retail news in context, analysis with attitude

Published on: September 6, 2011

by Kevin Coupe

I may not have been writing MNB over the past 10 days, but that doesn’t mean I wasn’t reading....and here are a few of the things that I noticed that opened my eyes....

• The pace of change... On Sunday, New York Times columnist Tom Friedman was on “Meet The Press” discussing the new book he has co-authored, “That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back.” Friedman, who in 2004 wrote one of the best books about change - “The World Is Flat” - said that in doing research for the new book he was astounded by one discovery, saying...

“I went back to ‘The World Is Flat’ and I looked in the index, and I realized that Facebook isn’t in it. When I said the world is flat, Facebook didn’t exist, or for most people didn’t exist. Twitter was a sound. The cloud was in the sky. 4G was a parking space. Linked in was a prison. Application was something was something you sent to college, and for most people ‘skype’ was a typo. That all happened in just the last seven years, and what it has done is take the world from connected to hyper-connected.”

It is extraordinary, when you think about it, how many things we take for granted are just a few years old ... and how fast we have to keep moving just to keep up, much less get ahead.


• Mixed messages... Advertising Age had an interesting assessment of what ails Walmart these days, suggesting that the company took its eye off the ball when it changed its message from “always low prices” to “save money, live better.”

And here’s where the rubber meets the road in this particular critique:

“What makes Walmart a powerful brand is the guarantee inherent in the name that it has the lowest prices. Always.

“So what is Walmart doing now? Advertising a ‘guarantee to match competitor's prices.’ Wait a minute, I thought the low-price guarantee was met by just walking in the door? Advertising that you will match prices is the same as admitting you might not always have the lowest price. Not a good direction for a brand like Walmart.”

That seems like such a simple observation, and yet it is one that seems to have escaped the folks in Bentonville. And the timing of the shift in emphasis - coming at roughly the same time as a recession made low prices more important, not less - seems to have undermined Walmart’s story.

As we always say here on MNB, every store has to tell a story. And when you lose control of the narrative, you lose your marketing momentum.

• What we can learn from the food truck phenomenon... I loved this description, from the Harvard Business Review, for at least some of the reasons that food trucks are all the rage these days - beyond the fact that Americans are suckers for a good culinary trend:

“Food trucks are also exercises in two kinds of fusion. The food is enthusiastically combinatorial. Korean meets tacos, and that's just for starters. Plus, these trucks are designed to fuse neighbors and neighborhoods.They take customers to parts of the city they might not otherwise visit. And those very long lines bring together people who would not be within conversational range of one another. Food trucks are a little like food processors. They are mixing both cuisines and city life.

“Food trucks are good at Culturematic economics. They keep risk small. The average restaurant costs hundreds of thousands to open. The average food truck costs tens of thousands. And food trucks are good at discovering hidden value. They help themselves to cityscapes, as if scouting film locations.The mise-en-scène is urban, dramatic, and, with the exception of the occasional parking ticket, absolutely free.”

The analysis goes on:

“What can we learn from the food truck? What are the cultural trends and trajectories in evidence here? Consumers are telling us that they prize drama over utility, scarcity over ubiquity, novelty over the guaranteed sameness of the national brand. They want brands that are porous to the world, that integrate with the world. They are prepared to embrace brands that take a little more effort, especially if that effort rewards them with something that is exciting and rare.

“Yes, consumers are willful and contrary. But in the process they are signaling us that the old rules of innovation, marketing, and retail (keep it simple, make it cheerful and unmysterious, lay it on everywhere, and lead with the functional benefit) are now in shambles. The world is changing.”

And if you’re going to take advantage of these changes and be relevant within their context, you have to keep your Eyes Open.

• Succession decisions...There’s been a ton of coverage of Steve Job’s stepping down from the CEO job at Apple, and the succession of Tim Cook to the top job there. It won’t surprise anyone who reads MNB on a regular basis that this particular observation from Wired caught my eye:

“Those who follow Apple know Tim Cook has been an active contributor to Apple’s success in his role as chief operating officer. He is credited with working aggressively to lower Apple’s hardware and gadget prices and making deals with component suppliers to give Apple an upper hand in the market. He is gruff and assertive in person, but that seems to make people feel secure. This no doubt is part of the reason Apple has been slowly introducing Cook to the public through Apple keynotes in recent years.

“In the public’s eye, Cook has become the Riker to Jobs’ Picard — and people generally like Riker. There may be no way to truly replace Steve Jobs, but Apple knows that publicly supporting Tim Cook is, at the very least, good PR.”

Yes, it’s good PR. But also a very good decision, especially if you follow the metaphor.

Because, as Michael Sansolo pointed out to me, Riker is not just an effective first officer capable of command. He’s also the guy who defeated the Borg.

• What a picture is worth... In his blog, marketing expert Bruce Turkel observed that this summer there has been a “rash of Millennials hurting themselves or dying preventable deaths falling off of waterfalls, mountains, and bridges.”

Turkel writes, “Authorities are desperately searching for answers to explain the recent rash of deaths. In other words, what the hell is going on?

“The common factors between many of these recent accidents are the age of the victims and that several of them were venturing into spots they didn’t belong so they could take photographs ... Why the sudden need for these pictures of daring-do?

“To post on Facebook, I’m sure. Today’s Millennial generation doesn’t merit an experience for the value of the experience itself; rather they value the documentation and distribution of those experiences on social media sites such as Facebook. In other words, an activity is not real unless someone else sees you do it.”

Turkel acknowledges that this is an alarming trend in all sorts of ways, but that there are marketing lessons to be learned, that “there’s an important seismic shift occurring here.

“If young consumers are risking their lives to share the evidence of their exploits then surely this behavior will manifest itself in other areas of their lives, including their purchasing tendencies. This should be a wake-up call to marketers, especially older, less tech-savvy ones, who pooh-pooh online marketing and communities. Companies must create opportunities for their Millennial customers to interact online and share their product-centric experiences.

“For example, cruise lines must provide online posting sites; hotels and destinations need to allow their customers to show and tell both their upcoming plans and their experiences; and banks and restaurants alike need to post and link photos and recaps from their networking opportunities. In fact, businesses in all verticals must find opportunities for their Millennial customers to express themselves and communicate with their cohorts.

“After all, while Millennial customers may be less brand loyal than their older peers, they’re just dying to be in Facebook.”

And that’s an Eye-Opener.

• Age-old wisdom... Finally, there’s my new hero. Alan Moore, who happens to be a placekicker for Faulkner University in Alabama. He’s on the roster for the school’s football team, and is expected to play when the Faulkner Eagles begin their season on September 10.

Here’s, you’ll excuse the pun, the kicker.

Alan Moore is 61 years old.

He played college football for one year, in 1968, for Jones Community College, then went to Vietnam for an 11-month tour of duty. When he returned stateside, he started working construction...and didn’t stop or even consider a return to college until he got laid off when the recession hit.

Moore then started thinking about going back to school, and got the itch to kick. He was eligible, but no NCAA school would take him, so he found Faulkner, an NAIA school that was willing to issue him pads and allow him to try out for the team.

Which, as of now, he’s made.

Moore says he’s not sore from practicing, and doesn’t even mind that his fellow players refer to him as “the old man.” One problem - it took some time for the team’s coach to stop calling him “sir.” But it took the coach less time to recognize that talent isn’t measured in years...which is an eye-opener.

Published on: September 6, 2011

The San Francisco Business Times reports that there are at least three potential buyers for Andronico’s Markets, which filed for bankruptcy protection last month and announced that the seven-store Bay area chain is for sale.

According to the story, the leading candidate is Renovo Capital, which already has given the upscale grocery and specialty foods chain a $5 million cash infusion in the form of a loan, and owns $29 million in the company’s secured debt. Renovo would pay $40 million for the chain and leave Bill Andronico, the current CEO, in place.

The other prospective buyers have not been identified.

There is some urgency, as Andronico tells the Oakland Tribune, "We are in a cash squeeze ... We need to complete a sale in October."

Published on: September 6, 2011

Jim Sinegal, the co-founder of Costco and since 1983 the CEO of the company, announced last week that he will step down from the job on January 1, and will be succeeded by Craig Jelinek, Costco’s president/COO.

Sinegal said he plans to remain on the board through January 2013 to help with the transition.

Published on: September 6, 2011

The Chicago Tribune has a story about the problems often encountered by supermarkets going into so-called “food deserts,” or neighborhoods generally abandoned or ignored by traditional food stores. The Trib uses as an example Maywood Market, about 10 miles west of downtown Chicago, which opened about a year and a half ago and is “the first full-service grocery of its size to serve Maywood residents in more than 15 years,” and “has been slow and shows no promise of picking up.”

According to the story, “The owners' experience underscores the promise and the problems that can arise when such stores open in so-called food deserts — often low-income communities where residents have trouble finding fresh foods. Their success or failure often hinges on a sobering array of intangibles that include income levels, eating habits and the proximity of fast-food restaurants, experts say.”

Co-owner Bob Haralambopoulos says that “the problem partly stems from the struggling economy and the long-held ritual of many residents to travel to nearby suburbs to satisfy their grocery needs.” In addition, he says that “it's not so much the lack of customers that's the problem now, but how much they spend.”

The intentions seem good ... but the question seems to be whether Maywood can hang on long enough for the numbers to begin to make sense.

Published on: September 6, 2011

The Wall Street Journal reports that Amazon.com is working on a major site redesign that “should be easier to use with a tablet computer.

According to the story, “The revamped site, which will be rolled out gradually, is less cluttered and has more white space and fewer buttons.” The redesign also reportedly “emphasizes digital goods, like e-books, music, video and software, over such physical goods as toys, clothing and sports equipment.”

The timing is said to be focused on an expected introduction by Amazon of its own tablet computer, designed to compete with Apple’s iPad and provide a more comprehensive experience that its Kindle. “The redesign also marks a shift toward Amazon giving its own digital products more prominence over products from other companies,” according to the story.

There also is another intriguing report circulating on the internet that Amazon plans to begin testing what is being called an “experimental delivery locker” at at least one 7-Eleven store in Seattle; it will have 40 drawers that can handle envelopes and packages of varying sizes, and customers choosing this option will be given a code number allowing them to access specific drawers for a period of time - they’ll be able to place an order with Amazon and then, conceivably, pick up their products on the way home from work.

Published on: September 6, 2011

• The Los Angeles Times reports that the California Assembly has followed on the heels of the State Senate and passed a bill that would require “Wal-Mart Stores Inc. and certain other mega-retailers (to) conduct economic impact studies before local governments approve proposals to build big-box outlets that sell both general merchandise and groceries.”

The only thing that remains is for Gov. Jerry Brown to sign it. Or veto it. And at this point, it is unknown what he will do.

As the Times writes, “The legislation is one of several pro-union bills heading to Brown this session by the Democratic-controlled Legislature. Brown, a Democrat, has taken no public position on any of them. However, earlier this year, he surprised the politically influential United Farm Workers union by vetoing a bill that would have made it easier to organize agricultural employees.”

Labor unions and small business owners have supported the bill, saying that companies like Walmart have an ultimately deleterious effect on local businesses, traffic, and infrastructure. Walmart, not surprisingly, argues that the legislation is anti-competitive and anti-consumer because it creates an environment that limits the number of choices available to shoppers.

Published on: September 6, 2011

• The New York Times had a piece about Tesco’s US division, noting that Fresh & Easy Neighborhood Markets “is trying to capitalize on the cultural and economic trends that have brought huge changes to the local grocery store business over the past five years. Squeezed by expensive purveyors of organic, local and artisanal products on the high end and discounters like Costco and Wal-Mart on the low end, as well as a slow economy, traditional supermarket chains are reeling, with store closings and bankruptcies sweeping the sector.”

The Times coverage is keyed to Fresh & Easy’s entry in the Northern California market, which has been marked by an aggressive marketing campaign with advertising slogans such as “wholesome food, not whole paycheck,” targeted at Whole Foods, and price comparisons against Safeway.

• Fresh & Easy Neighborhood Market and REC Solar, a provider of home and commercial solar electric systems in the United States, have unveiled 11 rooftop solar installations in Phoenix and Los Angeles. The systems will produce 746,000 kilowatt-hours (kWh) of electricity annually to meet approximately 20 percent of the stores’ energy production needs — equivalent to reducing 26 million pounds of greenhouse gas emissions, or, the company says, eliminating 38 million miles driven by cars over the next 25 years.

• Marketwatch reported that Tesco is pulling out of Japan, “joining a growing list of Western grocery behemoths who have struggled to entice shoppers in the Asian economic powerhouse.”

"We have concluded that we cannot build a sufficiently scalable business," CEO Philip Clarke said in a prepared statement. "It has proven very difficult to shift consumers from the stores that they use. You are competing with some extremely large Japanese retailers, both national and regional."

Published on: September 6, 2011

The New York Times reports that the US Postal Service (USPS) “ is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.”

USPS officials are hoping that the US Congress - which is seemingly unable to agree on anything - will allow them to take the desperate measures that they believe are necessary to save the postal system, including “eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.”

The post office has two problems. One is that revenue is down, because it is getting squeezed by email on one end and FedEx-like companies on the other. And the second problem is costs - the USPS expects to run a $9.2 billion deficit this year, and has labor contracts and benefits commitments that are said to be so generous that they are putting the post office out of business.

Published on: September 6, 2011

• The St. Louis Business Journal reports that Schnuck Markets “is selling nine grocery stores and eight gas stations in Memphis to Kroger,” a move that “will mark the St. Louis-based grocer's official exit from the Memphis area.”

According to the story, “The remaining three Schnucks locations in the Memphis area will close within 30 days of the sale ... Kroger said it will convert and rebrand the stores in the coming weeks. Kroger currently operates 37 Memphis-area stores. That number will jump to 43 with the acquisition, after the grocer closes two existing Krogers to make way for the new Schnucks.”

• The Los Angeles Times reports that “Del Monte Fresh Produce has filed a lawsuit against the Food and Drug Administration, claiming it and public health officials weren't thorough in their investigation of a salmonella outbreak blamed on the Florida company's imported cantaloupes.”

According to the story, “In July, the FDA, concerned about contaminated fruit getting into the U.S. food system, issued an alert blocking the import of cantaloupes from Guatemala. That cut off about 27% of the cantaloupe supply Del Monte imports into the U.S., according to the suit the company filed last week against the FDA in a Maryland federal court.

“Del Monte claims in the suit that there was no physical sample that proved the Guatemalan cantaloupes were to blame, and the company asks that the alert be lifted.”
• The Associated Press reports that McDonald’s has begun displaying calorie counts for each of the items sold in its more than 1,200 restaurants in the UK, “as part of a government-led program to fight obesity and promote healthier eating.”

The fast feeder already posts the information in New York City and other US locales where the law requires it, but the UK effort is voluntary. According to the story, “Aside from calorie labeling, McDonald's has also promised to remove artificial trans fats from its products, although it did not sign up to a salt reduction pledge.”

KFC, Pizza Hut and Starbucks are among the other chains aligned with the government effort.

• Bloomberg reports that France-based Carrefour “may sign an agreement this month to buy Argentine supermarket chain Eki,” as it gets close to concluding negotiations that began four months ago.

• The Los Angeles Times reports that the California state Senate has voted “to ban the plastic chemical bisphenol A, also known as BPA, from baby bottles and sippy cups sold statewide.” The bill now goes back to the state Assembly for a vote on amendments attached to the bill by the Senate.

Published on: September 6, 2011

• Golub Corporation/Price Chopper Supermarkets announced that Paul Gillis has been promoted to the position of Director, Center Store focusing on grocery food merchandising.

The company also announced that Michael DeSimone, manager of General Merchandise Sales has been promoted to the position of Director, Center Store focusing on General Merchandise and non-foods.

Published on: September 6, 2011

Don Haggen, who with his brother Rick helped to grow Haggen Inc. to be the biggest independent grocer in the Pacific Northwest, passed away on August 26 after a brief illness. He was 80 years old.

Published on: September 6, 2011

John Zupan, the founder of Oregon’s Zupan’s Markets, passed away last week from injuries received when his motorcycle was hit by a drunk driver.  Here is how the Oregonian reported the story:

“The founder of Zupan's Markets died Tuesday following a crash in which his motorcycle was hit head-on by a motorist on Northeast Marine Drive, a nursing supervisor at Legacy Emanual Medical Center said this morning.

John Zupan, 66, was westbound near Northeast 138th Avenue when he was struck by a car driven by Edy Porfirio Reynoso-Ramirez, 32, the Portland Police Bureau reported.

“Police said the 1998 Honda Civic was speeding in the eastbound lane of Northeast Marine Drive, driving erratically and passing other vehicles. Reynoso-Ramirez was booked into Multnomah County jail and faces allegations of assault in the second degree, failure to perform the duties of a driver, DUII and reckless driving.”

Published on: September 6, 2011

Back before MNB went on vacation, it took note of a Detroit Free Press report that bar and restaurant owners in Michigan, annoyed by a smoking ban that prevents people from lighting up in the workplace, have decided to strike back by banning all lawmakers who voted for the ban from patronizing their establishments.

My response:

Jeez, guys. Join the 21st century. Workplace smoking bans - which prevent the vast majority of people from having to inhale second hand smoke that comes from products specifically designed to kill people - are ubiquitous around this country ... and in my view, represent one of the best cultural shifts to happen in the last couple of decades.

If I lived in Michigan, I’d probably boycott any establishment that banned the legislators.

MNB user Jesse Ehlen disagreed:

I’m not a smoker either, but for selfish reasons, love my city’s smoking ban.  However, the free-marketer in me believes that establishments solely dedicated to the serving of alcohol should be able to choose whether or not to allow smoking; customers will either flock to, or stay away, based on that decision, as they do with other attributes like location, food selection, and crowd make-up (incidentally, all things that can be bad for your health as well…).

And let’s be intellectually honest here: the comparison of smoking bans in the workplace, and other public places, with those in taverns is obviously not apples to apples.  I have to go to work, and once there, I’m a captive audience.  It’s not like I could go to the non-smoking office, or the smoke-free airport, down the street…

And another MNB user concurred:

I have to totally disagree with you. I am NOT a smoker but if bars and restaurants want to allow smoking in their establishment they should have the right to. These are privately owned places and the public can choose to patronize the bar based on the place allowing or not allowing smoking. We don’t need the government telling ‘adults’ how to live their life. What’s to say that next time the government will tell people they can’t smoke in their house, car, backyard….

But another MNB user wrote:

I agree with your thoughts on the smoking ban discussed today regarding the idea that bars would ban Michigan lawmakers because they voted for the smoking ban.  A few years ago I was presenting our technology solution to a convenience store retailer (who shall remain nameless, as should I in this story) and I mentioned that one of our customers was Marriott.  The room instantly got quiet and one person commented that Marriott wasn't appreciated in their company and if, in fact, an employee stayed in a Marriott hotel then their expenses would not be covered.  Intrigued by this response I wondered aloud what Marriott must have done to them to provoke such a strong reaction.  The reason: Marriott had banned smoking in all of their hotel brands in all rooms and, since C-Stores still make a tremendous amount of money on tobacco, they wouldn't support the brand.  In my mind I realized that with thinking like this, the company was not on track to become one of the innovative leaders in the industry. 

When I look at the leaders in the space, companies like Sheetz, Wawa, Chevron's Extra Mile, and QuikTrip, what I see is brands that are realizing the attraction and margin to be derived from tobacco products is going to go away over the course of time, so they are creating an experience that shoppers can appreciate without the need for a tobacco fix.  You can either stick your head in the sand and cling to the past or embrace the future.  Finally, I'll admit that I wanted to ask whether the company would pay for airline expenses anymore, but I decided it wasn't in the best interest of the sale there.

MNB user Don Bachman wrote:

Owners need to move forward to the 21st century get with the times. Smoking is unhealthy and annoying to people who don’t smoke.

The customers will return in time.

If the Restaurants follow and enforced the Ban customers will return and enjoy the food, drinks sports and company even more than the past. Customers who don’t smoke will also return to the Restaurants, Bars and Night Clubs.

Smoking is no longer the cool thing to do.




I spent a lot of time before going on vacation talking about the importance of creating “Wow!” moments, and MNB user Rob Johnson agreed:

As an ex-retailer, I remember creating moments of wow that was both fun and exciting for the customer and our store.  One such moment actually was used as a national radio spot.  Since creating moments of wow is never associated with creating profit there seems to be a tendency of not seeing the big picture; these moments are not creating profit they are creating advocates – connected customers.

The stories of wow will long continue after the pennies of profit are collected by those who are not seeing the big picture.

MNB user Curt Lindy wrote:

Yes, wow moments are special and should be spoken about and the checker certainly went well beyond the norm to improve your shopping experience and reinforce that particular store image and is what  most management teams can only dream about.

The culture of that store must be special to allow the checker to do it on his own for his customer. You personally can share these moments being a reporter/commentator to a broad audience and we as individuals can all create the wow moments as we shop and work in the trade or elsewhere highlighting employees/associates that really go beyond what is expected in their jobs and tell the store management about things that are working very well , they need to hear it. I personally  have doing this for years and it is interesting on how the  store managers, DMs etc react when you speak to them on something that is not wrong but that is a story for another day.




Finally, I also continue to get email about Starbucks CEO Howard Schultz’s efforts to get companies to stop making political contributions until the partisan gridlock in Washington, DC, is reduced and actual progress is made.

One MNB user wrote:

What is so wonderful about Schultz's boycott is that it is itself non-partisan, and really gets to the heart of the problem - the obscene spending in support of political issues and buying of elections - that is the root cause of the gridlock in Washington and our states. I suspect a lot of less news-worthy readers like myself are personally supporting the boycott.

But MNB user Don Wilson disagreed:

Your policy is exactly what is wrong with our political system, the inability for many to discern what is going on in Washington.  Finally we have enough elected officials in one branch of the Congress willing to take on Washington's spending problem and all you can see is a lack of bipartisanship.

You guys are like the school administrator that punishes both the bully and the kid that finally strikes back as if both are equally guilty.  We have members of one party calling members of the other party "terrorists", "hostage takers" and "the enemy".  You are either ill-informed or aren't smart enough to know which elected officials we need to support in order to get our economy back on track. 

Wake up and smell the coffee, we have a government spending problem that is driving our economy over a cliff.  Businesses should be rewarding politicians that are promoting solid economic policies.

So if a person disagrees with you - or is willing to even consider the possibility that there are good ideas to be found on either side of the political aisle and that ideology is just a substitution for actual thought - that means they are either ill-informed or not smart enough?

Hard to imagine why civil discourse seems to be in short supply...

I would absolutely agree that much of the language and characterization go over the line ... on both sides of the aisle. I’m not sure that calling one side “terrorists” is any better or worse than calling the leader of the other side a “socialist.” Just like neither side should ever suggest that it has a monopoly on patriotism or love of country. It is just nonsense.