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    Published on: June 23, 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 is up to you. I look forward to hearing from you.

    Hi, I’m Kevin Coupe, and this is FaceTime with the Content Guy.

    I thought I would use this space today to answer a couple of questions that have popped up lately in emails from MNB readers.

    One was why we spend so much time focusing on Tesco’s Fresh & Easy concept. A reader says in an email:

    “I’m just 1 guy but I love Fresh & Easy and its concept.

    “Honestly I see Walmart as a bigger “monster”  The employees appear happier than at Ralphs, Vons or Walmart and yet Safeway and Kroger are mentioned much less often in your commentary.”

    My goal is not to cast any of these chains as monsters or saints - I think they’re all companies that are trying to make a profit, trying to do the right thing, sometimes making mistakes and sometimes succeeding. I don’t use any sort of quota system - I write about the stuff I find interesting on any given day, and just try to be equitable and fair-minded, even in my criticism.

    I would disagree with the suggestion that I’ve been tough on Fresh & Easy. In fact, I think I’ve been fairly consistent in saying that while they’ve clearly made mistakes in the assessment of the market and in crafting a format that responds to it, Im pretty convinced that Tesco is in for the long haul - unless, of course, someone makes them an offer they can’t refuse.

    Then again, I could be wrong.

    Another question I got the other day is about whether I’m inconsistent in the way I approach the obesity issue. One day I’m calling for better labeling and greater transparency, and the next day I’m salivating over ice cream pizza or waxing rhapsodic over this meal or that beer or wine.

    I don’t think I’ve been inconsistent, though I’m certainly capable of it.

    My general position on this issue is that I believe in context and moderation. I think I ought to be able to drink a glass of wine or eat ice cream pizza if I choose. It is then my responsibility to know that I’d better compensate for that with a long bike ride or a salad next time I eat. If I don’t, it is on me. But, I also think it is industry’s responsibility to be transparent about calorie, fat and nutrition information, so I can make informed decisions.

    And to take the argument one step farther, if I ignore the labels and information, don’t get any exercise, consume nothing but crap and eat myself into a heart condition and a hospital room ... well, then I ought to be paying higher health insurance rates than people who take care of themselves.

    I get accused from time to time of being in favor of the nanny state, but you’ll note that in my description of this continuum, I never even mentioned government mandates. I’d prefer if this all worked out because people and companies do the right thing ... though the sad truth is that not everybody does, and sometimes to make sure the game is fair and the rules are followed, there does need to be a referee.

    Finally, to the legions of people who wrote in about my trip to Barcelona - yes, this is a great gig, and yes, I am having a great time.

    And I try never to forget it.

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

    Published on: June 23, 2011

    The US Supreme Court may have ruled in Walmart’s favor this week by saying that a gender discrimination class action suit - filed on behalf of some 1.5. million current and past female employees of the company - could not proceed because the cases were too dissimilar to be linked, and because cultural discrimination is not the same as official discrimination. But that doesn’t mean the issue of gender discrimination has been put to rest

    For one thing, a gender discrimination lawsuit against Costco, on hold for three years while the Walmart case worked its way through the courts, has been revived.

    And, at the national level, the Equal Rights Amendment (ERA) has been reintroduced in the US Congress -- 88 years after it was first introduced - with proponents saying that it is needed more than ever to explicitly ban gender discrimination.

    The Seattle Times reports that “Brad Seligman, the lead lawyer for the women in both the Wal-Mart and Costco cases, said he has hope for the lawsuit against Costco.

    “For one thing, it's smaller, involving only 700 or 800 women. That includes current and former female employees who were denied promotions to general manager or assistant manager since 2002.

    “Another big difference, he said, is Wal-Mart has a decentralized system for making decisions about pay and promotions ... At Costco, decisions about general and assistant managers are made at its Issaquah headquarters, he said.” Therefore, it may be easier to gold Costco’s management - including CEO Jim Sinegal, who signs off on every general manager promotion - accountable. Lawyers in the Costco case are hoping that they can draw a distinction from the Walmart situation, arguing that at Costco the discrimination was de facto official.

    Costco’s lawyers, not surprisingly, disagree, and plan to argue that the same dissimilarities exist in their case as in the Walmart situation, and that a class action simply should not be certified.

    Meanwhile, the Huffington Post reports that Rep. Carolyn Maloney (D-New York), who reintroduced the bill with Sen. Robert Menendez (D-New Jersey), said in a statement: “The Equal Rights Amendment is still needed because the only way for women to achieve permanent equality in the U.S. is to write it into the constitution ... Making women’s equality a constitutional right—after Congress passes and 38 states ratify the ERA—would place the United States on record, albeit more than 200 years late, that women are fully equal in the eyes of the law ... “The Wal-Mart case decided by the Supreme Court this week is a classic example of how far attitudes must still come. The facts of the case support the view that over a million women were systematically denied equal pay by the world’s largest employer.”

    Menendez called it “a disgrace that American women are still not constitutionally guaranteed equal rights under the law."

    According to the Huffington Post story, “First introduced in 1923, the ERA is considered one of the pioneer acts of the women's rights movement in the United States, even though it was never ratified. Today, the ERA currently has 160 co-sponsors including Congresswoman Gwen Moore (D-WI), Chair of the Congressional Women's Caucus, reports Ms. magazine. According to The Hill, it has been reintroduced every year since it fell three votes short of ratification in 1982.”
    KC's View:
    I’m not a lawyer, so I can’t comment with any degree of authority about the Costco case. Except that discrimination of any kind is wrong, and I hope that justice is served.

    But I do have a thought about the ERA.

    First of all, I thought that we all are constitutionally guaranteed equal rights under the law. At least, that was my impression.

    That said, I have a daughter. There’s pretty good evidence out there that whether implicitly or explicitly, at some point in her career she may be taken advantage of, or discriminated against, simply because she is a woman.

    If it takes the ERA to make sure that this doesn’t happen to her and all her sisters, I’m okay with it.

    Some will say it is unnecessary and redundant. I’d guess I’d argue that since there continues to be discrimination - some of it cultural, some of it official - maybe it is necessary. And things sometimes have to be redundant because there are guys out there who simply don’t get it, who need to have this stuff drilled into their thick skulls.

    I vote with - and for - my daughter.

    Published on: June 23, 2011

    Reuters reports that “the Federal Reserve board will meet on June 29 to consider a final rule to limit the amount banks can charge merchants when a debit card is used, the Fed said Tuesday.”

    The so-called “swipe fee” regulation has been the subject of contentious debate and millions of dollars worth of lobbying, with the banking industry saying it will cost them $12 billion and profits and force them to cut back services, and proponents saying that regulation is needed to keep the banks from charging usurious fees that hurt consumers.
    The Fed originally proposed a 12 cent cap on swipe fees, a dramatic decrease from the average fee of 44 cents charged by banks in 2009. Now, Reuters says, the issue is whether the Fed will raise that proposed fee or leave it as is.

    The new fees are supposed to go into effect on July 21, and the Fed has said it plans to meet that timetable, despite calls by financial services companies for delays.
    KC's View:
    No more delays. The banks need to be smacked down and taught a little humility.

    And on July 22, if the new swipe fee regulations are in place, retailers and their trade associations across the country ought to go public to explain what has happened, how they are responding, and how consumers are going to benefit.

    Make a big deal of it. Embrace the moment. Behave and talk like you are the advocate and agent for the shopper.

    And leave the banks absolutely no wiggle room.

    Published on: June 23, 2011

    The Los Angeles Times reports that a big box store era is taking yet another hit, as weak sales and online competition have forced Best Buy to downsize its stores.

    According to the story, the 1,300-store electronics retailer “is launching plans to wall off parts of its cavernous stores and sublease the space to smaller retailers, such as grocers, beauty supply stores, home furnishing outlets and others.

    “Best Buy's new stores will aim to be about 36,000 square feet — down from the current average of 45,000 square feet.”

