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    Published on: February 1, 2012

    Notes & comments by The Content Guy

    ORLANDO -- There may be a slow economic recovery taking place, but food retailers need to work to define for themselves differential advantages that can set them apart from the competition and create tighter and more lasting relationships with shoppers. In some cases, the advantage may be food; in others, technology ... but what seemed to be consistent in both cases was a sense that it as much what you offer as how you offer it.

    That seemed to be a key takeaway during Day Two of the Food Marketing Institute (FMI) Midwinter Executive Conference ... at least from my perspective. And, to be perfectly honest, I have a strong perspective on this, because I moderated one of the morning’s panels, entitled “Stomach Wars,” in which a group of fascinating people from the food industry - but not the supermarket business - talked about the nation’s food culture and what retailers need to do to build such a culture for fun and profit in their own businesses.

    For me, the “smack me upside the head” moment came when Mike O’Donnell, CEO of the Ruth’s Hospitality Group (which has Ruth’s Christ Steakhouse as one of its banners), noted that his franchisee group was meeting just down the hall. I asked him how much time that group would spend talking about food, and he replied, “Ninety-five percent.”

    That’s extraordinary, and it pointed to the fact that while food can be a great differentiator - it is the single greatest competitive advantage for a number of supermarket chains - food retailers tend to spent relatively little time talking about its role in the store and how it can be exploited for fun and profit.

    Some other moments from our session...

    • Sandra Lee, of “Sandra Lee Semi-Homemade” fame on the Food Network, suggested that supermarkets are a great untapped resource, and suggested that retailers need to do a better job about communicating the opportunities available within; she also noted that economic concerns seem to be pushing some folks back toward cooking for scratch, and suggested that better labeling and information could get people to buy more and cook more.

    • Victor Giellisse, of the Culinary Institute of America (CIA), recalled a conference he went to years ago at which an expert spoke in layman’s terms about trans fats, noting that they are a virtual poison and just a few chromosomes away from being a plastic. The industry has done an excellent job, in this case, of eliminating them from most foods and communicating the reasons for the shift.

    • Luigi Bonini, who runs all of Starbucks’ foodservice programs, noted that European retailers seem to be way ahead on prepared meals, and suggested that speed and simplicity matter when creating an effective and relevant prepared meals strategy.

    One final note. There seemed to be general agreement that the market for great food in the US is far greater than most retailers believe, and that the booming food truck trend is evidence that when given the opportunity, Americans are willing to go out of their way to spend a little extra for great tasting food. Flavor choices are getting better and bolder. (One FMI attendee mentioned to me that he’d recently had an $18 lobster roll and a $12 bowl of clam chowder from a San Francisco food truck, and it was some of the best food he’d ever eaten.) It will take an investment of both energy and money, but US supermarkets are capable of exploiting this trend to their own advantage.

    But it will take an investment of energy and money. The alternative, however, would be to not take advantage of what should be a core competency and a built-in competitive advantage.

    (BTW...it should be noted yet again that FMI seems to be expanding its efforts in this area, with the inaugural “FMI Supermarket Chef Showdown” that it announced earlier in the conference, described as “unique cook-off competition exclusively for culinary professionals in the food retail industry.” It’ll take place at the Dallas FMI Show in May, and you can find details here.

    Some additional notes from FMI Midwinter...

    • In one session, Cathy Green Burns, president of Food Lion, and Jesse Spencer, Social media manager at The Integer Group, took the audience through the introduction and initial chapter of the latest study done by the North American Coca-Cola Retailing Research Council (CCRRC), into the challenges and opportunities offered by social media. Much of what they said was previewed here yesterday by Michael Sansolo; in addition to contributing weekly to MNB, Michael also is research director of the CCRRC, and you can read his view of the social media study here.

    Burns noted the fast-shifting demographics of social media usage: in 2011, she noted, 15 percent of users were under 18, 40 percent were ages 18-34, and 45 percent were older than 35, while in 2013 is is being estimated that the user base will get older as 35 percent are 18-34, and 50 percent are 35+. What this means, she said, is that core supermarket shoppers increasingly are immersed in the social media world, going there to get recommendations, critiques and a wide range of observations - all of which can and do shape their buying decisions.

    “Social media is not a marketing channel, it is a communications channel,” said Spencer. “It is not a monolog. It is a dialog.”

    And, they both agreed, it is an area in which retailers need to invest money and energy (yes, those two again) if they are to use it to their advantage. Hopefully, their differential advantage.

    If you want to read the initial chapters from the CCRRC study, you can do so by clicking here for the introduction and here for Chapter One.

    • And, in another panel that focused on differential advantage, Thom Blischok, president of Global innovation and Strategy for Symphony IRI Group (full disclosure, an MNB sponsor), noted that 2012 is shaping up to be “a challenging but opportunistic environment.

    This led Donald Knauss, chairman/VEO of Clorox, to say that “the retailers that sell ideas instead of categories are starting to see real growth,” and that “people don’t want to buy charcoal, they want to buy a grilling experience. People don’t want to buy cleaning products, they want to buy a healthy home.” It is the retailers that tap into these needs, Knauss suggested, that will carve out for themselves a differential advantage.

    To which I can only say...Exactly.

    In other FMI news...

    • Art Potash, CEO of Potash Markets, received the Food Marketing Institute (FMI) Glen P. Woodard, Jr. Award for his outstanding contributions on behalf of the food industry in government and public affairs.

    • Douglas R. Conant, former president and CEO of Campbell Soup Company, received the Food Marketing Institute (FMI) William H. Albers Industry Relations Award today for his excellence in trading partner relations in the food retail supplier community.
    KC's View:

    Published on: February 1, 2012

    Accenture is out with a new global study saying that “two out of three consumers switched companies –  including wireless phone, cable and utilities – as result of poor customer service in 2011 even as their satisfaction with the services provided by those companies rose.”

    Here’s how the results are framed by the study:

    “Among the 10,000 consumers who responded, the proportion of those who switched companies for any reason between 2010 and 2011 rose in eight of the 10 industries included in the survey.  Wireless phone, cable and gas/electric utilities providers each experienced the greatest increase in consumer switching – five percentage points.  This includes consumers who switched entirely to another provider as well as those who continued to do business with their current provider but added services from another provider – a new, but growing trend.   According to the survey, customer switching also increased by 4 percent in 2011 in the wireline phone and internet service sectors.

    “The survey also found that fewer than one-quarter (23 percent) of consumers surveyed feel ‘very loyal’ to his or her providers, while 24 percent indicated that they had no loyalty at all.  And, only half (49 percent) indicated that they are strongly influenced by at least one loyalty program offered by their service providers.

    “At the same time, however, consumer satisfaction with their providers’ customer service actually increased in 2011 in 10 attributes measured by the survey.  These attributes include the wait time for service (33 percent satisfied compared to 27 percent in 2010), the ability to resolve issues without speaking with an agent (38 percent satisfied compared to 33 percent in 2010) and speaking with just one customer service agent to resolve an issue (39 percent satisfied compared to 32 percent in 2010).”

    The study suggests that many companies have blind spots, like not using digital channels to engage with shoppers sufficiently (see our piece about the new Coke Research Study, above), or not even realizing how vulnerable consumers are to entreaties from other competitors. And they don’t realize that broken promises can translate into broken relationships.
    KC's View:
    I read these results, and I can hear “Satisfaction” playing in the back of my mind...

    I can't get no satisfaction.
    I can't get no satisfaction
    'Cause I try and I try and I try and I try
    I can't get no, I can't get no...


    While this study is a) global, and b) all-encompassing when it comes to the kinds of companies it looks at, it seems to me that there are couple of core lessons here.

    Just because you’re doing better does not mean that you are doing well enough.

    Loyalty is generally non-existent. At best it is the exception to the rule. And shoppers’ affections are always in play.

    In part, this is because most marketers create loyalty systems that are keyed to financial rewards, and while those are well and good, by their very nature they can be matched and beaten by any competitor with the will and the way.

    And I would suggest that maybe “enough” is a word that ought to be banished from most marketers’ vocabularies.

    Marketers have to earn loyalty by getting touch not just with shoppers’ wants, but also their needs ... anticipating them even before shoppers do. (This is one of the oft-quoted passages from the Steve Jobs biography, in which Jobs explained Apple’s success.) Instead of listing to “Satisfaction,” maybe marketers need to be paying attention to another Rolling Stone song...

    No, you can't always get what you want
    You can't always get what you want
    You can't always get what you want
    And if you try sometime you find
    You get what you need...

    Published on: February 1, 2012

    VentureBeat.com reports on a new survey by the Pew Research Center saying that “more than half of all adult cell-phone owners (52 percent) used their phone to either phone a friend, look up product reviews online, or comparison price shop during a 30-day holiday shopping period ... . While shopping offline, 38 percent of cell owners called a friend for advice, 24 percent looked up online reviews, 25 percent compared prices via their cell phones, and 33 percent, or one third of cell owners, used their mobile device to either check online reviews or pricing information.”

    The story goes on:

    “Who are these savvy price-conscious mobile shoppers? Primarily youngsters and middle-aged adults ages 18 to 49, college educated urban and suburbanites, and non-white cellphone owners, Pew found. Just 4 percent of mobile phone owners ages 65 and up, however, used their device to look up online product reviews.”
    KC's View:
    Okay, so the old folks aren’t going to do this as much. This should be scant reassurance to people not paying attention to this trend, because with every passing year, more and more people in this age bracket will be using their mobile devices for such purposes, because they were doing it when they were younger.

    The simple, irrefutable fact is that when people are in the store, they are still subject to a wide range of outside influences and privy to an enormous amount of outside information. Retailers have to not just put product out there, but have to engage in an ongoing conversation with the shopper and exists both inside and outside the store. And, understanding that so-called “showrooming” is going to take place, they damned well better have some sort of product and/or service that can’t be replicated by the store across the street or down the block.

    if they don’t, they might as well start thinking now about retiring or getting into another line of work.

    Published on: February 1, 2012

    • Piggly Wiggly Carolina has expanded their Click’n Shop program from ten stores to 26 additional locations totaling 36 stores, offering an eCommerce platform, digital circulars and online advertising platform.

    “It’s always been a priority of Piggly Wiggly to offer customers new ways to save money and time during their shopping experience. This drove our initial decision to add online shopping to ten of our stores,” said Robert Masche, Chief Supply Chain Officer at Piggly Wiggly Carolina. “The program has been profitable and a proven way to acquire and retain our customers. It only makes sense for us to expand this to new markets. We believe our online grocery channel will continue to grow as word of its quality and convenience spreads.”

    Full disclosure: Piggly Wiggly’s Click’n Shop program was developed by MyWebGrocer, a longtime and valued MNB sponsor.
    KC's View:

    Published on: February 1, 2012

    Apple Inc. has named John Browett, CEO at the Dixons retail chain in the UK and a former top executive at Tesco, to run its chain of Apple Stores around the world.

    Browett succeeds Ron Johnson, who left Apple a few months ago to become CEO of JC Penney.

    As the New York Times notes in its coverage, “Mr. Johnson will be a tough act for Mr. Browett to follow. Along with Steven P. Jobs, Apple’s late chief executive, Mr. Johnson made Apple’s stores into one of the biggest recent success stories in retailing. Mr. Johnson turned the Apple Store, which first opened in 2001, into fashionable high-tech emporiums, showcasing Apple’s latest gadgetry on uncluttered tables tended by impeccably trained staffs ... One of Mr. Browett’s biggest priorities will be overseeing the international expansion of Apple’s stores. Of the 40 stores the company expects to open in 2012, about three-quarters will be abroad, with China very likely to get more outlets.”

    Browett served as Operations Development Director at Tesco and often was named as someone who could replace Sir Terry Leahy as CEO, but he left before ever getting the chance.
    KC's View:
    The Times also suggests that some analysts see Browett as a surprising choice, saying that Dixons offers the kind of conventional retailing experience that Apple has avoided. But others say that Browett pushed Dixons into new directions, especially online, and that he may turn out to be a good choice.

    He wasn’t my choice. His was not the name I mentioned when I was having a conversation with the search firm that was looking for Johnson’s successor. (You’d be amazed who calls me, under the mistaken impression that I actually know what I’m talking about.) But I wish him luck...and want to make clear that any drop in service levels at my local Apple Store will be dutifully and loudly remarked upon here.

    Published on: February 1, 2012

    Bloomberg reports that Tesco’s share of the UK market dropped to 29.9 percent during the most recent quarter, the lowest it has been since 2005.

    Walmart-owned Asda Group saw its market share stay the same during the period, at 17.5 percent, while Sainsbury’s share grew from 16.6 to 16.7 percent.

    The Aldi and Lidl discount chains increased their share of the market to 3.5 percent and 2.5 percent, respectively.
    KC's View:

    Published on: February 1, 2012

    The Wall Street Journal reports that Barnes & Noble has declared that it will snot sell any of the paper-and-ink books being published by any of the imprints owned by rival Amazon.com, saying that the online behemoth has "undermined the industry" by trying to sign exclusive agreements with publishers, agents and authors.

    The Journal notes that the move “is likely to exacerbate tensions between the two book selling giants. Amazon is dominant in Web sales of print books, while the two companies are locked in an intense battle for the e-book market where Amazon's Kindle e-reader competes with Barnes & Noble's Nook.”

    And, the New York Times writes that “it signals clearly that Barnes & Noble has no intention of helping its largest competitor sell books,” and could undermine Amazon’s efforts to sign authors who expect their books to be sold in Barnes & Noble’s 703 stores across the country, crucial real estate for sales of many titles.”
    KC's View:
    I’ll just speak for myself here ... as an author, a very small fish in a very big ocean.

    This move by Barnes & Noble could impact authors of greater import and sales potential, but for the vast majority of writers out there, it won’t make a difference because dealing with Barnes & Noble can be an enormous pain in the neck. Comparatively, getting one’s book on Amazon is pretty easy.

    What surprises me a little bit is that Amazon would want its books sold at Barnes & Noble - I would have expected that Amazon would not want its major competitor to have those books, that it would have wanted some level of exclusivity. (Though there may be some antitrust issues here.)

    BTW...in my FaceTime commentary tomorrow I’ll be talking about a conversation I had with a writer who went from paper-and-ink books to e-books, and what broader marketing lessons his experiences provide.

    Published on: February 1, 2012

    • In a bid to appeal to young, primarily female shoppers, Walmart announced that it will be throwing a “Twilight” party on February 10 to celebrate the DVD release of Twilight Saga: Breaking Dawn Part 1. According to the press release, “Starting at 11 p.m. on Friday, Feb. 10, Walmart will throw the ultimate Twilight party with special giveaways, movie trivia and a bakery stocked with Twilight­-themed treats such as cupcakes and cakes. Walmart shoppers can also catch a cameo appearance from Rosalie Cullen (one of the characters from the film - a vampire) on the retailer's in-store television network while waiting for the midnight unveil.”
    KC's View:

    Published on: February 1, 2012

    • Winn-Dixie Stores said yesterday that it will hold a special shareholders’ meeting at its Jacksonville, Florida, headquarters on March 9 to consider and vote on its propose merger with Bi-Lo.

    Reuters reports that “the Humane Society on Tuesday accused two pig-breeding facilities, one of which supplies retail giant Wal-Mart Stores Inc, of mistreating the animals by confining sows in cages during pregnancy. In a video on the Humane Society website, sows can been seen chewing the metal bars of their cages and struggling to stand up. Some are scratched, bleeding and even dead.

    “Paul Shapiro, senior director of farm animal protection at the group, said Seaboard Foods and Prestage Farms Inc were the owners of the plants in Goodwell, Oklahoma.”

    • The Austin Business Journal reports that HE Butt “has finished a $7 million renovation to a North Austin store bringing the Hispanic-inspired Mi Tienda concept to the area. According to the story, “the remodeling added 6,000 square feet and 40 employees to the store,” as well as “an in-store masa factory and tortilla press ... imported Mexican cheese and meats, fresh cremas and salsas and Mexican pastries.”
    KC's View:

    Published on: February 1, 2012

    ... will return.
    KC's View: