business news in context, analysis with attitude

Published on: November 9, 2011

by Kate McMahon

Surely the Pilgrims would shudder to learn that a fully-prepared, traditional Thanksgiving dinner is as easy to order as an iPhone or a best-seller – one click online and the turkey and trimmings are delivered to your doorstep.

I recently came across such an offer on Costco.com, which promised a “Complete Thanksgiving Dinner in a Box” for $149.99, an online exclusive. While the notion of pre-cooked turkey and trimmings arriving via UPS Ground would be viewed as heresy in many American homes (mine included), the Costco deal piqued my curiosity.

And it’s a perfect example of e-commerce changing the way consumers shop, and as noted in MNB yesterday, why retailers need to keep pace with competition or be left behind. A web-surfing survey of grocery stores across the country showed many promoting fully-cooked Thanksgiving dinners through online ordering and then in-store pickup.

The Costco deal, which serves eight people, includes a fully cooked 12-pound herb-rubbed turkey, baby carrots with butter and dill, garlic mashed potatoes, green beans with almonds, sweet potatoes in maple glaze, and turkey gravy. The $149.99 price includes a bonus $20 cash card for pies or breads (in store) and shipping and handling for the 27 pounds of food. The promo reads “A complete Thanksgiving dinner ready in about an hour.”

The fine print revealed instructions for thawing the turkey (in the refrigerator for three days) and then cooking it for about an hour and 30 minutes. The sides also needed thawing, and could be cooked in an oven, microwave or on a stovetop. Convenient, yes. Appetizing, no.

More common, and much more appetizing, are the prepared meals at quality stores such as Whole Foods Market, Wegmans, Andronico’s, Lunds & Byerly’s, Bristol Farms, and HEB’s Central Markets.

While Wegmans has been offering prepared Thanksgiving-to-go for some 15 years, this marks the first year customers can both order and pay online, then pick up in the store. The Wegmans meal for 10 to 12 people – including a 12 to 14 pound cooked all-natural turkey, gravy, mashed potatoes, stuffing, green beans almandine, roasted butternut squash and cranberry-orange relish, costs $195.

At the Whole Foods, the meal for eight people with three sides, relish and gravy, ranges from $139.99 for an oven ready 12 to 14 pound turkey, $149.99 for a fully cooked 10 to 12 pound turkey, and $189.99 for a fully cooked 10 to 12 pound organic bird. And again, there is the opportunity to order and pay online, and select your pick-up time.

While checking the various websites, it struck me that somewhere short of a fully prepared meal is an opportunity for retailers to make Thanksgiving shopping easily accessible on line. I’m sure my home is like many others – all family members partake in the preparation of Thanksgiving dinner. My eldest daughter makes her signature stuffing, my youngest bakes a perfect pumpkin pie, and everyone peels potatoes.

There is joy in the cooking, just not in the crowds and hassles of pre-holiday shopping. If a store or an app maker created an easy way to order all Thanksgiving groceries in just one click, that would be a welcome new tradition.

What are your thoughts? Are you using non-traditional means to acquire or prepare your Thanksgiving meal this year? Send me an email at kate@mnb.grocerywebsite.com .

Published on: November 9, 2011

by Kevin Coupe

The San Francisco Chronicle had a story the other day that was running, in one form or another, in newspapers and news sites all over the country, reporting on a new, economic generation gap that seems to be growing in this country.

According to the story, a study from the Pew Research Center says that “the wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt. The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data being released today.”

This wealth gap is double what it was just six years ago, and five times what it was in 1985.

Now, this is not to say that either group has not been hit hard by current economic conditions...but younger people seem to be taking it on the chin more than people 65 or older. The median net worth of households headed by someone 65 or older is down 42 percent compared to 1984, while it is down 68 percent for younger-age households.

There’s an interesting comment in the story from Harry Holzer, a labor economist and public policy professor at Georgetown University: "It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them.”

Not only do these numbers suggest a marketing path that ought to be considered by retailers trying to tap into the psyche of this younger generation, but they also point to factors that ought to be taken into consideration by companies looking to hire people of this generation; there may be a fragility to their economic state that can be addressed by employers, and that can be exploited - in the best sense of the word - to create stronger connections and institutional loyalty.

Published on: November 9, 2011

MarketWatch reports that Walmart “is stocking its refrigerator cases with higher-quality beef in a bid to boost food sales, sending strong ripples through the U.S. beef market.”

The retailer said that it is “now selling choice-grade beef at all of its 3,800 U.S. locations after ramping up selections for the past three months. Wal-Mart traditionally has sold only select-grade beef, which is of a lower quality, keeping with its focus on low prices.”

Walmart said it was making the move to respond to customer demand.

Published on: November 9, 2011

The Los Angeles Times reports that both Sears and Kmart are testing out the concept of virtual shopping walls, which allow consumers to see vivid pictures of hot items and use their smart phones to scan QR codes to place orders that can either be picked up for delivered - a concept that Tesco pioneered in South Korea.

In the case of Sears and Kmart, they are testing the concept in a variety of different venues - malls, bus shelters, subway stations, airports and movie theaters.

Published on: November 9, 2011

The Boston Globe reports that Ahold-owned Stop & Shop “is gearing up for next week’s grand opening of a new state-of-the-art store in Chelmsford (Massachusetts) that includes such firsts for the chain as an in-store nutritionist and a Tree House, an area where Stop & Shop minds the children so their parents can go grocery shopping.

“Also new: Curbside pick-up. Customers can order online, then pick up what they ordered without leaving their cars.”

The opening comes about a month after Wegmans opened its first Massachusetts store in Northborough, which is about a half-hour southwest of Chelmsford.

Published on: November 9, 2011

The Wall Street Journal has a story about a new report from Forrester Research suggesting that the daily deal sites such as Groupon and Living Social “face challenges that threaten to slow down, if not end their businesses.”

The biggest challenge? “These sites depend on merchants, mostly small businesses, to partner with them to provide deals. If the merchants realize that they’re just cannibalizing full-price shoppers with the daily deals, they won’t use the sites anymore and poof goes the daily-deal industry.”

According to the story, “Some 51% of customers who buy offers from daily-deal sites, such as Groupon, or from flash-deal sites, such as Gilt, say they would’ve purchased anyway without the offer.” And “56% of subscribers to deal sites say they check the sites to see what offers are available before purchasing from traditional retailers or service providers. The deal sites turn people into ‘deal-hunting gremlins’ who buy goods and services only when there’s a special.”

Published on: November 9, 2011

The Seattle Times reports that Costco got its money’s worth yesterday when 60 percent of Washington State voters cast their ballots in favor of an initiative that gets the state out of the liquor business and allows private retailers to sell spirits. The new law takes effect in June 2012.

The story says that “the state budgeting office figures the number of outlets selling liquor will jump from 328 to 1,428. It also expects the change to generate an average of $80 million more in annual revenue for the state and local governments over the next six years.”

Costco reportedly spent $22.5 million supporting the initiative and was by far the largest contributor to the cause.

According to the Times, “The coalition against I-1183 was financed mostly by wine and liquor distributors, who fear that liquor and wine deregulation in the measure will spread to other states ... Distributors particularly dislike that I-1183 allows retailers to buy liquor directly from distilleries. Since Prohibition ended, states have required retailers to go through distributors for liquor, and experts say Washington now might be the only state to tear down that law.”

Published on: November 9, 2011

• TMNG Global, a provider of professional services and software solutions in the communications and digital media arena, is out with a white paper analyzing the opportunities and challenges of mobile marketing.

In short, the white paper suggests that “a crowded and complex ecosystem of technology, Internet, financial services companies and wireless carriers is vying to take advantage of the nascent mobile commerce (mCommerce) opportunity,” and that “while the widespread availability of NFC (Near Field Communications), a wireless technology that facilitates contactless payment, will support the development of many mCommerce services, service adoption will ultimately depend on how consumers and merchants weigh the benefits of mCommerce versus existing alternatives ... the battle for the marketplace will be won by those who overcome the twin fundamental hurdles of establishing an integrated and ubiquitous infrastructure and correctly incentivizing consumer and merchant adoption."

Published on: November 9, 2011

• Advertising Age reports that Walmart plans to “blow up” its designated multicultural marketing budget, and instead funnel the money to support multicultural efforts within its various business units.

Tony Rogers, senior VP-brand marketing and advertising, told the the ANA's Multicultural Marketing & Diversity Conference in Miami, "I've come to the conclusion that if you really want to be serious about multicultural, one way to do it is just blow up the multicultural budget ... Take the multicultural budget out of a silo and push it out into the business units. [And] you've got to protect the budget and make sure it doesn't just dissolve away.”

• Walmart has announced that “in appreciation of active and retired U.S. military personnel's service to our country, Sam's Club announces the permanent addition of a new Military Membership to our portfolio of membership offerings. When joining or renewing as an Advantage Member ($40) or Advantage Plus Member ($100) Sam's Club will provide a $15 Sam's Club gift card per primary membership to military personnel, active or retired, their spouses and civilian military employees.”

Published on: November 9, 2011

...with brief commentary in italics.

• Kroger announced that employees in its Mid-Atlantic division have ratified a new labor contract that covers 3,893 associates working in 41 stores. It includes Charleston, Morgantown, Clarksburg, Beckley, Huntington, and Parkersburg, WV; Proctorville, Belpre, and Marietta, OH; and Ashland, KY.

"We are pleased to reach an agreement that will provide our associates wage increases, high-quality affordable health care and a company-funded pension at retirement," said Jay Cummins, President, Mid-Atlantic Division.

• The Wall Street Journal reports on a new study appearing in the Archives of Pediatrics and Adolescent Medicine that suggests “it might take more than school restrictions to curb kids’ overall consumption of soda, sports drinks and fruit beverages.”

According to the story, “Researchers found the proportions of eighth graders who said they had access to and purchased sugary drinks were about the same in states that banned only soda (67% and 29%) and those that had no policy at all (67% and 26%). In states that banned school sales of all sugar-sweetened drinks, reported rates of access were about 15 percentage points lower and purchasing rates were about 7 percentage points lower.

This isn’t rocket science. If parents don’t get behind these kinds of initiatives, then all the bans in the world aren’t going to work.

I’m in favor schools being in the nutrition education business. But I think that also means teaching kids how to make responsible choices, and the importance of moderation in all things.

Published on: November 9, 2011

Got the following email responding to the decision by Raley’s to stop providing health coverage to its retired hourly employees age 65 and older, saying that its current financial situation makes it impossible to offer it as a continuing benefit:

Raley's move is so not an admirable one.  They likely think that breaking their covenant with retirees, those shoppers who buy the least and can fight the least, is ok. Not ok for the precedent and not ok for the dishonorable nature of their action. I am not retired and never worked for the company but will not support a corporation with this kind of socially irresponsible behavior.  Lost my shopping vote.  If they don't recognize that this hits a gray group larger than their helpless target and they are educated and they are wired.  Anger: the buzzword for the decade.  And the volume is just starting to increase.

I’m not sure that the decision can be cast in such black and white terms. One has to consider the cultural impact on Raley’s employees, but if this indeed is a matter of corporate survival - which is how the company portrayed it - then to have done otherwise may have been completely irresponsible. If management is doing it just to build its own margins and profits, then we have a different story ... but that’s not the message that is being sent.

I do agree with one thing you said. “Anger” indeed may be the buzzword of the decade.




Got a number of emails responding to all the tumult taking place in the banking business - including Walmart making money from its financial centers and credit unions doing better because of discontent with large banks, and the mixed benefits and problems created by the limits placed on hidden debit card swipe fees.

One MNB user wrote:

The Banks need competition. Come on People! They sell Money! Exactly how hard is that! They will try and B.S. you into saying they sell relationships etc. See how strong your relationship is when you don't have the statement to back up your loan request, no matter how much collateral you have! COMPETITION IS THE KEY TO SURVIVAL FOR THIS ECONOMY!

MNB user Andy Casey wrote:

I’ll leave whether or not Wal-Mart should be allowed into the banking world to the regulators but clearly the decision doesn’t have anything to do with protecting small banks.  As we have seen from the recent press about debit card fees, small banks aren’t the problem.

I’m not sure we should be leaving such decisions to the regulators, who have proven time and time again that they can be bought and sold.

Another MNB user chimed in:

I have to disagree with your comment on banks finding new revenues and hiding them.  I always thought the transaction fee argument was odd, as it is not the bank who is hiding the fees, it is the retailer.  I know what my bank charges me for different services and I am able to shop different banks based on my needs.  Retailers however just charge me one price - cash, credit or less likely, check.  I have no clue how much the transaction fee is because they choose not to provide that detail to their consumers.  I think transparency is needed at the time of purchase for the general public to decide if they are willing to pay the transaction fee for the convenience of credit or cash for a discount.  I continue to feel that this argument is solely between banks and retailers on who will ultimately keep my money and not an argument for lower retail prices.

It has been my impression that the bank rules prevented the retailers from making the transaction fees public.

MNB user Jesse Ehlen wrote:

Unfortunately the law isn’t just preventing the banks from “hiding” the fees, letting consumers and retailers show the banks what they’re willing to bear.  The law is telling the banks what they are allowed to charge for the service they provide.  You don’t see an inherent problem with this?

I get your point.

But I’m not sure that I have a problem with government stepping in and preventing gauging. Especially since my tax money helped to keep many of these banks afloat.
 
And, from another MNB user:

Only a dope, a true dope, like Durbin would even think that the consumer would ever see some of the debit fee reduction.  A fascist with good intentions is still a fascist.

Y’know, this is the kind of email that really ticks me off.

For the record, I thought there might be some benefit in the new law for consumers. That in part is the way it was sold. Now, I understand that things are not that simple, and that there always are unintended consequences.

But while you may be entitled to call the Senator from Illinois a dope (an adjective that could be assigned to a number of our elected officials on both sides of the aisle), I think that “Fascist” crosses the line. It lowers the level of political discourse in a way that I believe is not helpful.

And by the way, if you were to list all the business-driven trade associations and corporations that were in favor of the Durbin amendment that limited hidden and usurious swipe fees, you’d have a quite a list ... and I’m fairly sure that aren’t a lot of Fascists on their staffs.