retail news in context, analysis with attitude

Published on: May 17, 2011

by Michael Sansolo

There is a very, very painful question you need to ask yourself this morning, but in many ways, it may be the most important question that can be asked of any individual or any business. It’s a simple question with incredibly profound implications.

Is your business pursuing greatness that simply doesn’t matter anymore?

The question was posed at last week’s Food Marketing Institute (FMI) Future Connect conference in Dallas by former Acosta CEO Gary Chartrand as he talked about the history of his own company. As Chartrand explained (and as we reported here last week) Acosta faced the question at a time when it was a top performing regional food broker. Once Chartrand realized the answer, he took his company through a high-risk transformation, turning it into a North American-wide sales and marketing company. Today Acosta is one of only three such companies dominating a market that was once served by thousands of brokers.

The point seemed particularly compelling given so much of the other discussion at Future Connect. For instance:

• Is your company pursuing excellence in traditional store formats? If so, Dan O’Connor’s comments on the cataclysmic changes coming to the retail landscape should shake you to the core. O’Connor talked about the increasing portion of the shopping public making decisions based solely on price and who are, thanks to economic realities, unable to expand market baskets in traditional ways. If that prediction is true, today’s state of the art superstores might find themselves at a competitive disadvantage against small price-oriented merchants.

• Add on to that point, the growing urbanization of the US and the world and the growing need for smaller formats that fit into these markets. Again, this is a painful point to consider if you run 80,000-square-foot stores to perfection. Are you building the format of the present and ignoring the future? That may give you pause to look at experiments like Tesco’s Fresh and Easy with newfound interest.

• What shoppers are you serving? This question takes on all kinds of implications is you consider the enormous diversity (think Hispanics) and size of Generation Y (s bigger than the Baby Boom.) The challenge is are you building stores that appeal to today’s 50-year-olds, but somehow don’t connect with 20-somethings.

• If you think that’s not an important discussion consider the large chains that withered through the 1980s and 1990s with formats that appealed to today’s mature generation and didn’t connect with Boomers. Remember it wasn’t that long ago that Walmart, Costco, Whole Foods, Trader Joe’s, Dollar General and Starbuck’s together accounted for hardly any share of sales. In different ways, those companies served needs that existing companies simply missed or never saw coming.

• Who are you employing and how do you manage them? Again, the future looks far different than the present thanks to those same demographic trends changing shoppers. The face of America is changing and that means the face of your company needs to change. Ask yourself if you are an attractive employer of these new groups or if you could possibly be out of touch?

There are so many other points to consider, but you have to start somewhere. And it’s why Chartrand’s point matters so much. There’s a wonderful speech in an otherwise forgettable movie called Other People’s Money. In it Danny DeVito reflects on the last company that made buggy whips and just how great that last whip must have been, only to find that no one needed it.

Ask yourself, are you building a company for the future or are you simply perfecting the buggy whip? The wrong answer could doom you.


Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: May 17, 2011

by Kevin Coupe

Yahoo! News had an interesting story yesterday about a new poll saying that 35 percent of Americans, when they wake up in the morning, grab their smart phones and check their email, Facebook and Twitter before rolling out of bed - suggesting that getting in touch with what’s happening takes precedence over a shower or that first cup of coffee.

The story says that “the beefy figure points to just how much social media and constant web-based connections are influencing our daily lives. ‘Consumers become attached to a certain set of apps that makes them feel more in control of their lives, and turns everyday chores into positive experiences,’ notes lead researcher Michael Björn.”

Now, I’d like to see the demographic breakout of that 35 percent; for example, I’m guessing that middle-aged men, for example, may take care of certain personal ministrations before checking their smart phones. But the point is a good one - increasingly, thought leaders are looking for relevant and compelling content that will help them better live their lives.

That’s a good lesson for marketers - not that they need to be in consumers’ faces constantly (because that would be counter-productive), but that they need to be figuring out ways to be interesting, credible and germane to people’s everyday lives. In the broadest sense, this is what Michael Sansolo is talking about in his column - the importance of building a company that is relevant to how people live their lives, every day.

I can appreciate the challenge. It is sort of my goal each day when I write MNB - to give you something provocative, illuminating and entertaining, with a perspective you are not getting elsewhere.

It’s a challenge. And an Eye-Opener.

Published on: May 17, 2011

Walmart this morning reports that for the eighth fiscal quarter in a row, it suffered a drop in US same-store sales - down 1.1 percent compared to the same period a year ago. The company’s overall performance - profit was up 3.8 percent to $3.43 billion on sales up 4.3 percent to $103.4 billion - was boosted by international performance.

According to the Bloomberg story, Walmart is not expecting any sort of radical turnaround in the second quarter, forecasting “that the change in second-quarter fiscal 2012 comparable-store sales in the U.S. would be between negative 1 percent and positive 1 percent.”

Published on: May 17, 2011

The Chicago Tribune reports on an active business trend, prompted by the continuing obesity epidemic in America: “Many corporations are now encouraging employees to move more during the workday: In an April survey by the corporate benefits group Workplace Options, 36% of employees said their jobs offered perks such as wellness coaches, on-site health screenings and fitness programs.

“And 70% of Fortune 200 companies offer physical fitness programs, according to the National Business Group on Health, with many saving on healthcare as a result.”

Examples range from outdoor clothing manufacturer Patagonia in California, where “the company's flex-time policy means employees can go running, biking or surfing in the middle of the workday, and nearly all of them do,” to pharmaceutical giant GlaxoSmithKline, where “thousands of employees have enrolled in workshops targeting physical and mental health. The programs demonstrate workouts in the company gym and cover such basics as eating right and taking activity breaks away from the computer. More than one-third of employees surveyed three to 12 months after they complete the program say they've experienced ‘very significant improvements’ in their physical performance.”

Published on: May 17, 2011

The Financial Times reports that Walmart says that it could walk away from its proposed $2.4 billion investment in South Africa’s Massmart, which would give it 51 percent of that discount retailer, if the government there insists on certain conditions before approving the deal.

Among the conditions would be requirements for local sourcing and the rehiring of more than 500 employees laid off by Massmart last year; critics of the deal have said that they concerned that Walmart’s entry into South Africa will result in the long-term loss of jobs. Unions have been spearheading the opposition, largely driven by Walmart’s famously anti-union history.

According to the FT story, “Analysts argue that if the deal is blocked, it would be a damaging setback to South Africa’s efforts to attract greater foreign investment and market itself as the gateway for investors looking to tap into the potential of Africa.

“The proposed transaction would mark the first entry into sub-Saharan Africa by a leading mass-market retailer. Massmart is South Africa’s third-largest retailer and has operations in 14 African countries.”

Published on: May 17, 2011

The Wall Street Journal reports that “the U.S. Department of Agriculture is proposing to eliminate the ‘white potato’ - defined as any variety but the sweet potato - from federally subsidized school breakfasts and to limit them sharply at lunch ... The proposed change is part of a push to make school meals healthier, with more nutrient-rich vegetables and fewer French fries. Under the USDA proposal, school cafeterias would have to limit starchy vegetables such as potatoes, corn, peas and lima beans to a total of one cup per week for lunch.”

According to the story, “Messing with a stalwart like the spud doesn't go well with the potato industry, school cafeteria directors and legislators from potato-growing regions. They're fighting to see that in schools, no potato is left behind. As part of the effort, spud sellers are promoting potatoes as a ‘true gateway vegetable’ that could lead kids to broccoli.”

Published on: May 17, 2011

USA Today reports on a new poll saying that seven in 10 Americans say that the high cost of gasoline is creating a financial hardship, and that “more than half say they have made major changes to compensate for the higher prices, ranging from shorter trips to cutting back on vacation travel. For 21%, the impact is so dramatic they say their standard of living is jeopardized.”

The story notes that “nationally, the price of a gallon of regular gasoline averages $3.96. That's up 38%, or $1.09, from levels a year ago ... In seven states, gas prices have passed July 2008's record of $4.11 a gallon.”

Published on: May 17, 2011

• The Financial Times reports McDonald’s plans to “change the way customers order its meals in Europe, partly replacing cashiers and the use of banknotes at its 7,000 fast-food restaurants in the region with touchscreen terminals and swipe cards ... The move is part of the fast-food chain’s efforts to woo cash-strapped customers by making its restaurants more convenient and convivial. It is refurbishing stores, and introducing longer opening hours and new menus.”

• Dow Jones reports that JM Smucker Co. has completed its $360 million acquisition of Rowland Coffee Roasters, which it says “will add Rowland's Hispanic Cafe Bustelo and Cafe Pilon brands to its lineup,” which already includes the Folgers and Kava brands.

• Nevada-based Scolari’s Food & Drug has announced that it is adopting the NuVal Nutritional Scoring System, which rates virtually every product on store shelves on a scale of 1-100, based on a proprietary logarithm with high numbers signifying more nutritious food.

• The Denver Post reports that a newly remodeled King Soopers store in the Mile High City is catering to a growing Latino customer base by featuring new offerings such as a tortillaria; a bar serving aguas fresca (fresh juice) and helado (ice cream); products from Latin America; bulk items; and more ethnic items in the produce, bakery, meat and canned-food areas.

Published on: May 17, 2011

Dr. Jack Allen, Emeritus Professor of Food Marketing at Michigan State University, has been elected to the Meat Industry Hall of Fame. He will be inducted, along with 11 other nominees, in November at a ceremony coinciding with Process Expo, a food industry’s trade show.

An excerpt from the announcement:

“Jack Allen, a proud former officer in the U.S. Marine Corps, earned his doctoral degree at Cornell University, where he taught in the food industry management program. He served as Director of Retailer Relations for the American Meat Institute during its tenure in Chicago and later joined the Michigan State University faculty.

“At the university, Allen was a member of the Departments of Marketing, Broad School of Business and Agricultural Economics. For most of his academic career, he led the Food Industry Management Program at Michigan State, which provides a system-wide perspective of managerial problems confronting firms in the food industry. Under Allen’s leadership, the program became a catalyst for industry innovation in marketing and creating consumer value added, recognizing the increasing interdependence among companies throughout the food chain.

“Allen later became a member of the Michigan State University USAID project, ‘Partnerships for Food Industry Development,’ where he participated in projects in Guatemala, Ghana, India, Nicaragua and South Africa. The goal of these projects was to link small-scale produce farms to the global marketplace in sustainable business relationships that would raise agricultural incomes in these countries and provide food retailer export customers with distinctive, high quality products.

“Allen was an early proponent of improving the retail merchandising of meat and poultry products, and helped industry participants identify new opportunities in the natural and organic foods segment. He spent many years advocating for implementation of case-ready systems, which have become the industry’s dominant packaging mode. He spent many years delivering impactful presentations on those subjects to large and receptive audiences at retail and meat industry trade shows.”

The other new members include: Alan Simon, Chairman and CEO, Omaha Steaks (retired); Clarence Becker, President, Becker Food Company (posthumous); Dale Huffman, Ph.D., Professor and Researcher, Auburn University (retired); Eldon Roth, Founder, BPI Inc.; George Watts, President, National Chicken Council (retired); John Bryan, Former Board Chairman and CEO, Sara Lee Corp.(retired); John Story, Vice President of Meat Marketing, Fairway Foods (retired);  Manny Rosenthal, Chairman Emeritus, Standard Meat Co. (posthumous); Mel Salomon, Chairman, Allen Brothers (retired); Phil Clemens, Chairman, Hatfield Quality Meats; and Robert Madiera, Executive Director, American Association of Meat Processors (posthumous).

Published on: May 17, 2011

• FreshDirect, the New York City-based pure-play online grocery, announced that co-founder Jason Ackerman, who has been serving as the company’s CFO, has been promoted to the CEO job, effective immediately.

Ackerman replaces Rick Braddock, the former Citibank exec who had served as FreshDirect’s CEO until last March, when he resigned at about the same time that Marks & Spencer invested $50 million in the company.

Ackerman is a former investment banker with Donaldson Lufkin & Jenrette and Crown Capital Group, where he specialized in mergers and acquisitions and corporate financings primarily for the supermarket and specialty retail space.

Published on: May 17, 2011

• Patrick Collins, the former president/COO of Ralphs and, finally, the vice-chairman of the Los Angeles-based chain, has passed away. He was 82.

Collins served as President of the Western Association of Food Chains (WAFC) in 1983 and was honored by the University of Southern California as  Executive of the Year in 1981.

Published on: May 17, 2011

We continue to get reaction to Friday’s story about Supervalu’s announcement that Bill Shaner, a 27-year company veteran who has been running its Save-A-Lot division since 2006, is leaving the company, to be replaced by Santiago Roces, most recently a senior vice president and general manager at Walmart. Craig Herkert, the Supervalu CEO who engineered the change, also is a former Walmart executive.

One MNB user wrote:

I am a Save-A-Lot retailer. This move has caused me to put a halt on my expansion plans. I had three stores in the pipeline. I am not going to risk my current stores or lose what I have already built up.

Two Walmart guys trying to run a limited assortment format that they know nothing about means there will be a lot of changes that will be costly for the current Save-A-Lot retailers. If Herkert brought the new guy in to get more margin for Supervalu, it will stall any growth. I am afraid we will start losing talent at Save-A-Lot corporate office, many of whom deeply understand and have limited assortment in their blood.

My message to Giant Eagle and AWG - sharpen your focus on limited assortment for independent retailers. You could experience tremendous growth. There may be a bunch of us looking. The retailers I talk to would love to take Save-A-Lot to a co-op.

Good Luck to you, Bill Shaner. You were not always right, but you understood the concept and are a man of values and a class act.

Note to Supervalu board: Fire Herkert. Hire Shaner.

Please do not reveal my name I still will have to deal with these WM idiots.

My understanding is that this email is just the tip of the iceberg - that it reflects a broad swath of opinion within the Save-A-Lot and Supervalu family.

But let’s be fair about this. Herkert has his own reasons for making the change, for believing that a former Walmart exec with no experience in the limited assortment venue is better able to lead the division than someone who has been driving its growth for a half-dozen years.

But he hasn’t explained it. He’s described Roces’ resume, but hasn’t laid out a clear vision, other than his belief that Save-A-Lot will drive Supervalu’s ongoing retail growth.

I would suggest that he needs to be a lot more specific and detailed than that. Not because I need to know, because I’m reasonably sure that Herkert and Supervalu don’t give a damn what I know or what I think. But this email certainly makes it clear that the people who do matter - Save-A-Lot retailers - have no idea what is happening and why, and they need to hear it from the horse’s mouth.

There was a posting this week on the Fans of MorningNewsBeat Facebook page from MNB user Len Abeyta, in which he wrote:

I wonder if there is more to this than meets the eye...like a Walmart takeover of Save-A-Lot in the works with a Walmart exec. now in charge.

But MNB user Craig Espelien responded, also on Facebook:

My guess is that this is more of a "the strategy is not working so let's change the players" piece - fire the coach when the team is not being successful. Sort of sad - Bill Shaner is a good guy and deserved better.

Except that in this case, the coach and the team had been doing pretty well - it certainly wasn’t any sort of major collapse that seemed to require a change.

Then again, we don’t know ... because Supervalu isn’t really explaining anything.