retail news in context, analysis with attitude

Published on: April 4, 2011

by Kevin Coupe

The iPhone may have set the standard for smart phones, becoming in the process the “it” phone for Apple enthusiasts and millions of people who see the technology as relevant, accessible and, perhaps most important, cool.

However, it has been a simple fact that the Android phone has effectively challenged Apple’s dominance. And now there’s another player in the mix...Microsoft.

The New York Times reports that “despite Microsoft’s multiple, abject failures with mobile phones since 2002, many software developers and industry watchers expect Microsoft to become the second-largest smartphone player worldwide.”

The game changer, according to research firm IDC, is Nokia, which has formed an alliance with Microsoft and is about to start using Windows Phone software. The expectation is that Microsoft, which currently has a 5.5 percent smart phone market share in the US, could grow to more than 20 percent by 2015. Apple’s iOS software, then as now, is projected to have a market share in the 15 percent range.

The lesson here is worth noting. No matter how relevant, accessible and “cool” you may be, there is no such thing as an unassailable advantage. It is always possible - indeed, probable - that someone else will come up with a product that seems more relevant, accessible and “cool,” and maybe even at a better price point. And, if they can’t, they’ll come up with some sort of combination or alliance that has the potential to disrupt your plans and be a game-changer. (The good news, of course, is that competition makes us all better, makes us push for the next differential advantage.)

You have to keep innovating, keep pushing, keep trying new things, keep risking failure. Or die from inertia.

And that’s our Monday Eye-Opener.

Published on: April 4, 2011

Bloomberg reports that Walmart has tentative plans to test an online grocery ordering-and-delivery service in the San Jose, California, market later this year.

According to the story, “The service, internally dubbed ‘Project Titan,’ hasn’t yet been approved and may not happen, said the person, who declined to be identified because plans aren’t final.” However, one marker that suggests Walmart is serious is the fact that “to help lead the effort, the retailer transferred Richard Ramsden, who previously headed home shopping for Wal-Mart’s Asda division in the U.K., to the headquarters of Walmart.com in Brisbane, California.”

The initiative is seen as yet one more way that Walmart will seek to reverse the declining same store sales trend that has affected it for the past seven quarters. The retailer also is ramping up the growth of its Neighborhood Market stores, as well as creating a small-store Express format, that it can use to enter markets that it previously found to be inaccessible.

Published on: April 4, 2011

The Wall Street Journal reports that the Obama administration on Friday issued new rules that will require chain restaurants with 20 outlets or more to post the calorie counts of their food and beverage offerings on their menu boards.

According to the story, the Food and Drug Administration (FDA) “left out movie theaters, along with airplanes, bowling alleys, amusement parks, hotels and other establishments where the sale of food is not a primary business.

“The agency said it excluded them in part because they generally don't present themselves to the public as restaurants. However, the regulation will apply to establishments where more than 50% of the total floor area is used for the sale of food. Convenience stores still are required to post calorie counts, along with supermarket eateries, pastry and retail confectionary stores, coffee shops, snack bars and ice-cream parlors.” The new rules say that the font size has to be "clear and conspicuous" and in a color that's "at least as conspicuous as" that of the menu item.

And, the story says, “The FDA estimates that the regulation, as proposed, would apply to 278,600 establishments, out of an estimated 600,000 restaurants nationwide, according to the National Restaurant Association. It projects the initial cost of complying with the proposed requirements is $315.1 million, with an estimated ongoing cost of $44.2 million. Per restaurant establishment, that averages $1,100, the FDA says.”

The Journal reports that the “FDA also said it ‘tentatively’ concluded that bars and restaurants don't have to post calorie labels on beer, wine and other alcoholic beverages. It cited the fact that alcoholic beverages are regulated by a different federal agency, the Alcohol and Tobacco Tax and Trade Bureau, and that it was not clear Congress intended the calorie-label provision to apply to such drinks, given the different agency jurisdictions.”

Published on: April 4, 2011

USA Todayreports that based on an analysis of data from GovernanceMetrics International, it appears that “median CEO pay jumped 27% in 2010 as the executives’ compensation started working its way back to pre-recession levels,” while private industry employees “saw their compensation grow just 2.1% in the 12 months ended December 2010.”

The story notes that “the sizable pay hikes came even though the economy’s recovery remain frail, unemployment is high and corporate profits last year were roughly flat, up 1.5%, from where they were in 2007 when the stock market peaked.”

There is some distortion in these numbers, experts say; executive pay levels are still below those of 2007. However, between salary increases, heft bonuses and the potential for stock options that will pay big dividends, the suggestion is that it is a good time to be a CEO is America.

However, the story suggests that shareholders may be less sanguine about such compensation levels than in the past, in part because the scars from the recent recession have not yet entirely healed. And the level of transparency and exposure that high CEO pay can get in this technological age means that the executives have more to justify, and less room is which to do it. And, there are some concerns that the federal government could step in and create rules mandating that public companies be up front about the difference in salary between CEOs and a company’s median employee.

Published on: April 4, 2011

Fortune has an interview with Raj Sisodia, chairman and co-founder of the Conscious Capitalism Institute, in which he discusses what the magazine calls “the changing dynamics of American capitalism after the deepest recession in decades.”

Conscious Capitalism is defined as seeing one’s business as having a higher purpose than just generating profits, as having all one’s stakeholders aligned around that purpose, led by a “conscious leader” who helps to establish a “conscious culture.” Among the companies that are part of the Institute are Whole Foods and Costco.

Some excerpts:

• “It was interesting to observe how some of the companies that we've become very closely aligned with dealt with the global economic downturn in 2008. The Container Store and REI, for instance. Those two CEOs said first of all, "We are not going to lay off anybody. That's number one. Second, we are going to protect the weakest within the system, which are the part-time workers. They will not be asked to take any kind of pay cut, any kind of benefit deduction, or even reduction in their hours, because they are the most vulnerable in the system. And then all the salaried people will take an across-the-board pay freeze, or even a pay reduction." The sacrifice was shared equally between the people who could most afford to do it, and the weakest were protected.”

• “There is a fundamental shift going on in the culture. It's not a drastic choice anymore between Communism and capitalism; everybody believes in free markets and free people. The question is how do we refine it? How do we create the best possible kind of free markets and free people? Beyond that, the median age crossed 40 for the first time in 1989. If you look at what happens to people as they age, mid-life and beyond, it's not so much about, ‘How much can I accumulate?’ and ‘What's in it for me?’ They start asking questions about meaning and purpose and legacy. And then if you look at the impact of the Web, it has created almost total transparency and almost total connectivity. So people know about more things. They're more concerned about the well-being of others.”

• “If you have a conscious approach to business, it doesn't lead to inequality. There's a built-in mechanism to make sure that everybody prospers at the same time. And that's ultimately the power behind this: Recognizing the interconnectedness and interdependence. Any exploitation of one element for the benefit of others in the long run is not going to work. It's basic system theory. The system is only as good as its overall ability to function, and to be healthy all the components have to be healthy.”

Published on: April 4, 2011

Kroger, Walgreen and Best Buy are among the retailers that have been contacting customers since the end of last week informing them that one of its vendors, Epsilon, was hacked by an unauthorized person, exposing shoppers’ names and email addresses.

Here is the text of the email sent by Kroger to its customers:

Kroger wants you to know that the data base with our customers' names and email addresses has been breached by someone outside of the company. This data base contains the names and email addresses of customers who voluntarily provided their names and email addresses to Kroger. We want to assure you that the only information that was obtained was your name and email address. As a result, it is possible you may receive some spam email messages. We apologize for any inconvenience.

Kroger wants to remind you not to open emails from senders you do not know. Also, Kroger would never ask you to email personal information such as credit card numbers or social security numbers. If you receive such a request, it did not come from Kroger and should be deleted.

Published on: April 4, 2011

Crain’s New York Business takes note of how Amazon.com yet again seems to be challenging the boundaries of its business model: “In its most aggressive move yet into territory traditionally occupied by the major New York houses, the Seattle-based e-retailer took part last week in a heated auction for four books by self-published bestselling novelist Amanda Hocking. Executives at several houses said they knew of no other instance in which the company had competed with major publishers for a high profile commercial author.”

According to the story, “Amazon has done deals directly with authors and agents in the past, but usually for backlist titles or specialty projects. It has used those exclusive offerings to distinguish its Kindle e-bookstore in an increasingly competitive digital market.” And Crain’s suggests that “Amazon would have seen Ms. Hocking as a natural fit because of her roots in the e-publishing world, where she has sold more than a million copies of her nine titles in the category of young adult paranormal romance.”

The story says that Amazon partnered in the bid with Houghton Mifflin Harcourt, which would have handled the print editions.

Published on: April 4, 2011

The Chicago Tribune reports that the acquisition of craft brewer Goose Island by Anheuser-Busch for $38.8 million trains the spotlight on the boutique beer business, which seems to be enjoying strong growth - barrel sales were up 11 percent last year - at a time when more mainstream beers have been suffering, with barrel sales down one percent in 2010.

In Chicago, the story says, “several new entrants are opening for business, while established local favorites such as Half Acre, Three Floyds and Two Brothers are all furiously ramping up production in a seemingly futile effort to meet increasing demand.”

"We just can't make enough beer," Gabriel Magliaro, of Half Acre Beer Co., tells the paper. “Our goal every week is just to try not to run out of beer.”

And Benj Steinman, president of Beer Marketer's Insights, tells the Tribune, "Craft beer is kind of a rising tide right now. It's really in the sweet spot of where more consumers are going, and that seems to be toward the sort of innovation, flavor and variety that the craft brewers are epitomizing."

Published on: April 4, 2011

The Seattle Post Intelligencer has a fascinating story about the kind of analysis that is possible based on an analysis by Facebook data scientists of how people position themselves on the social network with respect to their favorite baseball teams.

For example, one of the things they found was that “Oakland A's fans are younger and more single than fans across baseball, at least on Facebook. San Francisco Giants fans, meanwhile, led the majors in being liberal, while the team's 2010 World Series opponents, the Texas Rangers, were the most conservative ... The Giants were fourth on the younger-single side of list, but on the other end - older and married - were fans of the St. Louis Cardinals, Cincinnati Reds and Detroit Tigers.”

In addition, the story says:

• “Philadelphia Phillies fans won the title of most devoted, measured by the number who did not fan any other team. The Phillies topped the Yankees, Boston Red Sox and Toronto Blue Jays for most loyal fan base.”

• “Fair-weather fans post about their team only when they win, the report said. By that measure, the Pittsburgh Pirates, the Seattle Mariners, the Kansas City Royals and the Chicago Cubs had the most fair-weather fans, while fans of Chicago White Sox, the Rangers, the Phillies and the Twins posted whether they won or lost.”

Published on: April 4, 2011

• Associated Whole Grocers announced that its Best Choice and Always Save private brands will adopt the Nutrition Keys front-of-packaging labeling program as way of providing consumers with better access to nutritional information.

“Even though the label modification is strictly voluntary, we believe it is an important and essential step in helping consumers make healthy choices when making food purchases,” said Jerry Garland, Associated Wholesale Grocers President and C.E.O. “This service will help our members who sell Best Choice and Always Save also demonstrate a commitment to their loyal customers that they too care about healthy lifestyles.”

• USA Today reports that the US Department of Agriculture (USDA) announced that “five dozen products, including hand soaps and engine oils, will soon be sold with a new ‘BioPreferred’ label to show they contain agricultural ingredients.” The products, whose composition is independently certified to meet USDA standards, are said to “create jobs in rural communities and help reduce U.S. dependence on foreign oil.”

• The Corpus Christi Caller Times reports that Sprouts Farmers Market plans to acquire nine Sun Harvest Farmers Markets in Texas. The deal has not been finalized, and terms have not been disclosed.

• The National Grocers Association (NGA) has honored Jim Rogers, president/CEO of the Food Industry Alliance of New York, with its annual NGA Leadership Award. NGA president/CEO Peter Larkin said that “"Jim's dedication to his members and his commitment to the continued success of the independent grocer is an example for us all.  As a member of the N.G.A. Board of Directors Jim's leadership and insight has been an asset not only to his fellow Board Members, but importantly to the membership of N.G.A." 

• IGA Inc. announced that it has awarded the J. Frank Grimes Award to Thomas S. Jackson, the retiring president/CEO of the Ohio Grocers Association, and Brandt Louie, chairman, president and CEO of H.Y. Louie, an IGA wholesaler based in Vancouver, British Columbia.

Published on: April 4, 2011

On Friday, which was April Fools’ Day, Starbucks posted the following news alert on its website:

We've all been there. You’re walking down the sidewalk with a huge craving for Starbucks coffee with no time to find a location and buy one (no "there’s a Starbucks on every corner" jokes, please).

What if the solution was as easy as whipping out your smartphone to have one delivered to you without missing a step?

Well now it is that easy, inspired by your ideas on MyStarbucksIdea.com we’re proud to introduce the exciting new Starbucks® Mobile Pour service that puts baristas on scooters. In seven of the largest cities around the country, we’re sending out two scooter baristas per every square mile to ensure speedy service.

We've even made ordering easy with our Mobile Pour app for your smartphone. Simply download it, allow it to pinpoint your location, select your coffee order and keep walking. Your fresh, hot Starbucks brew will be in your hands before you can say abra-arabica.

What's more, the Starbucks® Mobile Pour is only the first exciting development of our new mobile replenishment strategy. In the coming months we'll be introducing several other exciting (can you say "mall" and "rollerblades") initiatives that make getting your Starbucks coffee easier than ever.

Published on: April 4, 2011

• The National Association of Chain Drug Stores (NACDS) has hired Julie Philp, the former director of government relations for the Association of Community Pharmacists, to be its new director of federal affairs.’

• NACDS also announced that Jill McCormack joined its state government affairs team as a director of state government affairs. McCormack previously worked as a government affairs associate for the Pennsylvania firm of Malady & Wooten, representing the Pennsylvania Association of Chain Drug Stores.

Published on: April 4, 2011

Last Friday was April 1... and as has been the tradition around here, I started the day’s news with a few satirical pieces that made gentle fun of Supervalu, A&P and Big Y, touching on issues such as executive compensation, underperforming CEOs, and new ways to generate revenue in a tightening marketplace.

Let’s get one thing out of the way first - the story that was true had to do with Denny’s new “Baconalia!” menu and the introduction of a new ‘BaconAir” product that allows one to “breathe food.” The others were all in fun ... we kid because we love.

To be fair, though, not everyone shared my sense of satire and irreverence.

MNB user Bob McGowan wrote:

Many people rely on your update as a source of industry news every day.  With all of the consolidations and uncertainties affecting our industry, many individuals have been displaced and their families have been negatively impacted. Your article today was taken as fact by many and circulated widely. I understand the spirit of what you were trying to do for April Fools Day but, in light of all of the uncertainty, I think it was insensitive and ill timed.

I always feel a little bad when people tell me that they circulated my April Fools stories to their customers, co-workers and clients, thinking that these are serious pieces. A little bad, but not entirely chastised - the simple truth is that if satire works, it is because it comes close to the truth, or at least close to what people worry about.

I cannot tell you, for example, how many people have expressed concerns to me about Supervalu’s plans, and frustration that the folks at the top may not be connecting with the front lines as meaningfully as they should.

One person told me that I’d “demeaned” MNB with my April Fools joke. But I don’t see it that way - people who have been paying attention for the last 9+ years know that this site is about having a good time while trying for some level of illumination ... even if that means that like Icarus, I occasionally fly too close to the sun for my own good.

I was, however, worried by this email:

Thank you four the tip on Supervalu. I was able to sell all my shares on market today before company made announcements. Cut my losses, as you say.

Uh-oh.

I hope he was kidding...




I think it says much that I got a lot more email on Friday responding to another, serious story:

“The Great Atlantic & Pacific Tea Co. announced that beginning next week it will launch ‘Senior Appreciation Mondays,’ described as “a new special discount program for seniors in all Pathmark stores. Through the program, every Monday customers over the age of 55 will be able to save five percent on their grocery purchases of more than $30, excluding pharmacy items, milk, tobacco products, beer, wine and spirits. “

A&P also said that it will launch ‘Senior Appreciation Tuesdays’ with the same eligibility requirements for customers at Superfresh stores in and around Baltimore, Maryland on Tuesday, April 5th, and at all A&P, Food Emporium and remaining Superfresh stores on April 19.”

My comment: Fifty-five? You gotta be kidding me.

People who are 55 or older aren’t seniors. And speaking for myself, I don’t want to be appreciated as such.

This isn’t just male vanity speaking. I actually think that marketers have to be very careful about this kind of stuff - that they run the risk of offending people when they suggest that people who are 55 are entitled to “senior” treatment. Most of us don’t think of ourselves that way, and don’t want to be treated that way.

At least I don’t. And I cannot believe I am alone in this.

MNB user Owen Hernandez:

In response to the subject story:  5% is huge.  I’m 35 and I’d be happy to be called young or old or almost anything for a 5% discount on my significant (and growing) food bill.  I’d consider it an offset to inflation and say thank you every time I check out.

I get it. A five percent discount is huge, and some folks are willing to be called anything to save that cash. Especially these days. But I still think it is tone-deaf.

MNB user Georganne Bender wrote:

We agree on our dislike of being called a Senior - you may recall I said those exact words at SymphonyIRI Summit 2011 during Wednesday's Generational Panel. At 55 I am not a senior citizen, so don't call me one. It's not male vanity Kevin, it's generational.

You may also recall that I said Baby Boomers have redefined aging: 55 is now middle age, we don't even begin to think we are "old" until we hit our mid 70s -- and we'll still be cool even then.

Retailers who lump all Boomers -- ages 47 to 65 -- in one big group will lose. Younger Boomers, those of us in Generation Jones, may take your "senior" discount but we'll hate you for offering it. Classic Boomers do not appreciate this moniker either.

In our speaking and consulting practice, Rich and I recommend retailers drop anything that reads "Senior", "Golden Age" -- anything that smacks of calling customers old. We've been talking about this since Boomers began to turn 50 waaay back in 1996 - there's still have a lot of work to do!

Agreed on all counts.

MNB user Mary Rush wrote:

I am okay with getting a senior discount (I’m 57)  but they could call it something else like “Seasoned Shopper Discount” or “You’ve Earned it Discount”.

And from another MNB user:

We are baby boomers through and through!

It’s a fact that we are very rebellious against the aging process, its part of our baby boomer DNA.  Really.  We are the generation of “question authority” - we still are doing so, and will till our last breath.  We are absolutely going to prevent that dreaded “aging” however we can, even through complete denial that it’s happening.  Remember “don’t trust anyone over 30?”  We invented that! And we (rather arrogantly and egotistically, as is our nature) bumped it up to 40, then 50, then 60, to suit our needs.  Now we’re saying “70 is the new 30” and it’s true!  (Hey, even Bush Sr. jumped out of a plane. I know he’s not part of “our” generation, but we’ll do that at 80, some of us will for sure).   We’re still hangliding, bungee jumping, hiking, biking, doing yoga and gym workouts, pilates, eating healthy, taking vitamins, ANYthing to avoid “aging”.  It’s just part and parcel of being part of this exceptional generation!  (We’ve never been known for humility, why start now right?)

Another MNB user chimed in:

Hear ya, I’m 52 and I am NOT A senior!  I am getting AARP mail since age 49 – don’t know how they found me but I am offended and will never join.  (Generation America makes more sense to me anyway).

However, Kevin, historically, 55 has been considered “senior”, so I must say, it is indeed vanity – not gender specific – that we feel this way.  So, get over it.

Yet another MNB user wrote:

Between you and me, As a 25+ year vet of CPG sales I thought every day was Senior Appreciation day at A&P...a little funny and maybe a little or a lot sad because for years that's who their Customer based has either perceived to be or is...And I'm with you, I don't view 55 as a Senior...although my knees might beg to differ in that POV.

MNB user Mike Starkey wrote:

Leave it to A&P to miss the mark once again!  Like you, I'm in my mid-fifties and do not consider myself anywhere close to being a "senior citizen"; however, I am looking forward to being "carded" once again for not looking like I'm 55 (or 21 so very long ago!)!!

And MNB user John Quinn wrote:

Many years ago when I was still in my forty’s, and only beginning to gray up at my temples, Acme ran a seniors promotion of some sort. As I checked out of the store, the cashier asked me if I was eligible for the Senior discount? I asked her how old I needed to be to get this discount and she said 60!!! I blurted out…”do I really look 60??? (I’m nearing 60 now and still don’t look it). I told this dim wit that she ruined my day and that I would never go back in that store again… I didn’t. The store is now long gone and no doubt the lack of sensitivity training contributed to its demise.




Finally....on Friday, in “OffBeat,” I took note of a “real” BBC report that new studies suggest that milk produced by cows within 48 hours of having given birth could help athletes improve their performance, and also could help them avoid heat stroke and what is called “gut leakiness,” which is a kind of gastrointestinal distress sometimes induced by running.

The reason? Milk produced by cows immediately after birth - also known as bovine colostrum - apparently is rich in “bioactive components” that are performance-enhancing.

My comment:

All I can think if the poor cow ... she’s just given birth, she’s dealing with a new calf, and she’s got some guy pulling on her udders saying, “Come on girl, we’ve got the Olympics in two years...”

MNB user Rosemary Fifield responded:

I think this story about harvesting bovine colostrum to give to athletes is just plain sad. Calves are already deprived of their natural source of nutrition and maternal connection by being removed from their mothers so we can take mom's milk for ourselves. Colostrum conveys the cow's natural antibodies to the calf, providing immunity until the calf's own system can kick in. And getting it is the calf's one chance to behave naturally for a day or two. I hope it is an April Fool's story.

Nope.

MNB user John Giggy did have one reality check:

Kevin, you obviously grew up as a city boy...not that there is anything wrong with that, but to get milk from a cow you have to pull on the teats that hang from the udder.

Thanks for the info. I have no intention of touching either. Ever.