retail news in context, analysis with attitude

Published on: July 11, 2011

by Kevin Coupe

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

Well, I’m back. One of the things that Michael Sansolo and I always talk about is how we’ve both gotten used to this soapbox, and how it is sometimes frustrating on days or weeks that we’re not writing, and then something happens and we’re just dying for an audience...but alas, all we have is our wives and kids, and they don;t really want to listen to us.

This is exactly what happened as my vacation began. No sooner had I signed off than the proverbial stuff hit the fan in the political and media worlds when Mark Halperin went on “Morning Joe” and used an unpleasant word to describe President Obama. Not a dirty word - just an inappropriate one. He was almost immediately suspended, but the blogosphere spent more than a few days discussing the event.

The thing is, as I do almost every morning, I was watching “Morning Joe” when he said it. I knew instantly that there were going to be repercussions, though I have to admit that just suspending Halperin didn’t seem entirely fair since he was goaded into saying it by Joe Scarborough and Mika Brzezinski, who assured him that the seven second delay would bleep it out. Which it didn’t.

Now, it seems to me that there are a whole bunch of business lessons in this event...

Number one, never over-promise and under-deliver. If you say you are going to do something - like bleep out an inappropriate word - you’d better do it. if you don’t, there are repercussions.

Number two, words matter. In the moment, maybe Halperin thought this comment would be seen as edgy or irreverent. But once it came out, it just seemed gratuitous and disrespectful.

Number three, it is important not to always fall back on reflexive thought and actions. As soon as Halperin was suspended, there was a certain cadre of people who said that he never would have been suspended if he’d said it about a Republican president. Which strikes me as just absurd. The only news show on which a correspondent could get away with such a comment is “The Daily Show,” which sort of makes such irreverence its stock in trade. Which leads me to lesson number four - context is everything. What you can get away with on “The Daily Show” you can’t get away with on “Morning Joe.”

Lesson number five has to do with management style - because I think MSNBC actually did blow it by only suspending Halperin. Frankly, they should have taken the whole cast off the air for a couple of days - they goaded him into it, they laughed when he said it, and they all should have been held accountable.

Number six, make sure that people know how to do the jobs they are being paid for. The producer in the control room was supposed to hit the seven second delay button, but he was a new producer and he got confused and hit the wrong button.

Finally, there is a broader cultural lesson to be learned here, about the coarsening of the dialogue in the public square. I see it in some of the emails I get here on MNB, and it certainly is evident in the lack of civility that seems to exist in politics and the media. That’s too bad, and it makes it harder to compromise and achieve anything.

That’s what is on my mind this Monday morning...and I’m really glad to have gotten it off my chest. As always, I’m looking forward to hearing what is on your mind.

Published on: July 11, 2011

by Kevin Coupe

There were two quotes in different New York Times stories yesterday that caught my eye, because they reflected the extent to which certain people are able to see possibilities that the rest of us may be blind to.

• The first quote was from Marc Andreessen, one of Silicon Valley’s biggest venture capitalists, who observes that “Gordon Bell at Microsoft is working on wearable computing, where it literally records everything around you all the time - video, your conversations. He wants to get to where it’s like a pendant around your neck. We also have a company called Jawbone that makes peripherals for smart phones and tablets. Today, they sell Bluetooth headsets and speakers, but soon they will sell all kinds of wearable computing devices.”

And, Andreessen notes, “Google is working on self-driving cars, and they seem to work. People are so bad at driving cars that computers don’t have to be that good to be much better. Any time you stand in line at the D.M.V. and look around, you’re like, Oh, my God, I wish all these people were replaced by computer drivers. Ten to 20 years out, driving your car will be viewed as equivalently immoral as smoking cigarettes around other people is today.”

• The other quote came from education entrepreneur Chris Whittle, who is trying to start a new private school in Manhattan called Avenues: The World School.

Here’s how the Times describes this new educational venture:

“Avenues is not just about offering new private-school seats. It also proposes to educate children differently. The world has changed, Team Avenues says, and the way private schools educate has not.

“The founders say students at Avenues will learn bilingually, immersed in classrooms where half of the instruction will be in Spanish or Mandarin, the other half in English, from nursery school through fourth grade. The school will be part of a network of 20 campuses around the world with roughly the same curriculum. If Mom and Dad move to London, little Mateo doesn’t have to find a new school, or maybe even miss any class. When Sophia is in middle school, she can spend her summers in Shanghai, and when she’s in high school, she can globe-trot by semester. Avenues will foster ‘mastery,’ finding students’ passions early and building on them ... The result, they believe, will be a school where Singapore math and British geography collide with Juilliard-level violin instruction, in 20 shining schools around the world.”

Says Whittle, “Schools need to do a better job preparing children for international lives.”

Now, the statements from each of these men suggest a somewhat privileged view of the world, one that is dependent on the inhaling of rarefied air that many of us never will breathe.

Wearable computers that record every moment of one’s life? Seems unlikely, but it wasn’t that long ago that smart phones seemed more Star Trek than real world. Self-driving cars? Hard to imagine, but crazier things have happened. And Whittle’s vision seems like one that - especially in a political and economic climate looking to cut costs rather than make investments - seems more suited to Manhattan’s Upper East Side than almost any other place ... though it is hard to argue with the conclusion that a more global competitive environment is likely to require competitors with a more global education and perspective.

Whether these specific visions come true seems less important than the ability to see the world through a different prism, too see possibilities rather than limitations.

To see the world with your eyes open.

Published on: July 11, 2011

Market research firm TNS is out with a new survey saying that eight out of 10 US consumers plan to alter their purchasing behavior to compensate for high gas prices.

According to the study, many are starting at the supermarket:

• “Thirty-five (35%) percent of those surveyed say they are trimming down and removing items from their ‘typical’ grocery list to save money.”

• “Nearly one-third of consumers (30%) are more likely to purchase private label brands than national brands.”

• “Consumers are making fewer trips and often choosing to shop at discount stores (32%) over traditional retail outlets.”

Meanwhile, the Wall Street Journal is out with a story this morning noting that three discount-driven chains - Family Dollar, Dollar Tree and Dollar General - have all missed their most recent quarterly earnings targets, though their same-store sales numbers remain strong.

The Journal writes, “All three retailers cited transportation costs due to rising diesel-fuel prices as a major reason for their earnings shortfalls. But the chains also said their price-sensitive customers, pummeled by high unemployment, stagnant wages and soaring gasoline prices, are buying more food and other basics like cleaning products, which have relatively low profit margins, and fewer higher-margin discretionary products, such as apparel and home decorative items ... The cost and margins pressures are beginning to echo similar ones at Target and Wal-Mart Stores, which occupy a higher rung of the market.”

Published on: July 11, 2011

The New York Times had a story the other day noting that some states are passing legislation that prevents municipal governments from adopting rules that will do things like ban trans fats or mandate that fast food restaurants provide nutritional information on their menu boards - efforts that are said to be important in addressing rising obesity rates.

According to the story, “Florida and Alabama recently adopted such limits, while Georgia, Tennessee and Utah have older statutes on their books. Earlier this year, Arizona prohibited local governments from forbidding the marketing of fast food using ‘consumer incentives’ like toys” - a ban that recently imposed in San Francisco. And, the Times wrote, Ohio Gov. John Kasich recently “signed the state budget, which contains sweeping limitations on local government control over restaurants.”

The story positions the two sides of the argument this way: “Sue Hensley, a spokeswoman for the National Restaurant Association, said it supported the efforts of its state members to protect restaurants from what she described as ‘a patchwork of regulation’.” But “public health advocates worry that the new laws will stall a movement among cities and counties that are putting in place a wide range of policies and tools aimed at stemming the rising tide of obesity among their residents.”

The Times notes that “the new state laws will have no effect on a federal law that requires menu labeling by chains with 20 or more restaurants by 2013.”

Published on: July 11, 2011

Reuters reports on a new study in the American Journal of Clinical Nutrition saying that “menu labels on college cafeteria food that highlight the nutritional good and the bad of various meal options make no difference in students' choices.”

The conclusion - in certain environments, like cafeterias and fast food chains, nutrition matters less than convenience and taste.

Published on: July 11, 2011

MSNBC reports that Albertsons LLC is pulling all the self-checkout lanes from the roughly 100 of its stores that have them “in an effort to encourage more human contact with its customers ... The move marks a surprising step back from a trend that began about a decade ago, when supermarkets began installing self-checkout lanes, touting them as a solution to long lines. Now some grocery chains are questioning whether they are really good for business.”

There are reports that both Kroger and Publix are reconsidering the whole issue of self-checkout.

"We just want the opportunity to talk to customers more," says Albertsons spokeswoman Christine Wilcox. "That's the driving motivation."

Albertsons LLC operates 217 stores in seven Western and Southern states.

Published on: July 11, 2011

The Los Angeles Times reports on pressure building on the US Food and Drug Administration (FDA) to modify proposed rules that would require restaurants to display calorie counts on menus.

According to the story, the National Restaurant Association (NRA) wants the FDA “to allow a variety of approaches for letting consumers know how many calories are in the food they are considering buying ... The industry also wants flexibility in how it presents the calorie content of dishes that could be more or less fattening depending on what sauces, cheeses or other items are put on top. For example, if a burger chain has a sandwich that can include bacon, cheese and avocado, the FDA's current proposal would require the chain to post a range of calories, from the lowest amount to the highest, based on the consumer's various options.

“But in comments filed with the federal agency, the restaurant association and another trade group, the National Council of Chain Restaurants, said eateries should be allowed to choose the best way to present such information. For example, the associations said, it might be better to allow restaurants to post the average of possible calorie counts, rather than the whole range.

“The organizations also want the FDA to put off implementation of the rules to a year after they are finalized, instead of the six months currently proposed. The rules are expected to be issued at the end of 2011, so that would mean restaurants would have until the end of 2012 to put the calorie counts on menus nationwide. The rules, passed as part of the massive healthcare overhaul last year, would apply to any restaurant chain that has 20 or more locations operating under the same name nationwide.”

At the same time, the Food Marketing Institute (FMI) put out a statement noting that “one option FDA proposed in implementing the menu labeling law took an overly broad interpretation of the language found in the original legislation. FDA categorized mainstream supermarkets without restaurants or menus as ‘similar’ to chain restaurants.

“This is a menu labeling law and was passed by Congress with that intent. Supermarkets that have chain restaurants inside stores with menus and menu boards should and expect to label those menus in compliance with this law. However, it makes no sense and certainly was not the intent of Congress to ask supermarkets to find a way to label every cut up cantaloupe, olive in the olive bar or birthday cake,” said Leslie G. Sarasin, president/CEO of FMI. “This issue is not about nutrition information, which food retailers already provide on some 95 percent of retail foods, but is about the unfair application of a law to a group it was never designed for or intended to affect. FDA’s own cost analysis of the proposed rule acknowledges a disproportionate cost for supermarkets to comply with restaurant menu labeling.”

And Tom Wenning, executive vice president/general counsel with the National Grocers Association (NGA) said in a prepared statement, "There is no rational basis for considering independent food retailers to be part of a chain just because they may operate under a common banner name. The proposed rule is flawed in that it indicates that a chain should be covered regardless of the type of ownership of the individual locations. Independent retailers own, control  and operate their stores independently; choosing what products are sold, how they are presented and prepared for food displays."

Published on: July 11, 2011

Consumer advocates celebrated a victory last week when the United States dropped its long-held objection to the labeling of genetically modified foods, allowing the Codex Alimentarius Commission, made up of the world’s food safety regulatory agencies, to issue “consensus guidance” on the subject.

According to the announcement from Consumers Union, which publishes Consumer Reports and had supported labeling of GM foods, “the new Codex agreement means that any country wishing to adopt GM food labeling will no longer face the threat of a legal challenge from the World Trade Organization (WTO).”

The Oregonian reports that “Dr. Michael Hansen, a senior scientist at Consumers Union, said the new labeling consensus acknowledges the importance of what he calls post market monitoring, ‘so that if consumers eat modified foods, they will be able to know and report to regulators if they have an allergic or other adverse reaction’.”

The new agreement does not provide, however, for mandatory labeling of GM foods. The Obama administration says that it remains resolutely opposed to mandatory GM labeling.

Published on: July 11, 2011

The German publication Lebensmittel Zeitung reported that the Tengelmann family, which controls the bankrupt Great Atlantic & Pacific Tea Co. (A&P) in the US, is considering selling its stake in the company because it has “doubts” about the company’s turnaround plans.

Published on: July 11, 2011

USA Today reports that Kraft Foods “is the latest large food manufacturer to try hiding additional veggies in packaged foods, an effort to ride a renewed interest in healthy eating to fatter profits ... In June, Wal-Mart and Target stores started stocking Kraft Macaroni & Cheese Dinner Veggie Pasta across the country, alongside boxes of the traditional recipe and other alternative versions, including organic and whole grain. Every neon-orange cup serving of the new recipe packs a half-serving of cauliflower.

“Kraft joins brands such as ConAgra Foods' Chef Boyardee, which includes enough tomato in some of its canned pasta to claim half a cup of vegetables per serving, and Unilever's Ragu pasta sauces, which says it has two servings of veggies for every half cup of sauce. In the Kraft product, the company freeze-dries cauliflower and pulverizes it into a powder, then uses that powder to replace some of the flour in the pasta.”

Marion Nestle, a professor at New York University’s department of nutrition, food studies and public health, tells the paper that this trend is “a silly idea,” and says that “nutrients are lost when vegetables are freeze-dried, Nestle says, and people are also losing the benefit of greater volume of less calorie-dense food in a meal.

However, USA Today also says that there is a cadre of food experts who disagree with that perspective, dismissing it as elitist and saying that people need to get their vegetables - and that anything manufacturers do to help them is a positive.

Published on: July 11, 2011

• The Chicago Sun Times reports that Amazon.com plans to open a fourth distribution center in Arizona, “giving the state a nod for its hands-off stance on the issue of pressing online retailers to collect sales tax on shoppers’ purchases ... Amazon also announced last week that it would open a fourth Indiana distribution center just outside of Indianapolis. Indiana officials four years ago offered not to push the tax issue in recruiting Amazon to the state.”

• It was announced last week that a new Beauty Bar store will be opening at a Long Island, New York, mall - noteworthy because Beauty Bar is owned by Quidsi, which was acquired by Amazon a little over a month ago. Thus, Beauty Bar becomes an actual brick-and-mortar store opened by Amazon.com, which until now has stuck to the virtual retail environment.

• Internet Retailer reports that “ShopRunner, the fledgling shipping service designed to help retailers compete with the free shipping offers of Amazon.com Inc., is preparing to release a mobile app that could give retail chains with bricks-and-mortar stores an edge over web-only retailers like Amazon.

“The ShopRunner app would enable a consumer inside a store to scan an item’s bar code with her mobile phone to see which retailers participating in ShopRunner offer the item online or in nearby stores. That would keep the shopper away from offers from non-ShopRunner retailers, like Amazon, while directing them to nearby stores operated by such ShopRunner clients as Toys ‘R’ Us, Sports Authority, PetSmart, AutoZone and Radio Shack.”

Published on: July 11, 2011

MSNBC reports on how Burger King and Sonic - two chains best known for their fast food - “are experimenting with sales of alcohol along with their standard offerings, selling bottled beer that they hope will serve as an inducement to adult customers to patronize them.

The story notes that the two chains are following in the footsteps of Starbucks, which has been experimenting with beer and wine sales in a couple of its Pacific Northwest venues.

Published on: July 11, 2011

• Associated Wholesale Grocers, Inc. (AWG) has begun construction of its seventh full-line grocery distribution center with a groundbreaking ceremony at the 68 acre site in Pearl River, Louisiana, that will serve its new Gulf Coast Division. With over 720,000 square feet of space, the AWG Gulf Coast Division will carry 19,000 SKUs and categories that include dry grocery, frozen food, ice cream, dairy, fluid milk, meat, fresh seafood, produce, floral, bakery, deli, and supplies.

• Weis Markets announced it has lowered the prices on 1,600 staple items and that it will freeze these new lower prices for ninety days through October 8. It is the Company’s seventh 90-day price freeze program over the past two-and a-half years.

“Despite food inflation, we have been able to reduce and freeze the prices on 1,600 products across every department in our store,” said David J. Hepfinger, Weis Markets’ president/CEO. “Our price freeze program continues to offer our customers long term values they can count on. Over the past two and half years, our previous price freeze programs have helped our customers save more than $30 million.”

• WKBN-TV News reports that Corey Deandre Vance, a 27-year-old Michigan man, “has been sentenced in Pennsylvania Federal Court to 15 months in prison and three years probation for his role in a counterfeit credit card ring that targeted Giant Eagle stores in Ohio and Pennsylvania.” Vance “was convicted of conspiring to use counterfeit credit cards. Prosecutors said Vance conspired with three co-defendants to use fake credit cards to purchase gift cards from Giant Eagle. The company lost more than $70,000 in the scheme.”

• USA Today reports this morning that Nestle SA is buying a majority stake in Chinese candy maker Hsu Fu Chi for $1.7 billion (US).

According to the story, “analysts at Zuercher Kantonalbank said the price for Hsu Fu Chi was high, but noted Nestle's strategic ambitions in China - one of the emerging economies where the Vevey, Switzerland-based company sees the strongest chances of future growth.”

Published on: July 11, 2011

• Netherlands-based Ahold has hired James McCann, formerly executive director at Carrefour, to be its chief commercial development officer, a newly created position. According to the announcement, McCann will be responsible for “developing new and innovative ways to serve customer needs, build customer loyalty and broaden Ahold's offering. He also will be responsible for leading Ahold's e-commerce initiatives and will strengthen the company's online business globally.”

• The Financial Times reports that Judith McKenna, finance director at Asda, has been named as the new COO at the Walmart-owned retailer, succeeding Simon King, who departed after just a half-year in the job.

Published on: July 11, 2011

Washington Post columnist Ezra Klein, on his blog during the July 4th break, linked to a video showing celebrity chef Bobby Flay teaching President Obama how to grill.

Klein wrote: “Obama’s technique isn’t that bad, but he likes his steaks medium-well done. This is the best evidence I’ve yet heard that he’s not really an American.”

Published on: July 11, 2011

Betty Ford, a down-to-earth figure who seemed to be more popular than her husband, President Gerald Ford, during his White House tenure, passed away last week at age 93.

More important than her years as First Lady - when she brought a common touch to a White House plagued by scandal during the Nixon administration - Betty Ford used her prominence to promote mammograms when she developed breast cancer and turned her dependence on pain killers and alcohol into a mission to help other people recover from addiction, eventually opening the Betty Ford Center in California.

Published on: July 11, 2011

From the email folder, some notes that came in as I went on vacation...

On the subject of swipe fee regulation, one MNB user wrote:

The banks are charging 44 cents on average. Retailers wanted 12. The Federal Reserve made the Solomonic decision and split the difference, a little more to the retailers’ favor.  Seeing how both sides are complaining loudly, I consider it probably the most fair decision that could have been achieved.

I understand how the fees impact retailers and consumers (although this new regulation reduces the impact), and how the banks hold a lot of power. But to blame “the banks” for making a profit (or worse, for causing economic collapse) is akin to blaming “the government” for high taxes, corruption, or in this case, ineffectiveness. It’s painting with a pretty broad brush.

On point that banks make “too much” profit, here’s a question to ponder: how many retailers who share in the FMI’s condemnation of the swipe fee cap continue to profit on things such as slotting fees and promotional allowances?  Should the government cap these things as well in the name of consumer protection?

I certainly agree that slotting allowances are a bad idea, and corrupt the system by allowing some retailers to make money on the buy rather than the sell.

The difference, I think, is that retailers are not in bed together colluding over slotting allowances. Some don’t take them. I’m not sure the same thing can be said about banks in the debit card business.

Another MNB user wrote:

Do you honestly believe the poor retailers were going to pass all these anticipated savings along to consumers?  All this swipe fee regulation would do is pass the profits from one side to the other.  By taking it from the banks (who have already taken some major financial hits recently) they would in turn be forced to raise their fees to customers – so ultimately the customer will pay either way.  Is this really where our government should  be focusing its efforts right now?

I find it hard to sympathize with the banks. They may have taken some financial “hits,” but nobody has gone to jail ... and so they’ve dodged a bullet as far as I am concerned.

As for retailers passing on the savings...you’re right. Not everyone would. Maybe most would not. But somebody would, and I think that could have created market pressure on all of them.




On the subject of proposals that would have made it illegal in some states to photograph and film animal abuse scenarios on private farms, one MNB user wrote:

So “60 Minutes” would be illegal then? Big business and our government at work...

And another MNB user wrote:

In case you didn't know there is a piece of legislation floating around Albany somewhere that would ban images being taken on farms in New York.  This is presumably being offered by large CAFO operators who don't want to fall victim to employee/undercover pinhole camera operators.

As a small farmer myself, we welcome the public to come and view our operations...it connects consumer to their food, and creates a strong brand loyalty bond.  To suggest we have something to hide is nuts..but hey, I've been on some CAFO farms and I can see why they support the bill.

BTW....Mark Bittman of the New York Times recently had a great blog/column about this, and you can read it here.

Published on: July 11, 2011

• In women’s World Cup action, the US team won a quarterfinal match over Brazil yesterday, advancing to the semifinals in what one story said was “glorious fashion....one of all-time best, showcasing a U.S. do-or-die mentality that was unfailing and truly moving.”

• On Saturday afternoon, New York Yankee shortstop Derek Jeter collected his 3,000th hit with a third inning home run ... part of an overall sparkling day in which he went 5-5 and got the game-winning RBI.