retail news in context, analysis with attitude

Published on: December 7, 2011

by Kate McMahon

Back in the late 1970s, Carly Simon’s hit song “Anticipation” became synonymous with Heinz Ketchup. The TV commercial was all about Heinz being “worth the wait.”

Fast forward to this fall, as the iconic brand opted to utilize Facebook to introduce a new, more sophisticated product - Limited Edition Heinz Tomato Ketchup Blended with Balsamic Vinegar. There was the much-promoted hype (and wait) for the exclusive worldwide launch available only to Heinz’ 860,000-plus Facebook fans starting Nov. 14th.

Then came an unanticipated wait, as a computer glitch prevented orders from being processed until 9 o’clock that evening.

The 142-year old company got a taste of real-time online consumer ire.

While Heinz scrambled to fix the e-commerce order tab, the ketchup community peppered the Facebook Wall with frustration. These posts succinctly summed up the sentiment of many:

“Where’s my Balsamic Ketchup?!?”

“Fix that tab! I got fries waiting!”

“Yep - got halfway through (my order) then was kicked out .... Argh!”

"Where's my ketchup!? I been up wit da chickens waitin' fer da ketchup ... where's my ketchup? ... Or in lieu of my rant, please advise, at your earliest convenience, as to the cost and availability of this new and presumed exquisite gastronomic product?”

This could have easily become yet another “social media snafu” case study – “Heinz Forced to Bottle Ketchup Launch on Facebook” read one early headline. But to Heinz’ credit, the company turned it around.

Heinz responded quickly, apologized for the technical difficulties, and then sweetened the deal. Heinz offered a free bottle of Balsamic Ketchup and free shipping to every consumer who posted on the site while it was down, and a free bottle to those who placed orders in the first day of functionality. Fans who “liked” the Facebook page got 25-cents off of their order.

Just as importantly, Heinz’ social media team jumped into the Facebook dialogue, writing more than 600 posts in response to both positive and negative comments. (Here at MNB we consistently extol the benefits of engaging with consumers online. Yet I am consistently baffled by the number of major companies with big media budgets which do not respond on Facebook, leaving the consumer comments dangling, unresolved, on the page.)

Once in gear, Heinz shipped some 16,000 bottles in the first 36 hours, and the online reviews have been overwhelmingly positive. The blend, made with balsamic vinegar instead of distilled white vinegar, is a darker red color and has a richer, tangier taste. The print ads suggest it be paired with foods such as a “Haute Dog,” “Hamburgeur” and “French Frites.”

Additionally, the online enthusiasm has already built demand for the product, which will be available this month at select retailers, including Walmart and Safeway, through March. While the classic Heinz Tomato ketchup in a 14-ounce plastic squeeze bottle retails for $1.89, this Balsamic version comes in a glass bottle with a $2.49 price tag (plus $2 shipping on Facebook orders).

Which brings us back to “Anticipation,” which has the lyric: These are the good old days.

These aren’t the good old days. Manufacturers can find ways to get their products to consumers that have nothing to do with traditional retailers. They can create demand for these products using media venues that did not even exist a few years ago. And in exchange for having such opportunities, these same manufacturers have to deal with consumer expectations in a way that is more up close and personal than ever before.

It seems like a fair deal to me. Manufacturers and retailers, however, have to anticipate every possibility, be nimble enough to respond to both positive and negative events, and engaged enough to understand the exigencies of modern brand marketing, cashing some finer day.

What are your thoughts? Send me an email at kate@morningnewsbeat.com .

Published on: December 7, 2011

by Kevin Coupe

Conceding that Netflix had shot itself in the foot earlier this year when it raised prices 60 percent and tried to separate its DVD rental and internet streaming businesses (a split that was aborted in the glare of enormous customer backlash), CEO Reed Hastings sold a media conference in New York yesterday that he continues to believe that “internet video is going to change the world in the next 20 years.”

According to the coverage in Advertising Age, “By 2016, he estimated that over half of all TV would be internet-delivered and ‘broadcast TV will decline like landline telephony.’ Potential and real entrants into the streaming market include Amazon, Verizon, Microsoft's Xbox, Apple and even Google, but Mr. Hastings said Netflix's only serious competitor today is HBO, which competes for consumer spending and, increasingly, for the rights to premium content.”

That’s right. Premium content. Which also, in this case, means differentiated content.

The story goes on to report that “Hastings said that 5% to 15% of Netflix's content spending going forward would go toward original shows,” and that he described Netflix as “the ‘Moneyball’ of content acquirers,” using subscriber data to make customer-focused decisions about programming decisions in a way that tradition broadcast companies do not.

It is an enduring lesson that MNB likes to point out whenever possible.

To really be competitive, retailers need to offer products and services that are unique to them. That can mean differentiated private brands, and also can mean services that stand out as being either original or remarkable - or both - in a marketplace. It doesn’t mean not selling national brands, but it may mean having a different take on selection or pricing - or both.

Netflix has been providing a lot of business lessons lately. Things not to do, and things to do. Offering differentiated content is decidedly a positive move for the company.

All Eye-Openers.

Published on: December 7, 2011

The Los Angeles Times reports that Amazon is offering a financial incentive to shoppers who use its price-check smart phone application to scan the bar code of a product in-store and then order it for less online.

According to the story, “The world's biggest online retailer said that on Saturday, it will give customers an additional 5% discount (up to $5) on up to three qualifying products if they simply check the price of those items while shopping in physical retail stores. Eligible categories include electronics, toys, music, sporting goods and DVDs.”

Published on: December 7, 2011

The Seattle Times reports that Starbucks has handled six million mobile payments in just the last nine weeks, or “double the volume of the first nine weeks after the system launched in January.”

One in four Starbucks card transactions is now executed via mobile, the company says.

The company also says that it has handled 26 million mobile payment transactions since the program was rolled out nationally, with the largest percentage of usage coming in New York, Seattle, San Francisco, Chicago, and San Jose.

The company also says that “lately growth has also come from ‘mobile gifting’ using the ‘eGift’ capability of the company's iPhone app,” with “mobile devices now account for 10 percent of the company's digital gift card business.”

Published on: December 7, 2011

CNN reports that “radioactive cesium has been found in baby formula in Japan following the nuclear crisis at the Fukushima Daiichi plant, the manufacturer of the product has said.”

The company said that the cesium levels were below the allowable legal limit and would not be harmful to babies’ health. However, it also said that it “would nonetheless offer free replacements of 400,000 cans of the product ‘to relieve the anxieties of our customers’.”

Reports say that the baby formula is not exported to the US.

Published on: December 7, 2011

Advertising Age reports that in China, the Xinhua News Agency is reporting that a Minute Maid dairy drink responsible for the death of a young buy was “deliberately poisoned,” that “chemicals used in pesticides were found in the contaminated drinks, but added that authorities have not yet said how the poison was added to the bottles of Minute Maid Pulpy Super Milky or who might have been responsible.”

The investigation is said to be ongoing.

The news report comes after China's National Center for Food Quality Supervision released a report “saying tests on samples from the same batch of the strawberry-flavored drink did not turn up any problems,” the story says.

Coca-Cola, which owns Minute Maid, has maintained that its safety systems are comprehensive and its products are safe, urging police to look at the incident as a criminal case not related to product quality.

Published on: December 7, 2011

The New York Times reports this morning that JC Penney is spending $38.5 million to acquire a 16.6 percent stake in Martha Stewart Living Omnimedia.

According to the story, JC Penney “as part of a 10-year partnership, plans to introduce ministores and a revamped online presence dedicated to the Martha Stewart brand beginning in February 2013, these people said. The in-store areas will be stocked with Martha Stewart products, and will have trained employees who will provide advice and tips not dissimilar to Apple’s Genius Bar concept, these people added.”

JC Penney hired Ron Johnson, the former Target executive who helped create Apple’s retailing business, as its new CEO earlier this year.

Published on: December 7, 2011

• Bloomberg News reports that New York City Mayor Michael Bloomberg (who founded the media company before embarking on a political career) has come down in favor of allowing Walmart to open stores in New York City, saying that there is “enormous” demand and that citizens “should not say no” to Walmart.

Published on: December 7, 2011

• The Wall Street Journal reports that “companies would be able to call meat ‘fresh’ or ‘low-fat’ without getting government permission for the labels, under a proposal released Tuesday by the U.S. Department of Agriculture.

“Under the ‘generic label’ plan, aimed at reducing the work load of the USDA as well as red tape for food producers, officials said they hope to minimize the scenarios under which companies are required to get agency approval for product labels. A food producer would no longer need to get USDA approval to claim that its products are fresh, for example, or ‘Italian-style’.”

• The Danbury News Times reports that “the Great Atlantic & Pacific Tea Co. and 13 branches of the United Food and Commercial Workers International Union, representing some 36,000 workers, have reached contract agreements that both sides said will help the venerable grocery chain emerge from bankruptcy ... The new collective bargaining agreements were constructed to allow A&P to rebuild and emerge from bankruptcy, while protecting jobs, medical plans and pensions, said Marc Perrone, UFCW secretary treasurer, in prepared comments.”

The agreement came after a year of negotiation and avoided wage give-backs while giving the company some union concessions in vacations and sick-leave benefits.

However, the Wall Street Journal this morning reports that Ahold’s Stop & Shop and Giant chains “are balking at A&P’s deal with its unionized employees to slash wages and benefits, claiming they may be forced to pick up the slack with respect to a multiemployer plan the three chains share.”

• The Washington Post this morning writes that the Environmental Working Group is out with a report saying that “at least three popular children’s cereals are packed with more sugar in a one-cup serving than a Hostess Twinkie, and an additional 44 are loaded with more sugar in a cup than three Chips Ahoy cookies ... Kellogg’s Honey Smacks, Post Golden Crisp and General Mills Wheaties Fuel rank as the worst offenders based on the Twinkie measure, said the study , which analyzed 84 cereals. Other brands — including Honey Nut Cheerios, Apple Jacks and Cap’n Crunch — are among the 44 cereals that have more sugar in a cup than three Chips Ahoy cookies.”

“Most parents would never serve dessert for breakfast, but many children’s cereals have just as much sugar or more,” said Jane Houlihan, senior vice president of research for the nonprofit group. “I wasn’t surprised that so many of these cereals contained sugar. I was surprised at the very high amounts.”

Published on: December 7, 2011

• Tesco said yesterday that its CEO in Asia, David Potts, will retire, and be replaced by Trevor Masters, who has been running the company’s European business.

Masters is turn will be succeeded by Gordon Fryett, who will add Europe to his existing role of leading the company’s property management strategy.

Published on: December 7, 2011

One MNB user had the following thoughts about Walmart’s online strategies and tactics:

The other issue Walmart will need deal with in getting customers to order online and pick up at the store is that most online consumers shop online for the convenience of having the item delivered to their door.  From my husband’s experience with picking up an item ordered online at Walmart and then picked up from the store, .the experience was anything but pleasant. 

First he had to discover where to pick up online orders (the "Greeter" had no idea).  Then he had to walk to the furthest point in the back of the building - which is of course closest to their store room - then wait for an employee to show up...who then had difficulty locating the item, all the while not clearly not really wanting to be there.  Basically, trying to pick up the item from the online order took longer than buying it from the store to begin with.

To be successful, they will need to bring online orders to the front of the store, to a dedicated pickup window or counter staffed by an employee with a smile who will actually be there.  The cost savings have to be significant for him to order this way again.

I hear from various sources that there is an enormous disconnect between Walmart’s brick-and-mortar business and its online business - that manufacturers, for example, that want to run a promotion on both platforms often find themselves having to run parallel promotions instead of one cross-platform effort.

Not only does Walmart have to address this issue, but every retailer with both a brick-and-mortar and online presence needs to consider how to best break down the walls internally, culturally, and in the shopper’s eyes. Because shoppers don’t care about organizational issues. They just want their product. Retailers either have to find a way to make the experience compelling and seamless, or face the fact that the shopper will find a retailer that can and will and does.




MNB took note the other day of a USA Today story saying that retailers including Target, Costco, Sears and Kmart “are hawking freshly cut Christmas trees delivered door to door anywhere in the 48 contiguous states ... online tree sales — which at Sears costs as much as $189.99 for a 9-foot fraser fir tree from North Carolina— are becoming a lucrative business for some big chains. Some retailer sites cajole shoppers to purchase a tree even as folks sign on to just to purchase ornaments.”

The story quotedLisa Mastny, a spokeswoman for the Center for a New American Dream, a non-profit group that encourages a less product-focused seasonal celebration, as saying this about the online tree buying trend: "It's a sad reflection of where American society is going.”

My comment was that this “strikes me as just so silly.

“There’s no intrinsic and objective moral value to buying a tree locally as opposed to buying one online, just as there is no intrinsic objective moral value to cutting down a Christmas tree yourself. Subjective value, sure - because one chooses to acquire a Christmas tree (and everything else that one buys) in a way that suits their lifestyles and personal preferences.

In the case of Christmas trees, it seems to me that what is more important is having a spirit of love and compassion and good will, and sharing those feelings with the people around you. How one buys a Christmas tree is, in the end, objectively irrelevant.

And people who try to assign objective values to such things are operating with blinders on, trying to assign their own subjective values to other people, insisting that everybody else see the world the way they do.”

MNB user Richard Thorpe wrote:

There are quite a few charities here in Idaho that sell Xmas trees. Those on-line, door to door, I don't have to leave my house sales certainly reduce and may (probably will) eventually eliminate the profitability of charity lot sales due to decreased volume.

Perhaps how one buys a Christmas tree does reflect one's Christmas spirit just as what one buys, where one buys and to whom one gives does reflect who they are and how they view Christmas.  I agree that what we as a country have done to Christmas and consumerism in general is a sad reflection on our society. However, our profiteering on war and the public's lack of caring about it, among other special traits,  is a much much sadder situation.

We will buy our tree from a charitable organization and hope that Santa brings all the children in our lives a great Christmas and hope that those celebrating Christmas are as blessed as we are. We will do our best to not judge the actions of other unless those actions are harmful to children and adults.

Technology continues to bring with it both good things and bad. Let us all hope that the good eventually outweighs the bad!

I actually got a number of emails pointing out that every tree bought online could be taking money away from charities that desperately need it. Which is a reasonable observation, except that I wonder how many people who buy from trees from such charities would choose to shop online instead.

My point is simple, and I’m sticking to it. These buying decisions are subjective, made on the basis of people’s individual priorities. They are not intrinsically or objectively right or wrong, good or evil.

One MNB user wrote:

Your “KC’s View” comments about some trying to characterize their subjective values as objective and impose them on others goes to the heart of today’s politically engineered cultural divide. Sharing a spirit of love, compassion and good will, as you so aptly put it, would shed light on the statistical fact that we are all more alike in our attitudes and beliefs than we are different.

Nice piece, thanks.

My pleasure.