    “It's an opportunity to capture cost savings and get ourselves 'right size,'" said CEO Brian Dunn.

    The story notes that the move follows Best Buy’s previously announced plans “to open 150 smaller-format Best Buy Mobile stores focused solely on smartphones and tablets, nearly doubling the total to 325. The mobile stores, which average less than 3,000 square feet, have been very successful.”
    KC's View:
    Call it life in the age of

    The big lesson is that you can’t keep doing the same thing in a changing world - that you have to adjust your strategy and tactics and create a shopping experience that is financially viable and relevant to evolving consumer needs. Otherwise, you go the way of Borders. Or Blockbuster.

    It’s why Walmart and other retailers are focusing on small-store initiatives.

    Published on: June 23, 2011

    A new report from the Grocery Manufacturers Association (GMA) says that the CPG manufacturing sector “is now in recovery mode with companies focused on their growth agenda and looking to international expansion as an opportunity to enhance both the top and bottom lines, the report found. The value of shipments in the CPG industry rose 6 percent to almost $124 billion in 2010 versus the prior year.  Across the board, financial performance generally improved over 2009, with the manufacturing sector achieving strong median one-year shareholder returns of 15 percent. In addition, median earnings before interest and taxes (EBIT) growth overall improved from 4.3 percent to 12.9 percent.”

    The improvement in the PGC segment, GMA suggests, comes in part from the industry’s ability adopt and utilize digital technologies.

    “CPG companies of all sizes harnessed digital technologies in the past few years to become more productive and efficient,” said GMA president/CEO Pamela G. Bailey. “This study shows how food, beverage and consumer products manufacturers are leveraging innovation to optimize service to consumers and trading partners.”

    “Our analysis found that CPG companies were hard pressed to generate overall sales growth in 2010; however, some companies still managed to produce very healthy margins, free cash flow and other financial results. They made good progress building their brands in those fast emerging markets, and were able to balance long-term investment with smart cost management in ways that still generated substantial dividends for shareholders,” added Lisa Feigen Dugal, PwC’s North American Advisory Retail and Consumer Industry Leader.

    Here’s how the report frames the digital issue:

    “Business mobility has been shown to boost productivity in sales, supply chains, distribution centers and stores, as well as to contribute to individual productivity. To determine the best use of mobile devices across the workforce, the report suggests that workforce productivity should be viewed through three lenses: mobility on the floor where workers use their digital devices for instant information, in the field where mobile employees can make decisions on the spot with their devices, and in flight where sales representatives, who historically travelled to each location to analyze performance, now use mobile technology to monitor activity, thereby increasing productivity. The report notes that as devices and wireless data networks grow, rich multimedia capabilities will continue to be added to business work flows and businesses will continue to capitalize on the opportunities mobile devices create within the workforce.”

    The report is based on public information from 148 companies in the food, beverage and consumer products sector; the 2011 Food, Beverage, and Consumer Products financial performance report was co-authored by PwC.
    KC's View:

    Published on: June 23, 2011

    The Kroger Co. “continues to meet annual sustainability benchmarks, including reducing in-store energy consumption by 30 percent since 2000,” according to its just-released, fifth annual Sustainability Report.

    Some excerpts:

    • “Kroger stores reduced overall energy consumption by 30% since 2000. That's enough electricity to power every single-family home in Fort Worth, Texas for one year.”

    • “Company-wide, including all facilities, Kroger has saved more than 2.2 billion kilowatt hours, which equals 1.41 million metric tons of greenhouse gas emissions. That equates to taking more than 275,000 cars off roads for one year.”

    • “Kroger's manufacturing plants reduced the amount of waste sent to landfills by 30% since 2009 – a 22 million pound reduction.”

    • “Improved bagging techniques and increased use of reusable bags saved an additional 159 million plastic bags. Kroger sold and provided customers with more than five million reusable bags, an average of 14,000 per day.”

    • “Kroger's ongoing hunger relief efforts provided the equivalent of 125 million meals to local families in 2010.”

    • “Kroger is well on the way to meet its goal of sourcing 100% of the top 20 wild-caught species from fisheries that are Marine Stewardship Council (MSC) certified, in MSC full assessment, or engaged in a World Wildlife Fund fishery improvement project by the year 2015. Today, 56% of Kroger's top 20 wild-caught fresh and frozen species are sourced from fisheries meeting these standards.”

    "Kroger associates have worked hard to integrate sustainable practices into our everyday business operations. In 2010, Kroger stores saved enough energy to power the city of Fort Worth for a full year. We sent less waste to landfills, recycled more plastic, and provided our customers with five million more reusable bags – all while Kroger transported and sold more products than ever before," said Rodney McMullen, president and chief operating officer of Kroger.
    KC's View:
    Not only is Kroger doing things that make sense in terms of global stewardship and taking care of our fragile planet, but it also is making moves that will give it differential long-term competitive advantages.

    This stuff matters.

    Published on: June 23, 2011

    The Wall Street Journal reports that Carrefour CEO Lars Olofsson will also become the French retailer’s chairman, as Amaury de Seze has announced that he will step down.

    The move may streamline the executive suites at Carrefour, the world’s second largest retailer, but it won’t make Olofsson’s job any less daunting. As the Journal writes, “He is one year into a multi-pronged three-year turnaround on which his job depends. One step of the transformation was accomplished at the shareholder meeting, when investors approved the spinoff of the Dia discount unit. Dia will be listed on the Madrid stock exchange on July 5, and each Carrefour investor will receive a Dia share for each Carrefour share.

    “Yet Mr. Olofsson is also juggling several other projects as part of the overhaul. He is renovating the hypermarket chain in Europe to the tune of EUR1.5 billion, and rolling out thousands of Carrefour-branded groceries. He has faced setbacks in what he calls an ‘ambitious’ plan, including a management shakeup at the core French operations.

    “The overhaul is necessary to reignite consumer traffic in Carrefour's French stores, which accounted for 39% of its 90 billion euros in sales last year. Carrefour is facing stiff price competition from more nimble rivals.”
    KC's View:

    Published on: June 23, 2011

    The Private Label Manufacturing Association (PLMA) is out with its annual Yearbook, saying that during 2010, “sales of store brands saw gains of more than +2% in U.S. supermarkets and nearly +5% in drug chains. Over the past decade, annual sales of private label products have increased by +40% in supermarkets and by +96% in drug stores.

    “In total outlets – comprised of U.S. supermarkets, drug stores and mass merchandisers, including Wal-Mart – store brand sales increased by nearly +2% while dollar share advanced by almost half a point to a new record level. Overall, sales were $88.5 billion, another all-time high, according to The Nielsen Company.

    “Store brands share of dollar sales advanced to a record 19.1% in supermarkets, and unit market share was 23.5%. In drug stores, store brands advanced in dollar share to 14.7% and recorded unit share of 16.2%. For Total outlets, store brands dollar share rose to 17.4% and unit share came in at 21.8%.”

    In addition, the report goes on, “In supermarkets, store brands sales increased by $1.2 billion and accounted for 100% of the growth in the channel, even offsetting a sales drop of -$149 million by national brands. The picture was much the same in drug stores, where store brands dollar sales increased by $300 million, comprising 60% of all incremental revenue in the channel.

    “Looking at Total outlets, the results were even more dramatic – private label was up $1.5 billion while national brands were down $4.6 billion, a spread of fully $6.1 billion in sales revenue.

    “When it came to units sold, national brands in supermarkets gained one percent while store brands were essentially flat, indicating that national brands likely relied heavily on price reductions and other inducements to shoppers to move their goods at any cost. In drug chairs, private label units were off marginally and national brands were even. In Total outlets, store brands gave up -0.9% in units and national brands lost -0.6%. Whether such moves by national brands can be sustainable practices in terms of their bottom lines will be a development to watch during 2011.”
    KC's View:

    Published on: June 23, 2011

    Publix Super Markets announced that it will enter the Knoxville, Tennessee, market in the third quarter of 2012.

    There are currently 30 stores in Tennessee, three of which are in the Chattanooga area and 27 in Middle Tennessee. Publix said that additional Knoxville area sites will be identified as they are confirmed.
    KC's View:

    Published on: June 23, 2011

    • Walmart and the Walmart Foundation have announced “a $25 million giving campaign aimed at filling the gaps created when schools close for the summer. Funding to more than 350 local nonprofit organizations will help expand nutrition, learning and employment services for elementary, middle and high school students throughout the 2011 summer months.”
    KC's View:

    Published on: June 23, 2011

    • Unified Grocers, the largest wholesale grocery distributor in the western Untied States, announced that “Times Supermarkets (Times), a chain of 20 conventional supermarkets in Hawaii (stores are located on the islands of Oahu, Maui and Kauai), has switched its grocery supply business to Unified Grocers and will begin receiving groceries and other products from Unified during the second week of July, 2011. Times Supermarkets had previously been supplied by C&S Wholesale Grocers.
    “Times operates 17 supermarkets under the Times Supermarkets banner, 2 stores under the Fujioka's Wine Times banner and 1 store under the Shima's Supermarket banner. Recently, the company completed the purchase of 5 Big Save Value Centers on Kauai and those stores will officially become part of Times Supermarket family on July 25, 2011. This will bring to 25 the total number of stores in the chain.”
    • The Pasadena Star News has a story suggesting that if there is a Southern California grocery strike this year, it would “open up temporary jobs to the thousands who remain unemployed as Southern California emerges from the recession.” However, the story says, “in hiring replacement workers, supermarkets could get hurt as they take on the risks associated with hiring inexperienced employees, an industry analyst said. Such employees may not provide the level of customer service necessary to keep shoppers away from supermarkets' competitors.”

    • The Wall Street Journal this morning reports that US Secretary of Agriculture Tom Vilsack told a meeting of big economy agricultural ministers this week that the US plans to “push for more transparent food production and open markets to reduce food price volatility.” Export bans, Vilsack said, tend to distort food prices over the long term.

    According to the story, Vilsack said that “he hoped countries could be discouraged from imposing food export bans, which were a factor in food price spikes in 2008 and again in the past year after Russia banned wheat exports in July 2010 amid a drought.”
    KC's View:

    Published on: June 23, 2011

    Got a number of emails responding to yesterday’s story and commentary about graphic new images and wording that the government says must be on tobacco packaging.

    One MNB user wrote:

    So we all know that smoking is HIGHLY addictive, kills over 400,000 people per year in the US, contains 100’s of toxic ingredients, makes you, your cloths, and those around you stink, wrinkles and yellows your skin, is an incredibly expensive habit, costs the US billions of dollars per year in healthcare costs, and is just plain nasty.

    Yet it’s still legal and we want to put scary pictures on the package.  Why not just make them illegal already?  Can you say political bribes…I mean donations.

    Another MNB user wrote:

    And yet the government is right in the middle of this crap subsidizing tobacco growers.  There is so much $$$$$$$$$$$$$ in it they drool over the tax money paid by smokers.  If everyone in Wisconsin quit, Scooter Walker would have to tick off a whole new set of citizens in order to make up for the money lost in taxes.  Bunch of bureaucratic hypocrites.

    It’s no different than other drug issues (yes I consider nicotine an addictive drug not unlike heroin).  It’ll never end as long as greed prevails!!!  No matter how many images you put on the product it will still be purchased, images overlooked, by the smokers who can’t fathom the thought of quitting.  Cigarettes are a friend (stress reliever, companion in crisis – if you never smoked you won’t understand it) and an enemy (we know it’s a killer).  My neighbor says they’ll have to pull the cig from his cold dead hands – he will not give them up.

    From another MNB user:

    I have always thought that tobacco companies need an approach that will reach kids. These new graphics might change adult behavior, but kids don’t really worry about the future like that. They don’t worry about their health and they certainly don’t worry about dying. So I don’t think these tactics really work against kids. Why not take an approach that might really make an impression….like “Girls hate guys who smell like ashtrays”, or “who wants to kiss an ashtray”, or “Guys don’t find cigarettes sexy or attractive”……. “or “Cigarette smell isn’t a turn-on?”   Wouldn’t that work better?????

    And MNB user wrote yesterday to comment that he found the “Your Views” emails to be increasingly polarizing - and polarized - and I responded that I do my best to keep the conversation relevant and civil, though occasionally I do allow the lunatic fringe to have its voice heard.

    Which led one MNB user to write:

    You mentioned you sometimes feel the best way to illuminate the lunatic fringe is to highlight the lunacy and let them speak.  If people want to see the lunatic fringe, they can simply turn on the news – especially cable news.  It’s not hard to find.  The thing that appeals to me most about MNB is you can get the latest headlines and developments in the world of retailing and read some thoughtful, level-headed discussion and debate of various topics.

    Giving lunatics a podium to preach/scream/spew is one of the greatest aggravations of our time. And I say that because not only has technology given them a voice to the extent of which they’ve never had, but society has also shifted to think it’s the norm to be frothing at the mouth.  I’m not saying free speech is a bad thing; it just comes with side effects we have to manage.  But I am convinced that the multitudes of vocal minorities out there in the world that incite so much grief and rage and anger are for the most part in no way representative of the quiet (and sometimes silent) majority that they propose to speak for.  That’s not to say those in the majority are an opinion-less, amorphous blob of in-eloquence and non-confrontation.  The viewpoints and beliefs are likely just as stern on some things, they just communicate and debate in a rational fashion.  And unfortunately that discussion style can get drowned out by all the lunatics.

    When I come across a forum for the quiet majority, it is always pleasing on the ears and eyes.  And I find I often learn the most.  Here’s to hoping MNB can remain such a place.

    Fair point, and of course that remains my goal.

    What I should have noted yesterday is what when I post an email from the lunatic fringe, I generally do so because I actually think that the person is voicing an opinion held by a lot of people but is going unsaid ... and because it allows me to make a larger point.

    Finally, one MNB user wrote:

    Your story today about the corporate-owned obesity "scientist" and the recent story about CEO pay remind me of my favorite George Carlin routine, "The Real Owners of the World”:

    "The real owners are the big wealthy business interests that control things and make all the important decisions. Forget the politicians, they're an irrelevancy. The politicians are put there to give you the idea that you have freedom of choice. You don't. You have no choice. You have owners. They own you. They own everything. They own all the important land. They own and control the corporations. They've long since bought and paid for the Senate, the Congress, the statehouses, the city halls. They've got the judges in their back pockets. And they own all the big media companies, so that they control just about all of the news and information you hear. They've got you by the (expletive deleted). They spend billions of dollars every year lobbying ­ lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else.
    "But I'll tell you what they don't want.  They don't want a population of citizens capable of critical thinking. They don't want well-informed, well-educated people capable of critical thinking. They're not interested in that. That doesn't help them. That's against their interests. They don't want people who are smart enough to sit around the kitchen table and figure out how badly they're getting (expletive deleted) by a system that threw them overboard 30 (expletive deleted) years ago. 

    "You know what they want? Obedient workers ­ people who are just smart enough to run the machines and do the paperwork but just dumb enough to passively accept all these increasingly (expletive deleted) jobs with the lower pay, the longer hours, reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. And, now, they're coming for your Social Security. They want your (expletive deleted) retirement money. They want it back, so they can give it to their criminal friends on Wall Street. And you know something? They'll get it. They'll get it all, sooner or later, because they own this (expletive deleted) place. It's a big club, and you ain't in it. You and I are not in the big club."

    Thanks for your work....I'm often very proud of you of speaking unpopular but undeniable truths, especially when I think of all the corporate policy-makers who read your words every day.

    In quiet, contemplative and even dark moments, I know deep in my heart that in addition to being one of the funniest people on the planet, George Carlin also was one of the most accurate - able to cut to the heart of the matter (and the spleen, backbone and almost any other body part you choose) in a way that most of us could not even imagine, much less achieve.
    KC's View: