retail news in context, analysis with attitude

Published on: September 8, 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 either...it is up to you. I look forward to hearing from you.

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

My kids might disagree with this, but I like to think that I have a capacity for personal growth. I have a lot of strong opinions, but I’m willing to change them if I’m proven wrong.

For example: the wristwatch.

It was on January 20, 2006, that I commented here on MNB about a story saying that “younger people are abandoning them because they are too low tech, limited and inconvenient. After all, for the most part, all they do is tell time…which isn’t nearly enough for a generation in love with its iPods.”

I wrote then:

“I have to admit that I don’t understand this. My teenaged sons don’t wear watches, though my 11-year-old daughter does. Which explains why she’s more on time for stuff.

“It doesn’t matter to me what other technologies may be available. I always have a watch on. Hell, I’ve been wearing for 25 years the same Seiko that my wife (then girlfriend) gave me in 1980. I like its dependability, its ubiquity. I worry about a generation of people that don’t wear watches.”

Things have changed since then.

I’ve conceded here in the past that I was wrong to worry about a generation that doesn’t wear wristwatches. After all, what matters is that they know what time it is when it matters, not how they find out what time it is. (Just as it only really matters that people continue to read books, not whether those books are published on paper.)

Interestingly, one of my son has started wearing a watch. We got him one for Christmas last year, and it is almost never off his wrist - he says it makes him feel like an adult, and at 22, that’s a good thing.

My daughter, on the other hand, not so much. Sometimes, but more as a fashion statement than as a timepiece.

I’m still wearing a watch my wife got me ... those she did get me a new one a couple of years ago. That old Seiko, however, is still ticking and I wear it frequently.

I started thinking about this the other day when I read a piece that the always interesting David Pogue wrote on the New York Times< website about a class he was teaching at the Columbia Business School called “Consumer Tech: What Makes a Hit a Hit — or a Flop a Flop.”

One of the things he did with his students was challenge them to create a wristwatch that was relevant to how they live their lives ... and he was fascinated by what they came up with. There were ideas like watches with built-in trackballs that allow you to navigate menus. Or watches that were flippable, with a timepiece on one side and a little computer screen on the other. Or watches that would respond to verbal commands. Or watches with touch screens rather than dials or digital displays.

His point was this. In the end, no matter what business you happen to be in, you have to constantly reinvent yourself - or at least be willing to - if you are going to be relevant to consumers, who themselves are reinventing themselves every day. And to do so, you have to be willing to look outside your discipline, outside traditional boundaries, to find answers to important questions you may not even be asking.

It doesn’t matter what your watch says or does. Time marches on, whether you are paying attention or not.

That’s what is on my mind this morning, and as always, I want to hear what is on your mind.

Published on: September 8, 2011

by Kevin Coupe

ConAgra got a lesson in 21st century transparency recently, according to a story in the New York Times, when it sponsored a dinner for New York area bloggers.

The bloggers received invitations to dinner at a Manhattan brownstone, and were promised that they would enjoy a “delicious four course meal,” sangria made by TV chef George Duran, an education in food industry trends from “Supermarket Guru” Phil Lempert, and “an unexpected surprise.”

The surprise, as it turned out, was that the lasagna served was “Three Meat and Four Cheese Lasagna by Marie Callender’s, a frozen line from ConAgra Foods,” the Times writes. “Hidden cameras at the dinners, which were orchestrated by the Ketchum public relations unit of the Omnicom Group, captured reactions to the lasagna and to the dessert, Razzleberry Pie, also from Marie Callender’s.”

The story notes that this kind of scheme had been done before, by companies such as Pizza Hut that used the results for commercials. But the difference was that those events were attended by regular consumers - not by bloggers who see themselves as journalists, some of whom reacted angrily and publicly to what they viewed as a deception.

The story reminded me of an old story that I heard years ago - about how Citibank decided to test the notion of charging customers who used a real live teller as opposed to an ATM, but did so in the Upper West Side neighborhood in Manhattan that had the highest concentration of New York Times reporters. The journalists were not amused, they wrote about the test in not-very-complimentary terms, and the initiative soon died.

I’m not sure if this story is true or just apocryphal, but the ConAgra situation points out a 21st century reality - that these days, everybody has to be treated like they are a New York Times reporter. If you do something that people see as deceptive or dishonest, the odds are that it will become very public very quickly. And suddenly you’re doing damage control and answering questions from actual Timesreporters.

In some ways, it’s too bad. You have to be so careful about such things that it is almost inevitable that innovation could be stifled, because a failed effort could become as public as a success.

And while I probably would have not been amused had I traveled into NYC for what turned out to be a warmed up lasagna dinner, I’m sympathetic to ConAgra, its agency, and to Phil Lempert. (Full disclosure: Phil is an old friend of mine, and I wrote for “Supermarket Guru” for a number of years.) The blogging world remains new territory, and it hasn’t been fully mapped out yet ... which means that it is a lot more likely that people may stumble along the way. They weren’t doing anything malicious. They just misjudged the audience. That happens.

Still, it is an important and Eye-Opening lesson. When it comes to transparency, the best policy is to try to anticipate every possible reaction ... and to know that sometimes, things come around and bite you on the .... well, you know.

Published on: September 8, 2011

Interesting confluence of stories this week as the Washington Post writes about how “Wal-Mart has been fusing innovations from the mobile and social-networking worlds to create the foundation for a radically new type of hyper-personalized shopping experience.” Meanwhile, Reuters reports that Amazon has created a new Social Games Group internally, and is “stepping up social media efforts after the largest Internet retailer partially missed one of the hottest technology trends of recent years.”

According to the Post, Walmart’s focus on the bricks-and-mortar world means that it makes sense for it to explore “acquisitions as a way of catching up with competitors such as Amazon. With deals for social media start-up Kosmix ($300 million) and video download platform Vudu ($100 million), Wal-Mart might just be the Biggest Start-up in Silicon Valley You’ve Never Heard Of.

“Not only is the company becoming a leader in digital movie downloads with Vudu, it is also pioneering the integration of social data into the e-commerce experience. This goes way beyond just grafting on Facebook ‘like’ buttons to an e-commerce shopping cart. It means the full embrace of Big Data — something that Wal-Mart has lots of — as a way of learning about customers and making the shopping experience that much better. In short, Wal-Mart is using Kosmix (a.k.a. @Wal-MartLabs) to fundamentally change the shopping experience by taking what it knows about your digital and mobile behaviors and transforming that into hyper-personalized offers, promotions and discounts.”

Published on: September 8, 2011

Investors Business Daily reports that Dollar General is launching a new e-commerce site today ... and that “its Web store will offer somewhat pricier and higher-quality products than can be found in its 9,600 physical stores.”

The bet, analysts say, is that Dollar General will be able to make more bulk sales online, with higher value orders that will justify whatever shipping costs are built into the system.

It also is seen as a way for Dollar General to attempt to widen its customer base, since many of the core customers that use its bricks-and-mortar locations may either not be computer savvy or have regular access to a computer.

Published on: September 8, 2011

The Sacramento Bee reports that Amazon.com has reached a tentative agreement with the state of California to stop fighting a new requirement that it collect sales taxes on all online purchases made in the state.

The bad news, according to the Bee: “California would not collect $200 million in tax revenues that the state had projected in the current 2011-12 fiscal year. The state has already fallen behind its projections for total revenues in June and July.

Under the deal, the report says, the online giant won’t be required to collect sales tax for one year, until September 2012. The arrangement is structured to allow Amazon and other online retailers time to lobby the US Congress for a national online sales tax, which they say they prefer because it is easier to manage and administer.

Published on: September 8, 2011

The Los Angeles Times reports that the Los Angeles City Council will consider a proposal that would ban all single use shopping bags - paper and plastic.

The story notes that “the proposal goes beyond similar measures taken recently by other California cities and counties. Although L.A. County, Santa Monica and other municipalities have banned plastic bags in recent years, most have allowed stores to sell paper ones for a small fee ... Under the L.A. proposal, stores would be permitted to give away or sell only reusable tote bags, or risk a fine. An exemption would be made for small plastic bags meant to keep raw vegetables and meats separated from other groceries to prevent cross-contamination.”

Published on: September 8, 2011

Advertising Age reports that a new study from Catalina Marketing suggests that “the top 100 packaged-goods brands saw reduced loyalty from 46% of their loyal consumers in the past year, exacting a steep toll on sales.”

According to the story, “The big brands fared better than the 52% rate of lost loyalists shown in a Catalina study two years ago that looked at a broader group of 685 brands. So bigger brands commanded more loyalty -- just not a whole lot more.

“On average, the 100 brands in the study grew sales 2.2% during a 52-week period ended early July, according to Catalina. But had the brands held onto their loyalists, they would have grown an average of 8.5% more.”

The story says that Catalina “defined as loyalists consumers whose frequent-shopper data from one year ago showed 70% or more of their category purchases going toward a single brand. Reduced loyalty was defined as cases in which people who qualified as brand loyalists a year earlier reduced their share of rand purchases in the same category to under 70% during the most-recent year.”

"This is a call for brands to continue to move to a consumer-centric marketing model and away from mass-marketing thinking," Todd Morris, exec VP-brand development at Catalina, tells Ad Age. "Most of CPG and [over-the-counter] marketing is built around measures of efficiency. This data would indicate we would be better suited to move toward looking at customer lifetime value and that real revenue growth could be found in small groups of consumers who offer infinitely higher revenue potential."

Published on: September 8, 2011

The Wall Street Journal reports that Supervalu, in an effort to get rid off non-core assets, plans to sell 107 fuel centers carrying the Albertsons, Cub Foods, Hornbacher's and Jewel-Osco banners.

According to the story, “Among the buyers of the fuel centers, Tesoro Corp. will purchase 51 Albertsons fuel centers, Alimentation Couche-Tard Inc. will buy 27 Jewel-Osco centers, Holiday Stationstores will purchase 15 fuel centers and Stinker will purchase 14 Albertsons fuel centers.” The sales leave Supervalu with 27 fuel centers, for which it says it is looking for buyers.

Supervalu said in a prepared statement that “the transactions, expected to be finalized this fall, will allow Supervalu to monetize non-core assets, creating capital that the company can use to further strengthen its business. The transactions also include partnership opportunities that will result in Supervalu continuing to have the ability to offer fuel rewards programs to its customers through these existing fuel centers, and in most markets, through an expanded network of fuel centers.”

Published on: September 8, 2011

The San Diego Union-Tribune reports on a new study from The NPD Group saying that “at 52 million strong, the Millennials, ages 18 to 29, spent $73 billion last year on dining and takeout, and their spending power will only mushroom, as continued immigration fuels their growth.”

Two interest nuggets from the story:

There is a heavy use of takeout by Millennials, with “more than half of their food service dollars on ordering food to take home.”

And, while Millennials say they place a premium on healthy foods, they also say their favorite foods are french fries, hamburgers, mexican food and pizza.

Published on: September 8, 2011

• The Lakeland Ledger reports that Publix has opened a new prototype store in Valrico, Florida, described as a 54,000 square foot unit that “trades extra backroom storage space for more room on the shopping floor, which in turn allows Publix to increase its offerings in nearly every department and aisle. There are more varieties of ethnic, organic and gluten-free foods, and diverse produce choices like kohlrabi and Thai guava. The seafood department has a lobster tank and fresh sushi. The wine section is roughly double the size of those found in most Publix locations.”

• GFS Marketplace, which promotes itself as being a warehouse club store without any membership fee, has opened its first Florida store, in Altamonte Springs, with several more scheduled to open in central Florida over the next few years, the reports.

The story defines GFS this way: “GFS Marketplace, a niche player in the market, has 144 stores nationwide. Each is small, about 15,000 square feet, and sells mostly groceries. Traditional warehouse clubs offer everything from flat-screen TVs to eye exams in spaces that can reach 10 times that size. The marketplaces are a division of Gordon Food Service, the country's fourth-largest food distributor. The Michigan-based company started them years ago because its business clients — along with some regular folks — wanted to buy in huge quantities without the hassle of ordering through a warehouse.”

• The Wall Street Journal reports this morning that the Federal Bureau of Investigation (FBI) has arrested a New Jersey man and charged him with sending death threats over the internet to his employer, Danny Wegman of Wegmans. If convicted, the man could face a maximum sentence of five years in prison.

• Advertising Age reports that “despite a weakening economy, Campbell Soup Co. is not backing off its plans to plow more money into innovation and marketing and cut back on heavy discounting,” a move that means the company will continue with plans to invest $100 million more than originally planned into marketing and innovation in the current fiscal year. The effort is aimed at putting more emphasis on taste and creating for the brand a differential advantage that will get it through tough times.

CEO Denise Morrison tells Ad Age that "in this environment it is critical for us to deliver meaningful innovation focused on consumer needs and to differentiate our brands through effective marketing that emphasizes our products' tangible benefits and value relative to the competition."

• Natural Foods Merchandiser reports that a New York City law firm has “filed a class-action suit against Omaha, Neb.-based ConAgra Foods for labeling its four Wesson brand cooking oils ‘100% natural,’ even though they're made from genetically modified organisms.

According to the story, “The case may have a far-reaching impact. The Food and Drug Administration has not defined the term ‘natural’ and few rules exist for its use. Some experts feel that this lack of regulation is why ‘natural’ now appears on roughly 70 percent of processed foods and beverages, according to the Center for Food Safety.”

• The Los Angeles Times reports that Toys R Us is enhancing its site to store service, which allows shoppers to buy products online ands then pick them up at a local Toys R Us store. According to the story, “Now shoppers can designate an alternate person, such as a friend or family member, to pick up their order through ‘family and friends pick up’.

“Toys R Us also opened a new distribution center in McCarran, Nev., dedicated solely to the fulfillment of online orders. The company will also begin using store inventory from about 760 Toys R Us and Babies R Us locations to help complete online orders.”

Published on: September 8, 2011

Yesterday, MNB took note of a USA Today report that some restaurant industry players are lobbying the US Congress to allow food stamps recipients to use them at their establishments.

According to the story, “That's a prospect that anti-hunger advocates welcome, but one that worries some current food stamp vendors and public health advocates.”

The effort apparently is being led by Yum! Brands, which owns Taco Bell, KFC, Long John Silver’s and Pizza Hut.

USA Today wrote that “federal rules generally prohibit food stamp benefits, which are distributed under the USDA’s Supplemental Nutrition Assistance Program (SNAP), from being exchanged for prepared foods. Yet a provision dating to the 1970s allows states to allow restaurants to serve disabled, elderly and homeless people, USDA spokeswoman Jean Daniel said.

“Between 2005 and 2010, the number of businesses certified in the SNAP program went from about 156,000 to nearly 209,000, according to USDA data ... There is big money at stake. USDA records show food stamp benefits swelled from $28.5 billion to $64.7billion in that period.”

My comment:

This is nuts.

I know “entitlement” is a dirty word these days, and for some very good reasons. That said, people who cannot afford to buy food - and there are more of them than ever - ought to have access to food stamps.

But use them to buy KFC? Or Taco Bell?

Give me a break.

MNB user Manuel R. Reyes Alfonso responded:

Just a note on behalf of MIDA (Puerto Rico grocers and food distributors) to thank you for your recent comments regarding the use of SNAP on fast food restaurants. In the case of Puerto Rico, because of our demographics, this program could divert a potential 25% of the SNAP funds to fast food restaurants on top of another unique exception that already allows participants to receive 25% of their funds in cash.  But to give you an idea on the potential impact for local grocers, distributors and even farmers, because of the economic situation of the Island, the SNAP program represents around 1/3 of total food sales.  The Puerto Rico SNAP called NAP is the second largest state allowance behind California with a budget of around $2 billion.  This also affects mainland producers because most products are imported from the US.  But most importantly, it affects the participants health and their ability to purchase enough food for the month.  Puerto Rico has an epidemic of nutrition related diseases such as obesity, diabetes, heart, etc, that would worsen if this is approved by USDA.  Also, in the Puerto Rico Pilot program, the average expenditure per meal was $7.03 which means the average allowance would last only 10 days leaving participants without means for the rest of the month.

MNB user John Motley chimed in:

I was pleased to read your comments on yesterday's USA Today story on restaurants wanting a piece of the SNAP pie.  While the authority for states to do this for the homeless, disabled and the elderly has been on the books since 1977, it is being used only on a limited basis in certain municipalities in Michigan, Arizona and California.  Recently, it seems that YUM Brands and Burger King have decided want to push for broader use in more states and territories.  Currently, the battle is being the waged in Puerto Rico.  Puerto Rico is a unique case because SNAP recipients there already receive 25% of their benefits in cash.  Yes, that's right, in cash, and guess what, USDA says that this cash is not being spent on food.  The Commonwealth's government, urged on by the fast food industry, wants to allow ALL SNAP recipients to use their benefits to buy prepared food in fast food restaurants.  Benefits can't be used to buy a rotisserie chicken or a prepared meal in a supermarket, but they will be able to be used to buy a Big Mac or a burrito.  Most alarming is that this fast food restaurant program undermines two pillars of the SNAP program, providing healthy, nutritious food to recipients for a full month.

Kevin, NGA and a number of state grocers associations, principally Ohio, Iowa, Missouri and Wisconsin, have communicated with Congress about this assault by YUM Brands and the National Council of Chain Restaurants.  Their efforts have born fruit in the Report language accompanying the House Agriculture Appropriations bill which strongly disapproves of continuing to fund this program.

From another MNB user:

I do not support the significantly expanded use of Food Stamps in general let alone for fast food establishments. We should offer temporary help to people in need as the original food stamp program was designed. At this time food stamps are an entitlement that keeps people dependent rather than helping people through a difficult time. There is no limit to the duration of this entitlement and laws have been passed that do not consider a recipients assets including cash on hand, investments or property when determining eligibility.

But not everyone agrees:

If they use their food stamps for something like KFC grilled chicken, or Wendy's salads,  or Taco Bell Fresco (not fried or loaded with sour cream & stuff) items, they will get a decent value for their bucks.  Taco Bell prominently posts calorie values on their order board..the Fresco items are anywhere from 150 to 300 calories per item.  What is difficult, but most important, is to somehow be able to impart both  the knowledge of what's healthful and the will to adopt the healthier choices to the Food Stamp users.




Regarding the ongoing dispute between Publix and the Coalition of Immokalee Workers, which was unsuccessful in its most recent effort to get Publix Super Markets to join its Campaign for Fair Food, which gets businesses to agree to pay a penny more per pound of food, money said to go to the improve farmworkers’ financial state, MNB user Rafael Bratman wrote:

The farmworkers will eventually prevail over Publix and others based on the righteousness of their cause.  Publix is going to attract much bad publicity for this snub.  The conditions of the tomato pickers of Immokalee are the modern day equivalent of slavery...




Responding to Michael Sansolo’s column yesterday about un-common sense and the importance of diverse thinking to any business, MNB user Mike Franklin wrote:

Right-on! Everybody filters everything differently based on their experiences…but what we should all have in common is our desire to help ourselves…our families…our circle of friends…the company we work for…and our country… better. Better for everyone. Concentrate on what we have in common rather than on that with which we differ.

Another MNB user wrote:

Bravo! Mr. Sansolo!

Great article, I am not sure why I like this so much but I know from experience that different styles working together can accomplish great work.

Well as long as there aren’t too many of those “other” “style” people in my the group.
 
I hope I didn’t simply enjoy this article because we have the same or similar “styles”...



Regarding free shipping becoming more prevalent among e-commerce providers, and my ongoing contention that it will be part of the cost of doing business for any e-tailer, one MNB user wrote:

I agree with your point and would like to add one more.

The “cost of doing E-commerce” should also include the cost of collecting state sales tax, plain and simple. Even if it wouldn’t be all that simple a process it would be up to e-commerce businesses to “innovate” to make the process as effective as possible.  Then we would see if e-commerce can still compete with retailers without the “buy from me and it’s tax free” competitive advantage.




On the subject of declining American competitiveness, one MNB user wrote:

I’m surprised (and still delighted) the US has managed to hold on to a Top 5 position.  We’ve got a couple of root cause problems to fix. First, we need term limits in the Senate & House. Second, the private sector needs to balance their short term financially-centered decision making process by integrating innovation and topline growth ideation that sales & marketing functions provide. We’ve let financial incremental improvements trump prudent risk taking, so it’s no surprise we’re not seen as globally competitive. The fact is that most companies, including many who read MNB, don’t reward risk takers.




Finally, the “no smoking in bars and restaurants” debate rages on. One MNB user writes:

I think the magnitude of the response to the smoking issue is not about smoking at all – it’s about the government telling a citizen what they can/can’t do. Sadly, a point that’s been missing from the smoking discussion, and frankly a lot of other politically based discussions, is the concept of the greater good. Too often today, the arguments are individualistic and self centered, and seem to revolve around “my right to…(fill in the blank)” without regard for how exercising that right may impact others. This “my right is more important than your right” approach seems to lead to a semantic and heavily partisan discussion that, frankly, almost never has anything to do with the issue at hand. Have we forgotten the concept of sacrificing something for the betterment of society as a whole?

P.S. – My limited knowledge of law indicates that those acts which are deemed harmful/destructive to others, ! even potentially, are considered illegal (i.e. reckless driving, neglect, arson, assault, murder, etc.). Does/should smoking fall into this category? Just stirring the pot...