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    Published on: May 5, 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, I’m Kevin Coupe and this is Face Time with the Content Guy...

    Want a reminder of how old world business models have become virtually obsolete? It’s possible that one came in your mailbox this week.

    On Tuesday, I got my dead tree copy of Newsweek. The cover story was “Notes from a Royal Wedding,” which might have been interesting if a few other, more important things had not happened since those two nice British kids got married in one of the most over-covered events in recent media history.

    I guess it could have been worse. The story could have been about the President’s birth certificate.

    Now, Newsweek isn’t at fault on this one. The simple fact is that the killing of Osama bin Laden happened after they put the week’s issue to bed. They certainly had all the up-to-date reporting on the Newsweek website, but the flagship product was shown in no uncertain terms to be obsolete. To the point that I would argue that the folks at Newsweek ought to be seriously considering whether the flagship product ought to exist at all, or least how the company should begin planning for its demise.

    How many businesses are facing the same issue: having a core product that is either irrelevant or on its way to obsolescence, but a management team that doesn’t recognize it or isn’t doing anything about it? I suspect a lot. I suspect more than would want to admit it.

    Now, I have other problems with Newsweek. Last week, the cover story was about the Olsen twins and how they’ve built a billion dollar empire. I thought it was going to be a story about America’s new billionaires, a kind of post-recession piece about how the economy is coming back, using them as a lure into the story. But it wasn’t, and I didn’t even want to read the rest of the magazine because this single story was so far outside my interest zone. Again, the flagship failed me in a way the online edition would not have.

    How many businesses are making the same mistake: distributing a product to the mass market that is so at odds with the interests of core customers that it hurts the brand? And making this mistake because they don’t really know who their customers are, or what they want?

    To stretch the metaphor a little farther....

    There was an editorial this week in Advertising Age that examined the departure of Katie Couric from the CBS Evening News, noting that they tried to tweak the program when she got there so they could play to her strengths, and when that didn’t work they asked her to work against her strengths and do the same old newscast, which didn’t work either.

    Ad Age suggested that nobody faced the real problem - that the evening newscasts are watching their audiences erode largely because so many people are getting their news faster and in other ways, and because fewer and fewer people are even home at 6:30 at night to watch them. In other words, maybe the whole concept has to be rethought and reinvented for the 21st century. Sometimes, simple tweaking and recasting doesn’t cut it.

    Again, a question, using a different metaphor. How many businesses are repainting instead of remodeling, or remodeling instead of investing in a whole new structure? More, I suspect, than would want to admit it.

    These are serious issues that need to be reconsidered. The retailing graveyards are filled with the carcasses of companies that did not face reality, did not see the new competition coming, and had senior executives who may have hoped that retirement age would get there faster than reality.

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

    Published on: May 5, 2011

    Amazon.com and Walmart may be locked in a mortal battle for the hearts, minds and wallets of consumers, but that doesn’t mean that they can’t work together.

    Hence, the agreement between the two companies to sell Amazon’s popular Kindle e-reader at some 3,200 Walmart stores.

    Amazon already has made similar agreements with Staples, Best Buy and Target.
    KC's View:
    Walmart is willing to sell just about anything these days to drive traffic and build sales, and so this makes perfect sense for the Bentonville Behemoth.

    At the same time, it probably is fair to say that as much as Amazon is competing with Walmart, it also is competing with Apple’s iPad in the e-reader market; Apple remains committed to the multi-functionality of the iPad, while Amazon believes in the concept of the single-purpose device. And so anything that Amazon can do to build visibility and sales is a smart thing from its perspective.

    Published on: May 5, 2011

    Pierre-Olivier Beckers, president/CEO of Delhaize Group, said yesterday that the company has “re-launched around 200 Food Lion stores in the Raleigh and Chattanooga markets that will serve as phase one of the fundamental repositioning work focused on the brand elements of price, assortment and shopping experience. Helped by what we learn from this first phase, we will roll out the re-positioning work to the large majority of the Food Lion network by the end of 2012."

    Cathy Green Burns, president of Food Lion, said yesterday that the repositioning reflects a “back to basics” approach that will emphasize both pricing and quality, as the company looks to heighten its value proposition in a bid to build both sales and market share.
    KC's View:
    I’ve always been impressed by Delhaize’s flexibility, its willingness to move the pieces around the board when strategically necessary or desirable. And can’t imagine anyone better than Cathy Green Burns to make it work.

    Published on: May 5, 2011

    Lubbock, Texas-based United Supermarkets announced that it has entered the convenience store business with its first stand-alone offering, in Lubbock, that features “a six-pump fuel station and will feature fresh offerings along with the traditional items guests would expect to find at a convenience store.”

    The company already runs what it calls “A Taste of Market Street” stores, small-format units that operate on the same property will full-size Market Street stores.

    “Our goal with United Express is to take the offerings and products such as prepared foods which have been most successful in our A Taste of Market Street stores, as well as those on-the-go convenience items, and blend them where guests will see traditional offerings with a unique United flair,” says Chris Bridgford, director of fuel and convenience operations. “If a guest wants to come in and get a bag of chips and a soft drink, they will be able to do that. But if they are looking for a nice tossed salad or some other quality meal solution, those are available as well – and those are the items you don’t typically find in a convenience store.”
    KC's View:
    This is an extremely important move, because retailers can’t allow themselves to be hemmed in by traditional boundaries or heritage systems (defined in the broadest possible way).

    Published on: May 5, 2011

    The Associated Press reported yesterday that Walmart plans to invest $400 million in South Carolina over the next five years - to be spent both on at least a dozen new stores and the remodeling, relocation and/or expansion of existing units - that should result in the creation of as many as 4,000 new jobs there.

    There is a political subtext to the announcement. As the AP notes, it came “one week after another retail giant abandoned plans to build a distribution center in Lexington County, near Columbia. Last week, Amazon.com withdrew its plans for 1,250 full-time jobs and $100 million in investment after state lawmakers rejected efforts to give the Seattle-based company a break from collecting sales taxes.

    “The company had sought a five-year exemption from collecting sales taxes from South Carolina shoppers under a deal brokered with the Commerce Department under former Gov. Mark Sanford.”

    Current Gov. Nikki Haley, who like Sanford is a Republican, “opposed the break, as did tea party activists and a coalition of retailers that Wal-Mart helped organize, and which bought TV ads railing against it. They argued a tax break was unfair to local retailers that must collect state sales taxes.”

    Haley said that the Walmart announcement had nothing to do with Amazon, and had been in the works “for months.”
    KC's View:

    Published on: May 5, 2011

    The Minneapolis Star-Tribune reports that Supervalu will unveil a new seafood policy today, calling for “100 percent of its wild-caught seafood to originate from sustainable fisheries or ‘those on a clear pathway to sustainability’.”

    The company says it aims to meet the goal by 2015. While Supervalu says that the new policy has been in the planning stages for more than a year, the Star-Tribune notes that “it comes less than a month after the environmental group Greenpeace slammed Supervalu for being one of the nation's worst big supermarket chains when it comes to selling seafood raised or caught through environmentally sustainable processes.”

    The policy was developed in concert with the World Wildlife Fund, and certification will be done by the Marine Stewardship Council.
    KC's View:

    Published on: May 5, 2011

    • Walmart is once again atop the Fortune 500 list of the world’s biggest companies, for the second year in a row for the eighth time in a decade. Exxon Mobil once again is number two.

    The crowning comes despite the fact that Walmart has been suffering from stagnant US same-store sales.

    Reuters reports that the South African government is looking for “concrete commitments” from Walmart that it will not cut jobs if and when it acquires Massmart, a regional discount chain there.

    Walmart is looking to get a foothold in Africa with a $2.3 billion purchase of 51 percent of Massmart.

    "We want to ensure that this investment, or this merger, if it takes place, does not have some of the potential negative effects, in terms of job losses in particular," trade minister Rob Davies told Reuters.
    KC's View:

    Published on: May 5, 2011

    The New York Times reports that ConAgra upped its unsolicited bid to acquire Ralcorp Holdings to $4.9 billion, a two-dollar-per-share increase from the previous proposal that was rejected by Ralcorp - and was rebuffed by Ralcorp yet again.

    Ralcorp said that the offer did not make sense for its investors.

    According to the Times, now “ConAgra will have to decide whether to make a hostile play for the food manufacturer and take the offer directly to Ralcorp’s shareholders. Investors who own both companies have already expressed interest in a tie-up, according to a person close to ConAgra who was not authorized to talk publicly.”

    Bloomberg writes, “Purchasing Ralcorp would allow ConAgra Chief Executive Officer Gary Rodkin to almost quadruple sales of store-brand foods, a market that has grown as some cash-strapped shoppers trade down. Ralcorp, split from Ralston Purina Co. almost 20 years ago, generated about $3 billion last year from selling cereals, cookies and pasta under retailers’ own brands.”

    Rodkin told analysts, “We think this is a business that aligns well with ConAgra Foods’ strategic priorities and capabilities.”

    But the Ralcorp chairman, William Stiritz, demurred. “Ralcorp, as an independent company, has a proven track record of delivering superior results and shareholder value.”
    KC's View:

    Published on: May 5, 2011

    EPOnline.com reports that the Environmental Protection Agency (EPA) GreenChill partnership “now has 7,000 partner stores located in all 50 states. From regional grocers like Stater Bros. in southern California, and small health food stores like Down-to-Earth, to nationally recognized names like Whole Foods and the newest partner Target Corp., the partnership now represents 20 percent of the supermarket industry.”

    GreenChill is defined by the EPA as a partnership with food retailers designed “to reduce refrigerant emissions and decrease their impact on the ozone layer and climate change. GreenChill works to help food retailers transition to environmentally friendlier refrigerants; lower refrigerant charge sizes and eliminate leaks; and adopt green refrigeration technologies, strategies, and practices.”

    • The Associated Press reports that the White Castle fast food chain in introducing online ordering at all its 400 locations. The company says it believes that the option will be attractive to customers who want to place large orders for the chain’s signature sliders.

    • The New York Times writes that Dunkin’ Brands, parent company to both Dunkin’ Donuts and Baskin Robbins, has launched an initial public offering designed to sell $400 million worth o stock in the company, which it says will be largely used to pay down debt.
    KC's View:

    Published on: May 5, 2011

    • France-based Carrefour SA, the world’s second largest retailer, announced the resignation of James McCann, the former Tesco executive who has been running the company’s French business.

    Dow Jones notes that McCann’s departure is “a sign of mounting troubles for the company's turnaround efforts,” especially because McCann “is the second top executive in a core group recruited by Carrefour Chief Executive Lars Olofsson to leave this year.”
    KC's View:

    Published on: May 5, 2011

    • Jackie Cooper, the onetime child actor who was in eight Our Gang movies as well as playing the title role in Skippy (for which he received an Oscar nomination) and who grew up to be a prolific and Emmy-winning director of a wide range of television programs, while eventually playing Perry White in the four Superman movies starring Christopher Reeve, has passed away at age 88.
    KC's View:

    Published on: May 5, 2011

    In a piece yesterday about Walmart’s plans for the Portland, Oregon, market, I suggested that while Portland may be one of the places in this country that seems least appropriate for a Walmart - in my view, it rivals San Francisco in institutionalized eccentricity, which is one of the reasons I love it - economic pressures create new realities. It’ll be up to the consumers.

    One MNB user wrote:

    You are correct that Portland has its share of eccentric residents, from its mayor on down. But it is also a very polarized community, which means there is room for all sorts of retailers.

    It appears that Target, for example, will open a store on the second and third floors of a former five-story department store in downtown Portland.

    If Portland is ready for that, at least some customers in Portland are ready for Walmart.

    Walmart supercenters can be found in many Oregon communities. The real question is not whether Walmart could find a market in Portland, but whether Portland's economic conditions are dire enough (with some of the highest unemployment rates in the country) that the elitists who run the city are willing to relax their regulatory stance enough to allow more Walmarts in the city.





    On the subject of competition coming from non-traditional retailers, MNB user Dan Graham wrote:

    Our family just made the switch to Amazon's Subscribe and Save services for a number of categories (paper towels, shampoo, laundry detergent, dishwasher detergent and popcorn among others) driven both by a desire to reduce trips and frustration at not being able to find all of the products we want in one place.

    I spent the majority of my career with a major food retailer, and one of our goals was to find ways to take consumers "out of the market" for competition by giving them compelling reasons to buy from us.  Baring unforeseen circumstances, Amazon has now permanently taken us out of the market for a number of key categories.  As a retailer you cannot do any better than that.


    Agreed.

    And yet, it is amazing how many retailers I meet who have never ordered groceries from Amazon, and have no sense of what Subscribe and Save does. I feel like John the Baptist sometimes, preaching to the skeptical and unconverted. (And then, every once in a while I am reminded by someone what happened to John the Baptist...)



    Responding to our story about Supervalu’s move to consolidate its private label offerings and create a new line that cuts across all banners, MNB user Geoff Harper wrote:

    I sympathize with Supervalu over the private brand label control issue.  It is very difficult to run economic quantities of labels in all but the biggest supermarket companies.  However, I have always believed in getting your store name on as many items as is practical. Your name is in the cupboard, in the refrigerator, on the counter.  If your private brands are good (and they had better be!) the label is great advertising for your store, and a constant reminder of where to shop.  In this case, that asset will be lost.
    KC's View: