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    Published on: March 31, 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.

    Hi, Kevin Coupe here, reporting this week from the Fontainebleau Hotel in Miami Beach, site of the annual SymphonyIRI Group 2011 Summit.

    This week I’ve had the opportunity to moderate two different panel discussions focusing on how shoppers will interact with retailers in the future.

    The first was up in Kalamazoo, Michigan, at the annual Food Industry Conference held by Western Michigan University, and the panel was on the subject of mobile marketing and social media. One of the participants on the panel was a student named Doug Coffman, who told us that he spends some two hours a day on social networks, and identified sites such as Facebook and Twitter as places where his behavior and attitudes can be influenced.

    It isn’t just students. Michelle Adams, vp of consumer insights at PepsiCo, told us about research the average American woman spends three hours online - which is staggering, because it means for every woman who is online for an hour a day, there is a woman online for five hours a day. She also explained the increasing dominance of women on the web by talking about research showing that men generally use about 7,000 to 9,000 words a day, while women speak some 20,000 words a day. There’s a joke in there somewhere, but there’s also a serious message - men like to watch, while women are seeking connections.

    That’s a serious message to which marketers need to pay attention.

    Here in Florida, the panel - which included Tom Furphy of Ideoclick and formerly of Amazon, and Rich Tarrant of MyWebGrocer, who was nice enough to be on both the Kalamazoo and Miami Beach panels - essentially continued the discussion ... and one of the lessons was that if retailers are not aggressive in this area, and willing to work with manufacturers, they run the risk of being disintermediated by manufacturers that look for ways to go around them.

    And here’s the big lesson, it seems to me. We are rapidly getting to the point where the e-grocery boat is going to be leaving the dock, and all the major players, as well as a lot of the minor players, are going to be aboard. Those who don’t get on board may find themselves at a significant competitive disadvantage ... and it could be almost impossible to make up.

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

    Published on: March 31, 2011

    by Kevin Coupe

    The New York Times this morning reports that “at a time when global health officials are stepping up efforts to treat obesity as a worrisome public health threat, some researchers are warning of a troubling side effect: growing stigma against fat people.”

    The story notes that a recent study by the School of Human Evolution and Social Change at Arizona State University suggests that “negative perceptions about people who are overweight may soon become the cultural norm in some countries, including places where plumper, larger bodies traditionally have been viewed as attractive ... One reason may be that public health campaigns branding obesity as a disease are sometimes perceived as being critical of individuals rather than the environmental and social factors that lead to weight gain.”

    The study isn’t considered large enough to be conclusive, and experts say that more study is necessary.

    But at the very least, the initial findings suggest that the people who are helping to frame the public discourse about this important issue need to be careful with their words and actions.

    That shouldn’t be an Eye-Opener, necessarily. But it is.
    KC's View:

    Published on: March 31, 2011

    Bloomberg reports that Federal Reserve Chairman Ben S. Bernanke told lawmakers “that the central bank would miss the April deadline for a rule capping debit-card ‘swipe’ fees, after receiving an ‘extraordinary volume’ of detailed comment letters on its preliminary proposal.”

    As the story notes, “The Fed in December proposed capping debit-card interchange fees charged to merchants at 12 cents a transaction, compared with the current formula that averages 1.14 percent of the purchase price, or about 44 cents. The proposal, which may cut as much as $12 billion in revenue from large lenders like Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), set off a lobbying battle between banks and retailers.”

    And, Bloomberg continues: “Bipartisan groups of Senate and House lawmakers this month proposed legislation to prevent the rule from taking effect July 21. Senator Jon Tester, a Montana Democrat and lead proponent of the Senate bill to delay the proposal for two years, said he’s concerned that an exemption for banks with assets of less than $10 billion would be ineffective. Retail groups who favor lower interchange fees said the delay indicates that the rulemaking process is working and should be allowed to continue.”
    KC's View:
    Retailers need to keep the pedal down on this one, and not let up the pressure on legislators. And they ought to enlist their shoppers to join the battle, explaining in clear and unambiguous terms how swipe fees hurt them.

    It shouldn’t be a hard sell. After all, nobody likes or trusts bankers these days.

    Published on: March 31, 2011

    The Hartford Courant reports that Big Y Supermarkets is unveiling a new discount program called the ‘Silver Savings Club” that “works like a hybrid between a club membership and traditional store enticement, an innovation that highlights the fierce competition for grocery shoppers ... For a $20 annual charge, Big Y customers can buy a membership that gives them even deeper discounts on select items.”

    "It's like a warehouse store within a traditional store program," Harry Kimball, Big Y's director of database marketing, tells the Courant.

    The paper explains: “As part of its free loyalty program, Big Y rewards frequent shoppers with ‘gold’ and ‘silver’ coins that can be redeemed for additional discounts on specific items ... Now consumers who opt to pay the $20 annual fee for the store's club card can take advantage of an unlimited number of ‘silver coin’ specials ... One of the reasons Big Y is introducing the club card is that customers forget to bring their coins or don't have enough reward coins to obtain all the discounts they want.”
    KC's View:
    I think the word to describe Big Y’s attitude toward this is cojones.

    And I mean that as a high compliment.

    This is a tough one, because Big Y is trying to do something that I’ve never heard of a traditional food retailer doing before. Heck, most food retailers don’t even like to give their top shoppers better discounts than the cherry pickers because they are afraid of being accused of treating people differently. But Big Y isn’t just doing it, it is charging people for the privilege.

    There could be a backlash. On the other hand, maybe we’ve gotten to the point where customers will buy this. After all, we pay for memberships at warehouse clubs. We pay Amazon for “Prime” memberships that create the illusion of free shipping. More of us are paying for Internet access to newspapers and magazines. And many people are willing to pay a little extra to get more legroom on airplane flights.

    I admire the impulse. If it works, we could see a lot more of this.

    Published on: March 31, 2011

    Advertising Week reports on Babycenter's 2011 Mobile Mom Report, which says that “moms with smartphones like the iPhone spend more time with the mobile Web (6.1 hours a day) than the PC-based Web (4.1 hours).”

    The story continues: “Of course more moms still have vanilla featured phones than smartphones. And among non-smartphone moms, PC-based Web consumption dominates mobiles—an average of 5.4 hours per day spent surfing the Web on a PC vs. 2.5 for the mobile Web.”
    KC's View:
    These numbers are staggering for two reasons. One is the amount of time that moms are spending on the mobile web. And the other is how much time they are spending on the web overall. In other words, you know where they are, you know they are looking for connections, their actions can be targeted and their responses to your marketing efforts can be tracked.

    The ever-increasing penetration of smart phones suggests that marketers are going to have to adjust their budgets to compensate for this shift. As I heard one expert say this week in one of the panels I facilitated, you can’t just “sprinkle” a little money for mobile and social marketing on top of an overall budget, or put mobile and social media at the bottom of the list. It has to be at or near the top of the list ... and these numbers vividly illustrate why.

    Still, with smartphone penetration on the rise (and $50 iPhones now on the market), the demos media consumption is likely to become far more mobile-centric.

    Published on: March 31, 2011

    Sunflower Farmers Market announced that it will open its first California store - in Roseville, about 20 miles northeast of Sacramento - on May 11. Sunflower currently operates 33 stores in six southwestern states, using the motto, “Serious Food, Silly Prices” as a way of distinguishing itself from pricier competition.

    Even as it expands into a new market, Sunflower has been dealing with a series of challenges - the recent arrest on charges of child prostitution and subsequent resignation of Michael Gilliand, the company’s CEO, and then the announcement that competitor Sprouts Farmers Market will merge with Henry's Farmers, a move that almost certainly will result in a competitor with deeper pockets and more ambitious growth plans.
    KC's View:

    Published on: March 31, 2011

    As the US Food and Drug Administration (FDA) considers the possibility that artificial dyes in processed foods could be linked to hyperactivity in children, Whole Foods is out this week with a statement reminding shoppers “that its strict quality standards have prohibited artificial food colorings since the 1980s,” and that they also are “free of artificial sweeteners, preservatives, hydrogenated fats and other prohibited additives in the company's 304 stores.”

    "Our quality standards prohibit artificial colors because of our deep commitment to selling the highest quality natural and organic foods," explains Joe Dickson, global quality standards coordinator. "Our shoppers rely on us to set high standards so they can shop with peace of mind, and artificial colors are not consistent with our vision for natural and organic food."
    KC's View:
    So there.

    I know that CPG companies have been fairly quick to say that this issue has been amply studied and that there is no provable link. But I must confess that as a parent, I have no problem with studying the issue further. If there is no link, then what’s the harm?

    Published on: March 31, 2011

    USA today features an interview with Bill Simon, the head of Walmart’s US business, who said that he believes that inflation “is going to be serious,” based on “cost increases (that are) starting to come through at a pretty rapid rate."

    Simon says that inflation could actually help the company regain its reputation for price leadership, which was eroded by tougher competition from the likes of Target and Aldi, as well as its own actions in raising prices to cover increased expenses.

    “We're in a position to use scale to hold prices lower longer ... even in an inflationary environment," Simon says. "We will have the lowest prices in the market."
    KC's View:
    I’ve always thought that a wounded Walmart is a dangerous Walmart. And these days, the company is wounded. Expect a major “low price” push in the coming days, as the company looks to reassert its authority in this segment. That’ll dovetail with its increased emphasis on convenience, which will be highlighted in its small store initiative.

    And if that doesn’t work? Well, then you can expect a new management team to be installed.

    BTW ... what is the over-under on when Walmart gets its first female CEO?

    Just asking...

    Published on: March 31, 2011

    Kantar Worldpanel reports that the UK’s two largest retailers, Tesco and Walmart-owned Asda Group, saw their market shares decline slightly during the just ended quarter.

    According to the report, Tesco’s market share dropped from 30.3 percent to 30.2 percent, while Asda’s went from 17.1 percent to 17 percent, compared to the same period a year ago.

    The number three retailer, Sainsbury, remain unchanged at 16.3 percent.

    Number four retailer William Morrison Supermarkets saw an increase in market share, from 12.1 percent to 12.2 percent, as did Waitrose, which rose from 4.1 percent to 4.3 percent.

    Kantar says that the combined market share of discount retailers Aldi, Netto and Lidl rose to 6.3 percent, from 5.8 percent.
    KC's View:

    Published on: March 31, 2011

    The Public Patent Foundation announced yesterday that it has filed what it is calling a “preemptive lawsuit” against the Monsanto Company, challenging the corporation’s patents on genetically modified seeds.

    According to the announcement, the litigation was filed on behalf of farmers who “were forced to sue preemptively to protect themselves from being accused of patent infringement should their crops ever become contaminated by Monsanto's genetically modified seed.”

    The litigation charges that Monsanto “has sued farmers in the United States and Canada, in the past, when there are patented genetic material has inadvertently contaminated their crops ... Plaintiffs in the suit represent a broad array of family farmers, small businesses and organizations from within the organic agriculture community who are increasingly threatened by genetically modified seed contamination despite using their best efforts to avoid it.  The plaintiff organizations have over 270,000 members, including thousands of certified organic family farmers.”
    KC's View:

    Published on: March 31, 2011

    • The UK magazine Checkout is out with a story accusing Tesco of increasing the prices of 8,000 SKUs right before it announced that it was lowering prices on the same items.

    Tesco, is responding to the accusations by saying that the cuts were “meaningful,” and came after "some price increases in recent months due to inflationary pressures from world commodity markets which have been well documented.”
    KC's View:

    Published on: March 31, 2011

    Reuters reports that analysts “are expecting U.S. farmers to plant second largest area of corn since World War Two and the third most acreage of soybeans ever,” and that “the bumper crops expected to be planted by U.S. farmers this spring could be the first big step toward alleviating global food price inflation.”

    According to the story, “Soaring prices have been a crucial incentive for farmers to rush to sow more acres. Cotton futures rose to an all-time high this year and grains are hovering around their highest levels since the food crisis of 2008.

    “Demand for corn to make ethanol has increased to record levels, the livestock sector's profitability has shot up while China's demand for soybeans remains insatiable and Beijing is believed to have resumed its import of corn from the United States.”

    • The Wall Street Journal reports that the US Commerce Department says that “consumer spending rose 0.7% in February, the largest increase since October and the eighth straight month of gains, easing some worries about the economic recovery ... The pickup in spending came as personal income rose by 0.3% last month, though higher prices sapped the gains. The saving rate, meanwhile, slid to 5.8%.”

    The story continues: “Despite rising commodity prices, inflation at the consumer level is tame. A gauge closely watched by the Federal Reserve rose in February but only slightly, the Commerce Department reported. The core price index for personal consumption expenditures, which excludes food and energy prices because of their volatility, increased 0.9% on a year-over-year basis, after climbing 0.8% in January. The overall index rose 1.6% from a year earlier largely due to gasoline prices.”

    • The Wall Street Journal reports that discussions are underway for Starbucks to invest in a joint venture with India’s Tata Coffee Ltd. The two companies currently have a partnership for sourcing and roasting premium coffee beans, but the goal would be to open coffee shops in all of that nation’s major cities.

    • Jim Harrison, president of the Vermont Grocers Association for almost a quarter-century, has received the Donald H. MacManus Association Executive Award from the Food Marketing Institute (FMI).

    The award was presented at the industry’s Washington Public Policy Conference hosted by FMI, the National Grocers Association and Food Industry Association Executives (FIAE).
    KC's View:

    Published on: March 31, 2011

    • California’s Bristol Farms, which recently went through a management-led buyout after being owned by Supervalu, announced that Chuck Eallonardo, its controller and senior finance director, has been promoted to vice president of finance and chief financial officer.
    KC's View:

    Published on: March 31, 2011

    ... will return.
    KC's View:

    Published on: March 31, 2011

    ...for the lateness of MNB this morning. Between storms in central Florida (where I am at the moment) and some server issues, things just took a little longer than usual.
    KC's View:

    Published on: March 31, 2011

    The Major League Baseball season starts today.
    KC's View:
    Which reminds me of what the great Rogers Hornsby once said...

    People ask me what I do in winter when there's no baseball.  I'll tell you what I do.  I stare out the window and wait for spring.

    Published on: March 31, 2011

    by Kevin Coupe

    MIAMI BEACH -- The theme of the 2011 SymphonyIRI Summit was “gaining the competitive edge,” and the most telling phrase in this regard was uttered by Sasha Muradali, a blogger from the Millennial Generation who was part of a panel on generational marketing.

    She told the audience of mostly male, middle-aged attendees that she was sorry “if it takes you six minutes to send a message on Twitter. It takes me one minute to send six Tweets...and they are all rich in content.”

    And, she threw down the gauntlet to people and companies advertising price breaks via traditional means: “I am not buying a newspaper so I can cut coupons out. Never. No way. Not going to happen.”

    What Muradali said she is looking for in the companies that she patronizes is an interest in an understanding of her needs and desires, and an ability to cater to them - and to marketers, that probably would mean a complete re-evaluation of existing marketing plans. And, she seemed to be saying, she is looking for specificity - not just vague and unfocused efforts.

    It was, in fact, a consistent message from other members of the panel, which was moderated by Thom Blischok, global president, innovation and strategy, for SymphonyIRI.

    Alma Klein, another blogger who was there representing Generation X, said that she was looking for companies with strong environmental and sustainability credentials. What with all the environmental issues facing the planet, she said, “it is a scary time to be a mom,” and she is looking for patronize companies that are specific and accurate in their views and actions toward these issues.

    Isabel Villegas, director of Jack Morton Latino, a “global brand experience agency” focusing on the Hispanic marketplace, made a similar observation from the cultural perspective: “You have to have a real understanding of the (Latino) audience and who you want to reach,” she said, adding, “What is valid in New York is not necessarily valid for Los Angeles.”

    The comments represented what this conference has done best over the years - putting unfamiliar faces and attitudes in front of mainstream attendees. (It could be argued that none of these attitudes should be unfamiliar, if only people and companies were paying attention. But if people were really paying attention, they would have left the room and called for an immediate review of all their FSI-related expenditures. Which I’m guessing that not a lot of people did. But should have.)

    The insights - especially as it relates to coupons - were especially interesting in that they came after a presentation by Rob price, senior vice president/chief marketing officer for CVS Caremark, in which he described the company’s ExtraCare loyalty program in glowing terms...noting that it has allowed the company to collect “tens of billions of pieces of information” that he believes will allow it to create a more “intimate relationship” with shoppers. And yet, many of the benefits, as he described them, still come in the form of paper coupons, either on the backs of register receipts or handed out via in-store kiosks.

    Considered within the context of Muradali’s comments, that process just seemed so 20th century.

    And then there was the presentation on improving the center store through stronger, customer-focused category management, given by John Kastenholz of ConAgra. At one point he put up a slide of an aisle planogram, and the guy next to me muttered, “That woman blogger is probably looking at that and wondering what the hell it is.” And he added, “I think I heard this same presentation 10 years ago.”

    Sometimes it is in those moments - and these contrasts - that the real challenges facing retailers and manufacturers are highlighted. There is an old saw that “food retailing is evolution, not revolution.”

    But that’s probably not true anymore. It’d be nice, and comforting, if it were, because people and companies could simply build slowly on what has come before. But the rest of the world, largely because of technology, is going through a revolution that seems to pick up in pace almost every day.

    Food retailers and manufacturers have to pick up the pace as well, if they are going to have sort of competitive edge.
    KC's View: