retail news in context, analysis with attitude

Published on: January 30, 2012

by Kevin Coupe

So I’m in Florida, here to attend and moderate a panel entitled “Stomach Wars” at the annual Food Marketing Institute (FMI) Midwinter Executive Conference. On Saturday night, I’m hanging out at the bar of a Bonefish Grill with a marketing guy I know, sipping rum and tonics and eating Bang Bang Shrimp, and I asked Jim what he was working on.

“Priceline for golf tee-times,” he said.

Now, I don’t even play golf, but I got all excited, mostly because it seems like such a great business idea on a number of levels.

1. The concept is easily communicated in just a few words. You hear “Priceline for golf tee-times,” you instantly understand the concept - you can use a free website, PlayGolfPlanet.com, to establish your favorite courses, identify which ones have available tee-times, book a tee-time at a significant discount (because it is, after all, perishable inventory), and even set up twosomes and foursomes.

2. The concept seems easily expandable. Right now, it is available in Orlando and Raleigh, North Carolina, but it seems like a natural for a national, even global roll-out.

3. There would seem to be endless possibilities. I’ve been thinking about it, and it strikes me that there are all sorts of ways to grow this thing. For example, it seems like a natural for a mobile app that would allow someone in any location to use his or her smartphone to find local courses with tee-time availability, and instantly book it (not to mention get directions, rent equipment, and whatever other things golfers need to do).

4. The business seems like one that somebody is going to come along and buy for a lot of money - so good for the guy who started it.

There may be other, similar sites out there endeavoring to do the same thing, but for the purposes of this discussion, that doesn’t really matter. The point is this ... smart, perceptive people are able to see opportunities where other people cannot. Or do not.

In this case, there is the wonderful combination of perishable inventory and technology, together creating an opportunity for relevant and potentially profitable innovation. It struck me as a Big Idea.

And I just thought that was an Eye-Opener.

Published on: January 30, 2012

Reuters reports that Walmart has decided to redraw its organizational chart, putting its marketing functions under the leadership of its merchandising group, a move, the story says that comes “as Walmart sees a need for better coordination between the two groups. Shopping and advertising are being quickly transformed by the Internet, social media, smartphones and other shifts in both shoppers' behavior and reaching shoppers with the right campaigns.”

From a personnel point of view, the change means that Stephen Quinn, Walmart’s chief marketing officer for the US, now will report to Duncan Mac Naughton, the company’s US chief merchandising officer, instead of to Bill Simon, president/CEO for Walmart’s US business.

Mac Naughton, the story notes, previously was executive vice president of merchandising and marketing at Supervalu before moving over to Walmart.

Published on: January 30, 2012

The Food Marketing Institute (FMI) will officially announce this morning what it is calling the inaugural “FMI Supermarket Chef Showdown,” described as “unique cook-off competition exclusively for culinary professionals in the food retail industry.”

In a letter sent to FMI retail members, the trade association’s CEO, Leslie Sarasin, says that the finals will take place at the FMI Show in Dallas, Texas, on May 1-3.

“Designed to promote the value and culinary expertise present in our supermarkets and grocery stores, this friendly competition is surely destined to be the premier event for supermarket food professionals nationwide,” Sarasin writes. “Part recipe contest, part taste-testing competition, it’s a one-of-a-kind opportunity for culinary professionals in the food retail industry to pit their know-how and skills against others in the field.

“All supermarket culinary professionals are invited to submit original recipes that will be judged by a panel of celebrity judges at an event emceed by Phil Lempert, the Supermarket Guru. Five finalists in each of four categories (ethnic, health and wellness, family meals and indulgent) will be invited, as guests of FMI, to prepare their winning recipes at FMI2012 in Dallas, TX, May 1-May 3, 2012. In addition, the winner of each category will be awarded $1,000 and the ‘Grand Chef’ winner will receive a trip to a CIA Boot Camp Experience. All finalists, and the companies they work for, will be recognized at the FMI2012 show in front of 25,000 industry insiders and the media.”
 
The deadline for submitting recipes is March 15, 2012.

Published on: January 30, 2012

Internet Retailer reports that Staples plans to open an E-Commerce Innovation Center in Cambridge, Massachusetts, this spring, aimed at “designing and deploying e-commerce tools and features to serve Staples’ customers.”

“Cambridge is a hub of innovation, with both world-class universities and technology companies,” Brian Tilzer, the company’s vice president, e-commerce and business development, tells Internet Retailer. “Staples new E-Commerce Innovation Center will become the home to some of the world’s best e-commerce talent with the goal of rapidly bringing breakthrough new ideas to market in emerging online technologies like mobile commerce and social media.”

The story goes on to say that Staples’ move is seen as similar to the decision by Walmart to create @WalMartLabs in Silicon Valley, which “works on creating social network and mobile technology that could tie together online shoppers and the chain’s stores.”

Published on: January 30, 2012

The New York Times had an interesting piece over the weekend about the efforts by Barnes & Noble by remain relevant in an Amazon-dominated world, both through its stores (which saw some sales increases last year because of the collapse of brick-and-mortar competitor Borders) and, increasingly, through its Nook e-reader, which has been well-reviewed and has been stealing market share from Amazon’s Kindle.

What’s particularly interesting about the story is how perceptions have changed within the publishing industry and how “Barnes & Noble, once viewed as the brutal capitalist of the book trade, now seems so crucial to that industry’s future. Sure, you can buy bestsellers at Walmart and potboilers at the supermarket. But in many locales, Barnes & Noble is the only retailer offering a wide selection of books. If something were to happen to Barnes & Noble, if it were merely to scale back its ambitions, Amazon could become even more powerful and — well, the very thought makes publishers queasy.”

That’s because Amazon seems to increasingly in the business of disintermediating traditional publishers by setting up its own unit, allowing authors to publish their own books. And so, Barnes & Noble has a rooting section.

John Sargent, CEO of Macmillan publishing house, tells the , “Anybody who is an author, a publisher, or makes their living from distributing intellectual property in book form is badly hurt if Barnes & Noble does not prosper.”

Published on: January 30, 2012

PaidContent.org reports on the growth of “mobile action codes” in US periodicals during 2011, noting that in the top 100 US magazines there were 352 of them during the first quarter, and 1,899 of them in the fourth quarter - an increase of more than 400 percent.

Mobile action codes, the site says, include “2D barcodes, QR codes, Microsoft Tags and watermarks.” They are said to be far more prevalent in advertising than editorial content, and more than half the time were used to link to a video promoting a product or service.

In addition, the site says, “Nearly 40 percent of codes were created by the beauty, home and fashion industries and the codes were especially likely to appear in women’s magazines.”

Published on: January 30, 2012

• The Los Angeles Times reports that coming on the heels of its decision to eliminate greeters from its late night shifts as a way of saving money, Walmart now has said that its greeters will be moved from its store lobbies and brought into the stores “so they can more actively help with customer service.”

The story notes that “greeters have been around at the discount giant since 1980,” and that over the years the company “has expanded the duties of greeters over the years to include tagging return items and wiping down shopping carts.

“Now these employees will once again concentrate solely on helping customers. By standing near the checkout lanes inside the stores, greeters will be able to welcome shoppers, give directions and answer questions...”

• Bloomberg reports that there is speculation in France that Walmart may be interested in acquiring any Carrefour stores that the French company may want to sell. Carrefour, the world’s second-largest retailer, has been facing tough sales numbers in its home market, has been shopping for a new CEO, and is said to be interested in paring down the size of its French fleet. At the same time, Walmart is said to be actively seeking new European markets where it can acquire or open stores.

Published on: January 30, 2012

• The Wall Street Journal reports that Walmart plans to introduce a low-price alternative to the Keurig single-serve coffee machine this spring, a brewer that one analyst says will be a “game-changer” in the category.

• Meanwhile, at the other end of the scale, Starbucks said that in just the two final months of 2011, it shipped more than 100 million K-cup packs of its own coffee, and that it had captured 11 percent of the premium single-cup segment.

Published on: January 30, 2012

• The Washington Post reports on how Google is changing its privacy policies, integrating user information across some 60 different services across the company so that it treats the customer “as a single user across all our products, which will mean a simpler, more intuitive Google experience.”

According to the Post explanation, “In a nutshell, Google is taking information from almost all of your Google services - including Gmail, Picasa, YouTube and search - and integrating the data so that they can learn more about you. Google Books, Google Wallet and Google Chrome will retain their own additional policies, partly for legal reasons, but Google could still integrate data from these services ... Google says it will be able to do a lot more ‘cool things’ when it combines information across products. There’s ‘so much more that Google can do to help you’ if you share your information with them.”

Published on: January 30, 2012

Following criticism in a range of media properties that Apple Inc. was turning a blind eye to poor and exploitive worker conditions at supply factories in Asian countries such as China, CEO Tim Cook reportedly has circulated an email to company employees saying that leadership is “attacking problems” where they exist. The content of the letter was carried on Bloomberg.com.

"We will continue to dig deeper, and we will undoubtedly find more issues," Cook said in the email. "What we will not do — and never have done — is stand still or turn a blind eye to problems in our supply chain. On this you have my word."

Cook went on to write that “We care about every worker in our worldwide supply chain. Any accident is deeply troubling, and any issue with working conditions is cause for concern. Any suggestion that we don't care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It's not who we are ... "We are attacking problems aggressively with the help of the world's foremost authorities on safety, the environment, and fair labor. It would be easy to look for problems in fewer places and report prettier results, but those wouldn't be the actions of a leader.”

Published on: January 30, 2012

USA Today reports that the so-called “he-cession” may be over, and that we may be about to enter a “he-covery.”

According to the story, Heather Boushey, senior economist at the Center for American Progress, says that since the economic recovery began in June 2009, “private-sector employers have hired 503,000 men ... Over the economic recovery so far, men have seen especially strong job gains in professional and business services, adding 425,000 jobs."

In part, the job gains have come because men are willing to take jobs that they saw an unattractive in the past - such as retail jobs.

Published on: January 30, 2012

• USA Today reports this morning that “low cattle supplies in 2012 are expected to drive up beef prices for the second year in a row, stretching consumers still coping with high unemployment and only modest wage increases.”

The projections are based on a US Department of Agriculture (USDA) estimate that the number of cattle in the country is down two percent over the past year to 91 million, and at its lowest level since 1952; at the same time, experts say that they expect retail beef prices will be up between four and five percent this year.

• The Chicago Tribune reports that Roundy’s “is seeking to raise $250.9 million in its initial public offering, up more than $20 million from its original plans last month.” The story says that Roundy’s hopes to sell more than 18 million shares priced at between $10-$12 per share.

The story also notes that “Chicago-based private equity firm Willis Stein currently owns 66 percent of Roundy's. It will still own 37 percent of the company after the offering.”

• The Los Angeles Times reports that the US Food and Drug Administration (FDA) has seized almost 14 percent of the orange juice imported into the US since early this month because “ it contained trace amounts of a fungicide, carbendazim ... FDA officials said the juice was safe to drink but that carbendazim, used to combat a fungus that leaves black spots on tree leaves, was not allowed in the U.S.”

"We don't feel that this is a safety problem," FDA spokeswoman Siobhan DeLancey tells the Times. "This is more of a regulatory issue. We don't have any plans to call for a wholesale recall of orange juice."

In the UK, the Telegraph reports that online grocer Ocado plans to cut prices on some 600 SKUs, making them 10 percent cheaper than equivalent products sold by Tesco and generating yet more heat in the nation’s continuing grocery price wars.

• USA Today has a story about the Greek yogurt boon, reporting that Chobani is expanding to meet rising consumer demand for the thicker, richer, and lower-fat yogurt style that now accounts for a quarter of the total US yogurt market.

According to the story, Chobani is increasing production at its Syracuse, NY-area plant “from 1.5 million cases a week to more than 2 million when the current $134 million expansion is completed this year. Another $128 million Chobani plant being built 2,000 miles (3,200 kilometers) west in Twins Falls, Idaho, will add still more.

“About 60 miles (100 kilometers) northeast, the Greek company Fage is in the early stages of doubling the capacity of its 3-year-old plant in Johnstown, N.Y., to about 160,000 tons of yogurt annually.”

"I personally do not believe that the yogurt story has started yet. I believe the yogurt story in this country is about to start," Chobani's founder, Hamdi Ulukaya, tells the paper.

Published on: January 30, 2012

• Meijer Inc. announced that it has promoted J.K. Symancyk from EVP of merchandising and marketing to the role of COO, a new position within the company.

Symancyk’s successor in the EVP role will be Peter Whitsett, most recently the EVP of global merchandising for Dick’s Sporting Goods.

Published on: January 30, 2012

We continue to get email about Paula Deen’s questionable judgement in not revealing her diabetes diagnosis until she had a deal with a pharmaceutical company to promote diabetes drugs.

One MNB user wrote:

By way of contrast, I wonder if anyone else remembers the switch in Graham “The Galloping Gourmet” Kerr’s cuisine? In the mid-80s, his wife had a stroke and then a heart attack, he immediately became educated about the impact of food on her condition and shared these insights with his audience every step of the way. He became a pioneer in low-fat cooking, and his “minimax” approach gave me tips that I use to this day.

Paula’s approach smacks of a bait and switch. By deliberately keeping people in the dark, she squandered the empathy that would naturally come from her fan base.

Another MNB user wrote:

My wife has been griping about Paula Deen for over a year now, complaining that she is squandering an opportunity to include some element of “healthy eating” in her programs.  This series of events absolutely put her over the edge. 




Regarding efforts by both Target and Amazon to pressure suppliers into helping them get better prices and differentiated products, one MNB user wrote:

I agree with you completely that what Target is doing is not whining. Trying to get the same pricing given to competitors and trying to secure special products to differentiate your business is competing, not whining.

As for Amazon's demanding big price cuts from its vendors, my response is that the vendors are completely justified in walking away from Amazon, and perhaps should even be praised for doing that.

Several years ago, the New York Times ran an article about how workers on banana plantations in South America were unable to keep their children in school. The children have to leave school to work in the fields so that their parents could feed, house, and clothe their families. The pressure to keep banana prices low that kept their wages so low and the consequences for them and their families came from American grocers who were (and I imagine still are) in effect condemning them and their families to an endless cycle of poverty and lac! k of education so that Americans could enjoy cheap bananas (well under $1.00 per pound). Wal-Mart was mentioned as being particularly aggressive in demanding these low prices.

That doesn't strike me as being all that different from what Amazon is doing now, except perhaps that Amazon plans to divert some of the savings to improving its profits as well as lowering prices.

The story didn't mention what kinds of grocery suppliers are being pressured (all sectors or just some?) but it wouldn't be surprising if the end result was increased pressure on producers and farmers and their employees both in the US and elsewhere, keeping incomes and wages low, if not leading to wage reductions. Does anyone get rich harvesting tomatoes ... or working in a tomato cannery? It's either that or compromising the quality of their products, perhaps by replacing real food ingredients with slop (you know ... soy slurry with synthetic flavors).

I can't help but think that the vast majority of Americans never give a thought to the corporate strategies (and the consequences of those strategies) that keep the prices they pay for so many commodities so low.

It also reminds me of another Times story about a manufacturer who refused to sell his products (lawnmowers? vacuums? I don't remember) to Wal-Mart because he was unwilling to lower his standards to make a product that he could profitably sell to Wal-Mart at the prices Wal-Mart was willing to pay.

It could be argued that the manufacturer was passing up a great chance to sell a lot more products and grow. But it could also be argued that the manufacturer was refusing to compromise the quality and reputation of his product, which could have ended up destroying his company, while Wal-Mart traded on a respected name to sell a debased product at an "everyday low price."




We had a story the other day about how Apple had record sales in the last quarter, largely from the iPhone and iPad, products that didn’t even exist a few years ago. Which led MNB user Rich Heiland to write:

That the two products account for 74 percent also should be a warning sign to Apple - it has created a bar and raised it high. Products have life spans and the market is fickle. Here's hoping, if you are an Apple shareholder, that the track record for product prescience continues and another blockbuster is awaiting announcement....




Regarding Walmart’s decision to eliminate greeters from night shifts, MNB user Curt Lindy wrote:

I think that the most important value behind the greeters is in who they are and the unique opportunity that Wal-Mart was giving to them to be a  productive members of society and earn a paycheck. The Wal-Mart employees especially the longer term employees have been looking over their shoulders for years now and it shows in their morale.

Another MNB user chimed in:

Wal-Mart greeters serve more than a customer-facing role within Wal-Mart. They are also a deterrent for people (and associates) walking out of the store with unpaid merchandise.

The Analyst comment shows how little they understand about the operations of Wal-Mart, candidly.  Financial focus needs to be augmented with operation focus and brand considerations.

This move is disappointing for business reasons (customer-facing & theft deterrent) – and also for me personally since I aspire to be a Wal-Mart greeter when my day job comes to an end!

And MNB user John Hall wrote:

Another possible unanticipated shift that this will present is that now that it is reported in so many media outlets that their shoplifting amount will increase during those hours.  Although WM does have in store security their stores are so massive and their clerks and stockers so focused on benchmarks that it will be easier to enter and exit undetected.




In response to our story about the government mandating healthier school lunches, one MNB user wrote:

I think it is a good idea for the government to make school lunches more healthy.  However, they need to make sure the children will be eating these new "improved" menus.  Here is an example that is very evident at the school where my wife teaches.  When the school was required to change their 2% milk to a 1% or skim milk based, they noticed less milk being taken.

Furthermore, the children taking the milk are throwing away an almost full carton. Several children have now opted to drinking water.  So, I think we need to ask ourselves, is it better for the children who will drink a 2% chocolate milk or to gain the healthiness of decreasing the fat by 1% and children no longer accepting / drinking the milk.  I guess in the end, it is saving the school money with less milk purchases, but I do not think this is a good thing.