retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: August 23, 2011

    by Michael Sansolo

    I wish I could admit that I hate picking on United Airlines, but they just keep finding strange ways to annoy me. A few months back I criticized United’s new president for his short, but useless (as I saw it) welcoming speech before the pre-flight safety video. If he wasn’t pointing out emergency exits, I wasn’t sure why I was listening to him. Now he’s back and he’s doing it again, but this time it’s worse.

    Jeff Smisek’s new message touts United’s merger with Continental. Now I can understand his pride at that. But here’s what I wish he talked about: Tell me how the merged airline is bringing benefits to my fellow passengers and me. Tell me about the benefits of new routes or how the bigger company is able to produce efficiencies that keep my costs down and my experience up.

    Instead, he tells me they are making great progress in painting planes with the new United/Continental logo and all I can think is why should I care about the paint job. Does it make the plane fly better? Will it stop the passenger in front of me from dropping their seat back into my lap? Why does this paint job matter?

    It’s something we all need to think about. When we talk to our customers we have to talk about what matters to them. They care about cost, about the experience and they care about choice. In short, they care about themselves and their own experience and they really only listen when that’s what we say.

    Otherwise a paint job is just a paint job. And then I start wondering how much of my ticket cost went to a paint job and why? After all, a new logo on a plane isn’t like new packaging on a product. The product sits on the shelf and needs to draw my attention. It needs to be updated, modern and it needs to attract me because it’s all about me, the consumer. An airplane is different. I’ve never once looked up, seen one flying in the sky and thought, “That’s the airline I want to fly. I love that color.”

    The thing is, little changes do matter. I love it when stores post information explaining that their new refrigerated or frozen cases are more energy efficient and they explain why. It’s not a sign I read every time, but it makes something small matter to me. Likewise, when light bulbs are changed to CFLs or recycled materials are used in building materials or parking lots I like the information. I may not care that your logo is different but I do care about those other little touches.

    If you explain it and help me see why it matters it becomes more than cosmetic—it starts mattering to me. And that might create some new competitive disadvantage. If it doesn’t impact my experience I don’t know why you are talking about it.

    So here’s my advice to United. Talk to me about the really good changes you are making thanks to the merger. There are all kinds of ways that United is incorporating benefits from Continental and it’s in areas that impacts me, such as comfortable seats on long haul flights and bigger overhead storage areas. Those things matter and they’ll make me even happier to fly your airline. Put that stuff in a video and I’ll be really happy.

    But one last thing United: While walking down the aisle to my seat—21c—something amazing happened. After row 14 the numbers suddenly skipped to row 20. When I made a crack about this strange numbering to a flight attendant, she explained that United has decided to standardize the number for exit rows. From now on, apparently, rows 20 and 21 mean exits and on my 757 rows 15 to 19 ceased to exist. Now there’s a good reason to do this and it’s because frequent flyers like me love the roomier exit row seats and want to make sure they are getting those seats. But the change hardly works if United doesn’t tell anyone and just waits for us to serendipitously learn the answer.

    In other words it isn’t a benefit and it isn’t information until you tell it to me. And then it had better matter.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:
    This is a place where Michael and I differ. My feeling is that as long as United continues to give me free upgrades 25-30 percent of the time that I fly the friendly skies, they can paint the planes and number the aisles any damn way they want. And since the merger with Continental increases the number of flights upon which those upgrades may occur, I’m okay with that.

    Published on: August 23, 2011

    The Oakland Tribune reports that Andronico’s, long considered to be one of the nation’s most progressive independent specialty food retailers but recently “hobbled by a cash crunch triggered by an aggressive store expansion,” has filed for bankruptcy protection and hopes to sell itself to private investors.

    According to the story, “Andronico's said its seven stores will remain open and its 400 workers will stay on the job while the grocer attempts to work out its financial problems ... The 82-year-old regional grocery chain listed $10 million to $50 million in debts and the same range of assets, according to the Chapter 11 filing with the U.S. Bankruptcy Court in Oakland ... Andronico's is negotiating with Renovo Capital to obtain financing to keep operating during the bankruptcy proceeding. The grocer also is in talks for a sale to a private investor group.”

    However, there is no guarantee at this moment that financing will be secured or a buyer found, in which case the ability of the chain to survive would be in doubt.

    "This is a bittersweet moment in our history," Bill Andronico, CEO of the company, tells the Tribune. "We have struggled mightily to keep going, but the combination of the economic downturn and a broken balance sheet was too heavy a burden."

    In addition to the economic downturn, Andronico’s also has been struggling to combat heightened competition in the San Francisco Bay Area, from the like of Safeway and Whole Foods as well as from players such as Sunflower Farmers Market, Sprouts Farmers Market, and Tesco’s Fresh & Easy Neighborhood Markets.
    KC's View:
    In some ways, this has been percolating for a long time; Andronico’s has closed three stores since 2004 as it tried to get its economic and competitive footing right.

    That doesn’t make this story any easier to read or write. It is a shame when these things happen, especially to once vital retailers that at one point helped to define the progressive wing of the supermarket industry. There have been too many of these casualties in recent years, companies that used to be destination retailers not just for customers but for retailers from around the world looking to learn from the best, that have fallen on hard times.

    Sure, it is survival of the fittest. Law of the jungle. But the industry is creatively diminished any time one of these companies fails.

    Published on: August 23, 2011

    by Kevin Coupe

    Fascinating story in Inc. about De Santos, a high-end Italian restaurant in New York’s Greenwich Village, which has become the first restaurant in the city to run completely on iPads.

    According to the story, “The iPads can do everything associated with the day-to-day functions of the restaurant—namely, taking orders, sending them to the kitchen, and paying for the bill—but makes it simpler and much more time- and money-efficient. The customized POS system, which appears as an app on every server's iPad, can access the restaurant's table and seating chart, as well as a full visual menu from the kitchen and the bar ... With the entire menu in detail on the iPad, waiters simply choose each item from the library of menu options. Once the order is complete, it's sent wirelessly to the kitchen and bar, where the order is printed out and punched. For the waitstaff, this means no more extra trips to the terminal to repeat the full order; this technology frees up servers to see more tables, take more orders, serve more drinks, and chat with customers.”

    And, “when it comes time to pay the bill, De Santos eliminates the back-and-forth exchange of credit cards and receipts by completing the purchase tableside ... All of these efficient tools mean faster customer service, fewer mistakes, happier customers, more sales, and more overall revenue. The cost of this new system is considerably cheaper, too.”

    Receipts are emailed to customers if they so desire, though they can be printed out if necessary.

    And, it gets even better:

    “Thanks to the iPad's compatibility with Apple's other products, De Santos's owners now have more control over their restaurant than ever before. The owners...can all monitor the entire restaurant from anywhere in the world from an iPhone and receive real-time data about the restaurant's performance. Every transaction is immediately tabulated and analyzed.”

    The while story can be found here.

    This is intriguing stuff, mostly because it points to a new reality that is gaining momentum and could influence the way a lot of retailers come to market. And that’s an Eye-Opener.
    KC's View:

    Published on: August 23, 2011

    The New York Times this morning reports on how the food safety establishment seems to be caught in the middle of a perfect storm - there have been an increased number of food-related illnesses in the US, but fiscal pressures mean that the cause of food safety may face budget cuts, or at the very least a decrease in expected budget boosts.

    The irony is that last year, Congress passed and President Barack Obama signed what was described as landmark food safety legislation designed to increase vigilance and funding, and, as the Times puts it, “reduce the frequency and severity of food safety problems.”

    While the US Food and Drug Administration (FDA) is writing rules designed to meet the mandate established by the new law, there are concerns that there simply won’t be the money to implement these rules.
    KC's View:
    And then, of course, there also are concerns in various quarters that the rules may be insufficient, in other places that the rules will be too intrusive, and still others that they will be unfairly applied in a way that could benefit big players and hurt little guys, or vice-versa. And the problem is that all of these concerns could have some validity ... and are made tougher by the fact that money seems to be the biggest concern.

    Listen, it’s not just food safety. At some point, we need to start thinking - as citizens - about what is important to us, about the priorities of the government that is supposed to represent us.

    I’d put food safety pretty high on the list. I’m not entirely convinced that the way the food safety establishment is current constructed is the best way to accomplish this ... but I’m not sure cutting back on investment is the best way to do it, either.

    Published on: August 23, 2011

    Advertising Age has a piece analyzing Walmart’s US problems, looking at reasons why the company has seen stagnant or declining US same store sales for nine consecutive quarters.

    Part of the problem, the story suggests, is that Walmart no longer has the kind of low price dominance that it used to have; there are simply too many competitors - ranging from Target to Amazon, dollar stores to limited assortment stores - that are able to challenge Walmart’s “always low prices” claims on this score.

    “So what happens,” Ad Age writes, “when a brand built on low prices doesn't have such low prices anymore? People notice. That's caused some to buy less, particularly in a bad economy. So the productivity loop has morphed into a vicious circle.”

    Another problem, the story suggests, is that as store growth slowed in the US, Walmart had to increase its margins in order to meet the profitability desires of the investor class - in some ways putting the priorities of Wall Street ahead of the priorities of Main Street.

    And, analysts say, there is an addition trend working against Walmart: a feeling that “the supercenter heyday is over as boomers age out of child-rearing years, millennials delay having kids and big stock-up trips decline.” Which means that Walmart may have to move away from the supercenter-centric strategy it has embraced over the past decade because it gave the company the highest return-on-investment (ROI), and start investing in smaller stores (supermarkets and convenience store-sized units) and internet operations.
    KC's View:
    Even the Roman Empire went into decline ... and so it is not entirely surprising that a powerhouse like Walmart eventually would run into strategic issues ... especially at a time when there are so many shifts taking place in geography (people moving to urban environments) demography (boomers getting older), and culture (the embrace of the digital world by the next generation of shoppers).

    Walmart is placing some big bets when it would be easier to only hedge them, and I think this is probably the right way to go. (Not that Walmart gives a rat’s patootie about my approval...)

    Published on: August 23, 2011

    The Indianapolis Business Journal reports that Marsh Supermarkets has decided to outsource all of its distribution services to New Hampshire-based C&S Wholesale Grocers.

    According to the story, C&S will handle distribution services for all 97 of Marsh’s stores in Indiana and Ohio, managing “purchasing, inventory management and distribution of products from its distribution centers ... Marsh said 250 logistics workers will become employees for C&S and work from Marsh’s distribution centers.”

    In a prepared statement, Marsh said that “with this agreement, Marsh will be leaving the logistics business” and “will realize greater operational efficiencies and...focus exclusively on its core retail business.”
    KC's View:

    Published on: August 23, 2011

    Reuters reports that Anthony Cuti, the former CEO of Duane Reade, “has been sentenced to three years in prison for exaggerating the chain's income;” prosecutors said that Cuti “inflated income from fraudulent real estate transactions and made it appear that expenses were decreasing from 2000 to 2005 to inflate income.”

    In addition to the prison sentence, which will commence in January, Cuti also was ordered to pay a $5 million fine.

    Duane Reade has since been acquired by Walgreen.
    KC's View:

    Published on: August 23, 2011

    • The San Antonio Business Journal reports that HE Butt has acquired three Texas Albertsons stores, in College Station, Kerrville and New Braunfels.

    The Kerrville store reportedly will be converted to the HEB banner, while the other two will be closed and leased to other retailers because they are in communities where HEB has recently opened new stores.

    • The Chicago Sun Times reports that Roundy’s is scheduled to open its first Mariano’s Fresh Market supermarket in the Windy City today, the third to be opened in the region and “one of 20 it plans to open within the next five years.”

    The Chicago store is located at 3350 N. Western Avenue. A second Chicago city store is slated to open sometime next month.

    • The Grocery Manufacturers Association (GMA) and its Associate Member Council (AMC) has awarded General Mills and Batter Blaster with the 2011 CPG Award for Innovation and Creativity. The award is given annually to companies that have demonstrated creativity, innovation, and have made a significant impact on the industry knowledge base.

    General Mills and Batter Blaster were presented the awards today during the Leadership Luncheon at the GMA Executive Conference in Colorado Springs.

    • The Food Marketing Institute (FMI) is teaming with the Grocery Manufacturers Association (GMA) on a three-year initiative to reduce food waste.

    According to the announcement, the program will be guided by executives from both the retailer and manufacturer segments, and will seek to both increase composting (as an alternative to landfills) and send more non-purchased food to food banks.
    KC's View:

    Published on: August 23, 2011

    • North Carolina-based c-store chain The Pantry announced yesterday that its CEO, Terrance M. Marks, has resigned from the company, and plans to step down within 60 days. Marks said that he was resigning because of “personal considerations,” and plans to take another position in Atlanta, where his family lives.

    Marks will be immediately succeeded by Edwin J. Holman, chairman of the board, who will serve on an interim basis until a search for a replacement is completed.

    • CVS Caremark has hired Mark Cosby, formerly Macy’s president of stores, to be its new president of CVS/pharmacy. Cosby replaces Larry Merlo, who has been serving as CVS Caremark CEO since March.
    KC's View:

    Published on: August 23, 2011

    Responding to our piece about - and criticism of - Walgreen’s new “Nice!” private brand entry, one MNB user wrote:

    I haven’t seen the “Nice” design but a color scheme of Black and White harkens back to the old Generic labels which were nothing close in quality to branded.

    My guess is the packaging folks have never been to a Trader Joe’s.  They just opened one up in my area and the lines were out the door at first, now about month later the busy times right after work are still very much busier than my local supermarket.  But then they don’t just have a product line or  just a brand, it’s sort of a whole philosophy.  And an inviting, enticing, and exciting one at that.

    MNB user Richard Lowe agreed:

    I agree with you! The only one who gets private brand right is Trader Joe’s. You cannot tell and each product is better quality.

    We took note yesterday about a story that celebrated the growth of the coop grocery movement, and I noted that if I had one near me I’d be a member...but I don’t.

    Which led MNB user Brian Peat to write:

    It may not be extremely close, and I have never visited this place, but there is one that I know of.  Fiddleheads is a co-op in New London (I’m a CT native but never spent much time in that part of the state). 

    I may be partial to co-ops since I am the grocery manager at one, but at “most” co-ops I have visited, and I have toured many, customer service (mainly friendliness, willingness to help and product knowledge) outshine 90% of the “conventional” stores I have shopped at.  Neatness seems to have been the common thread of deterrents to co-ops but I have seen that improving in many areas as they get more competitive.

    And, responding to Michael Sansolo’s piece about Michael Eisner’s speech to the Grocery Manufacturers Association (GMA) this week, one MNB user wrote:

    I was fortunate enough to have worked for a man named Bobby Horowitz who was our President.  We were a VERY large successful company and his guiding philosophy was   “It is all right to make mistakes.  It means you are trying something new and different.  Just don’t make the same mistake twice.”  Somehow that was within the box and yet let us get creative also.  No appointments to see him.  Just look over your shoulder.
    KC's View: