywood production companies more original shows that will run initially on Netflix's streaming Internet service, according to a person familiar with Netflix's plans.”

    In other words, if this all works out, Netflix won’t be just a distributor of other people’s programming. It’ll actually be developing and distributing original programming ... and it isn’t hard to imagine that at some point it will start developing and producing its own movies and television series.

    It is sort of like the move to private label that has changed the balance of power to some degree in the supermarket business. At some point, distributors of product start to realize that in order to differentiate themselves in the marketplace they have to have product that nobody else has. In this case, Netflix is hoping to have exclusive rights to a series that won;t be carried by HBO or Showtime and won’t be available in Redbox kiosks.

    Think this can’t happen to you?

    Well, think again. Because everybody is looking for an edge, everybody is looking for a differential advantage, everybody is looking for that disruptive product or service, everybody is looking to rewrite thew rules in their favor, and everybody is potential competition.

    And if there are companies out there that are not looking to do these things ... well, the odds are pretty good that in the long run, these companies are going to be the victims of the companies that do.

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

    Published on: March 17, 2011

    Crain’s Chicago Business reports that Supervalu-owned Jewel-Osco will eliminate 56 store director jobs from the chain. The cuts are scheduled to take place next month.

    "Although the decision to reduce the number of store directors is difficult, the company believes the move will improve efficiency and help make Jewel-Osco more competitive in the communities it serves," Jewel-Osco said in a statement.

    As the story notes, “Last year, Jewel-Osco eliminated more than 120 store director positions after Supervalu decided it only needed one per store. The chain's 182 stores in Illinois, Indiana and Iowa had been working with two in each location: a store director overseeing the Jewel grocery business and another in charge of the Osco drug division.”
    KC's View:
    Maybe I’m wrong about this, but it seems to me that for a store to be a functioning organism, it needs a strong leader who sets the tone for how business will be transacted, how customers will be treated, and how employees will treat each other and take ownership of the business.

    Not a half-time leader with his or her eye on the budget line, hoping against hope that expenses can be kept in line so that he or she can keep her job and not be deemed irrelevant or unnecessary by the folks back at corporate.

    I’m sure that the folks at Supervalu are doing what they think needs to be done to get expenses in line. But there are (at least) two problems with this logic.

    One is that by reducing leadership at store level, it is probably less likely that the stores will perform either efficiently or effectively. (And what does it say about the company’s hiring and promotion policies if this is not the case?)

    Two, it seems to me that a strong and effective store director ought to be viewed as an investment, not as a cost ... just as labor in general ought to be viewed as an investment, because it is the people on the front lines who make or break a chain. That clearly is not the thinking here. Upper management has decided that the people on the front lines are not the most important thing...and this likely will mean that, in the long term, the front lines will not hold.

    And Supervalu will continue to have to answer questions about whether it has any strategy in mind that does not involve a scissor and an eyeshade.

    Published on: March 17, 2011


    The St. Petersburg Times reports that when Publix Super Markets hosts its annual shareholders meeting on April 12 - an event that usually is “a happy corporate pep rally” - management will face a write-in campaign run by a group of dissident shareholders looking to elect an alternative slate of directors and explore the possibility of taking the company public.

    As the Times writes, “The chances of upsetting the balance of power at the nation's largest employee-owned company appear remote. Dissident shareholder campaigns seldom succeed at more than putting pressure on management to change policies. And last year, holders of 5.5 billion Publix shares voted to retain the current nine-member board, while owners of just 14 million voted to oust them.

    “None of the write-in candidates appeared to be employees, according to Publix officials, and a reporter's e-mails to the group - Publix Employee Shareholders United - drew no response. While the campaign's presence has been confined to a news release and a page on Facebook, that alone was enough to generate lots of buzz Wednesday on stock and retail industry blogs.

    “After all, Publix is the nation's fourth-largest supermarket chain, and investment bankers for years have lusted over the possibility of underwriting a public offering.”

    The story goes on: “Founder George Jenkins gave 85 percent of the company's shares to its employee stock ownership plan. His heirs and other insiders control the rest. The shares are currently traded privately and can be cashed in, usually when leaving the company, only by selling them back to Publix ... The dissidents want to enhance the value of Publix stock and make it easier to cash in shares. Standard ways to do that are to take the company public or sell a chunk of the company to private investor groups.”
    KC's View:
    It may be unlikely, but it seems to me that there are a lot of unlikely things happening these days.

    But if this does happen, it would be a shame, because Publix management would be put in a position where it has to run the company with an eye on how Wall Street perceives it, as opposed to how Main Street responds to it.

    Published on: March 17, 2011

    Roche Bros. announced that it has begun offering a call-in service at 17 of its Boston area stores, providing “the ability to call-in a grocery order via the phone and have the groceries delivered to the customer’s doorstep.”

    The service is designed to appeal primarily to elderly and disabled who need home delivery, but either don’t have access to a computer or do not know how to use one.

    “Roche Bros. has a long tradition of meeting the needs of the community,” says Arthur Ackles, director of marketing for Roche Bros. “That means serving not just our core customers, but customers whose lifestyle may be compromised. This philosophy is at the heart of what Roche Bros is all about.”

    Roche Bros. has been offering online shopping and home delivery via MyWebGrocer since 2005.

    Full disclosure: MyWebGrocer is a longtime and valued MNB sponsor.
    KC's View:
    I think that anything you can do to be available and responsive to your customer base is a good thing. Kudos to Roche Bros.

    Published on: March 17, 2011

    Wine Spectator reports that “a recent study finds that drinking alcohol in moderation protects against dementia, even after age 75. Scientists from several German university psychiatric departments and primary-care centers reported in the study that, on average, the daily consumption of alcohol reduces the risk of dementia by nearly 30 percent compared to nondrinkers. Additionally, the risk is another 30 percent lower for people who drink between one or two servings per day.

    "’Our study suggests that light-to-moderate alcohol consumption is inversely related to dementia among individuals aged 75 years and older,’ the scientists wrote. The team also found similar results in regard to Alzheimer's disease, classified as a specific form of dementia.”

    While the results of the study were said to be encouraging, not everyone bought into the fact that there may be a chemical correlation between alcohol consumption and less risk of dementia.

    One critic, Erik Skovenborg, a member of the Scandinavian Medical Alcohol Board in Denmark, wrote: “Happy people with many friends have the most opportunities for social drinking and, in this study, alcohol consumption was significantly associated with factors that are protective for the development of dementia: better education, not living alone and absence of depression.”
    KC's View:
    Whatever it takes.

    In the old days, I would have used this story as an excuse to make a wisecrack or slightly irreverent joke. But for the past year or so, we’ve been dealing with rapid onset dementia of a family member, and I’ve learned that there is nothing funny about it. It is a horrible, horrible way to go ... and I will do anything not to go through that, or put my loved ones through it.

    Even moderate alcohol consumption.

    Published on: March 17, 2011

    The Chicago Sun Times reports that “wholesale food prices spiked 3.9 percent in February from January, the biggest jump in 36 years, the Labor Department said Wednesday. Most of the increase was because of a sharp rise in vegetable costs, but meat and dairy prices also jumped. Harsh winter freezes in Florida, Texas and other Southern states damaged crops, driving up vegetable prices. Meanwhile global prices for corn, wheat and soybeans have risen sharply in the past year. That has raised the price of animal feed, pushing up the cost of eggs, beef and milk at the wholesale and consumer level.”
    KC's View:
    While nobody knows what is going to happen for sure, there seems to be a real sense out there that we’re all going to face what Bob Murphy used to call “nine miles of bad road” when it comes to food prices. In the US, we’re used to not having to spend much of our discretionary income on food, but that may be changing for the foreseeable future.

    Published on: March 17, 2011

    Politico reports this morning that First Lady Michelle Obama will be out in April 2012 with a book, as yet untitled, that "will tell the story of the garden she has established on the South Lawn of the White House and explore how improved access to fresh, locally grown food can promote healthier eating habits for families and communities."

    Crown Publishing Group at Random House says in a release: "Mrs. Obama accepted no advance for the book and will donate all proceeds to a charity or charities to be named later."
    KC's View:
    Good for her. You can think anything you want about her politics, but it seems to me that there are a lot of things that Michelle Obama could have done with her time in the White House. She’s fighting the good fight, not trying to regulate what peoples eat, but simply create awareness and help people - especially kids - understand the connection between food and health.

    Published on: March 17, 2011

    Marketing Daily reports on new Nielsen research saying that “men are spending more time in supermarkets, and women are spending more time on the couch watching the tube.”

    According to the story, “Women are still doing the majority of shopping in all retail channels (with the exception of convenience stores), writes Todd Hale, SVP/consumer & shopper insights, in his analysis. And they also ring up bigger totals at checkouts, which implies they still do the heavy-duty weekly stock-up trips. But men aren't just running out for beer and chips: At the grocery store, women spend an average of $44.43 per trip, while men spend $34.81 -- and at dollar and warehouse club stores, women are only spending $3 and $5 more respectively per trip than guys are, the market research company reports.”

    One of the reasons that men are doing more shopping: the unemployment rate continues to affect men to a disproportionate degree, and many of them simply have more time to do the shopping.
    KC's View:

    Published on: March 17, 2011

    The Oakland Tribune reports that there is speculation in the marketplace that Starbucks may be interested in acquiring Peet’s Coffee & Tea. Neither company commented on the reports.

    “If a deal occurs,” the Tribune writes, “it would bring together two companies that have ties dating back to the early 1970s, when both companies were getting off the ground. It would also combine the giant of the coffee industry with one of the Bay Area's most prominent specialty roasters.”
    KC's View:
    This may be good for the two companies, but I’m not sure it is better for the consumer, who would be better served by healthy competition.

    Published on: March 17, 2011

    • The Washington Post reports that Ahold-owned Giant Food of Landover has given verbal notice to the Teamsters union representing workers at one of its Maryland warehouses that it plans to close the site.

    According to the story, “The area's largest supermarket chain agreed in April to have Jessup Logistics, an affiliate of C&S Wholesale Grocers, assume operations of its dry-groceries warehouse in Jessup starting Sunday. This month, the operator began meeting with Teamsters Local 730, representing 430 workers there, to negotiate the contract set to expire May 14. Union president Ritchie Brooks said that Tuesday, officials from Jessup Logistics informed him that the plant would shutter.”

    • World Wildlife Fund (WWF) announced a new collaboration with Costco Wholesale to assess its source fisheries and further develop the company’s wild-caught seafood sourcing strategy.

    According to the announcement, WWF is undertaking assessments of ten of Costco’s wild-caught species and is using that information to help develop sustainable sourcing strategies for the company’s seafood purchases that includes Marine Stewardship Council certification.   WWF will also work closely with Costco to advise as to how the company and its suppliers can engage in select WWF fishery improvement projects.

    • Published reports say that Publix Super Markets has unveiled its first charging station for electric cars, at a store in Belle Meade, Tennessee - a test to see how many customers use the free service before the company rolls out additional charging stations at other locations.

    Drug Store News reports on a new study from Mintel saying that “69% of consumers believed that how you age is mostly genetic. Eight-out-of-10 consumers also thought that diet and exercise are the most important factors associated with aging skin, and 78% believed that using sunscreen is the real key to preventing visible signs of aging.”

    This means business of a certain kind: “Currently, 24% of consumers reported using anti-aging skin care products,” Drug Store News writes. “Another 21% have used wrinkle-reducing facial skin care products in the past year, and 18% reported using skin-rejuvenating products. Meanwhile, 39% of consumers who are concerned with aging have not taken any action to prevent or reverse the signs of aging, according to Mintel.”

    USA Today reports that a number of supermarket chains are moving away from offering rebates to customers who bring in their own reusable bags, but instead are moving toward educational efforts to teach consumers about the environmental importance of getting away from single-use bags.’

    • The Wall Street Journal reports that “U.S. sales of Diet Coke overtook those of Pepsi Cola for the first time in 2010, making the diet soda the No. 2 carbonated soft drink in the country behind Coca-Cola ... Occupying the top two rankings would mark a historic win for Coca-Cola Co. in its decades-old rivalry with PepsiCo Inc., which has seen its market share slip in recent years and is trying to retool its marketing.”
    KC's View:

    Published on: March 17, 2011

    Responding to yesterday’s story about Supervalu apparently spending a lot of money to build market share in the west - a move that some critics say is not sustainable - one MNB user wrote:

    As a recent long term employee of Supervalu, I can say that Supervalu acquiring distribution to a retailer is nothing new, they have been doing this for a long time and they are good at it and its always been part of the distribution plan. The distribution side of Supervalu is one of the grocery industries quiet success stories. I only wish (and they do to) the retail side of the business was as successful.

    But another MNB user echoed my sense of the situation:

    Sounds more like Fleming everyday.

    How long before they change CEOs?





    On the subject of transparency as it affects GM crops, something of profound interest to some in the MNB community, one person wrote:

    If you looked at all the GM crops grown and follow their usage as basic commodities in food as well as their use in ingredients and ingredient processing, you would find that so many products would have to carry a GMO label that it would be common place.  Consumers would become immune to the labeling and those that were adamant about not eating GM foods would have their diet severely restricted and the cost to skyrocket.  

    We have tried to make GMO free foods for export to Europe where you have to label GMO ingredients and found that we had to move production to Europe to be able to find GMO free ingredients at a cost that would allow us to compete in the market place.





    Finally, we got a number of emails about our story regarding a bipartisan group of nine US Senators, led by Sen. Jon Tester (D-Montana), that 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.

    I commented , in part:

    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.


    One MNB user disagreed:

    To me, the answer is not to cap the fees. Historically, these kinds of regulations add to the craziness and cost more than anything.

    Couldn’t the solution just be to make it transparent to the customer? Retailers seem like they would post this kind of information in a minute, and the credit card companies currently block them from doing so. Wouldn’t it be effective if the retailers had the option of charging less for cash? Transparency, in my opinion, would go a lot further than a cap.


    I want both.

    The original story said that Sen. Tester “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.” Which led one MNB user to write:

    This has got to be the lamest argument of all.  I really don't think it's in the consumer's interest to coddle the high-cost producers in the marketplace.

    MNB user Blake Steen observed:

    I agree that President Obama can’t afford to be seen backing “big banks” even though he clearly already has in the beginning of his presidency. I agree that fees are way too much, however with that said tracking needs to be done to ensure the trade groups who are so angry do what they say in passing along the savings to the customer.

    If some retailers that are whining so loudly about these fees do not end up passing at least some of the savings onto the customer, then I fully expect that there will be other retailers that will call them on it and turn those savings into their own marketing advantage; the retailers that have been less than genuine will pay a penalty in customer goodwill and credibility.

    And finally, another MNB user had the ultimate solution for how to smack the banks down:

    All they have to do is let Wal-Mart enter the banking business as they have tried to do many times.  Wouldn’t be long after that “market forces” began to dictate the fee structure instead of banks.

    Agreed.

    BTW...the only reason that Walmart doesn’t operate a bank right now is that the financial services industry has spent millions in lobbying fees to keep them from doing so.

    Best damn government money can buy.
    KC's View: