retail news in context, analysis with attitude

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.


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: