retail news in context, analysis with attitude

Published on: April 5, 2012

This commentary is available both as text and video. They are similar but not identical. Enjoy both, or either.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

I have a couple of things on my mind this morning...

One has to do with the independent sector. In this case, I want to talk about an independent bank that seems to be positioning itself to do battle with the big banks, which it perceives with some justification as having been tainted by recent events.

The bank is called Hudson City Bank, and I’ve been going to a local branch because of some illness in my wife’s family. Her mom has moved to an assisted living facility, and we’ve been doing some of her banking for her at what is her bank of choice. Now, I have to tell you that every visit to this place is about as frustrating as one can imagine - the tellers seem to all have just started yesterday, they don;t seem to be able to take a simple deposit without calling over a branch manager, and visits that at my local Citibank would take about 45 seconds end up taking 10 or 15 minutes.

Here’s what’s amazing to me. On their website, they talk about being “the most efficient bank in America,” which is a claim so absurd as to be laughable. Forbes apparently said it was one of the best managed banks in America, which is also a joke, because they have no idea how to make a branch visit relevant to a 21st century customer.

The whole marketing pitch seems to be hinging on the fact that it is better because it is small, which is ridiculous. Small is not better because it is small. Small is only better when it is better. And anybody who ties the size of an enterprise to quality is, I think, making a big mistake.

Which brings me to a story that really annoyed me this week - from Bloomberg, bearing the title “The Era of Big Box Retail Dominance Is Coming to an End.”

Let me quote from the story:

“The new mantra is small box. While Best Buy, Wal-Mart Stores Inc. and Target Corp. are still opening large stores, all are putting increasing emphasis on smaller ones. Best Buy plans to double the number of its smaller Best Buy Mobile stores by 2016. Wal-Mart is building as many as 100 small-format stores this year, while Target is opening five CityTarget locations.”

I hate stories like this one.

On the one hand, sure, it is accurate.

But on the other hand ... Best Buy’s small stores and Walmart’s small stores and Target’s small stores are only going to be successful if they are located in the right neighborhoods, carry the right products, and offer the right services relevant to local shoppers.

Headlines like “The Era of Big Box Retail Dominance Is Coming to an End” often are generated, I think, by consultants who need a new pitch to peddle, new services to market and new research to sell.

Give me a break.

I’ll give you my headline.

People ought to stop talking about box sizes. They actually ought to thinking about the “right box” instead of the “big box or the “small box.”

And by the way...this isn’t a “seismic shift,” which some people like to call it.

Things run in cycles. Always have, always will. And I think that traditional format boundaries actually are falling, because they aren’t relevant to shoppers. They don’t think to themselves, “I think I’ll go to the big box store.” They think about what stores carry the products and offer the services they need.

Memo to Best Buy. Apple Stores aren’t better than you because they are smaller. They’re just cooler, better staffed, and carrying products that people see as relevant and desirable.

I don;t care if you are a bank or an electronics store or a discount retailer. Don’t think about whether you are big or small, local or national, independent or chain.

Make the store experience relevant, compelling, illuminating, unique and immersive.

Do those things, and maybe the customer will see you as intrinsic to their lives.

That’s what is on my mind this Thursday morning. As always, I want to know what is on your mind.

Published on: April 5, 2012

by Kevin Coupe

The Chicago Tribune reports this morning on a fascinating statistic, courtesy of the Pew Research Center: that one in five Americans read an e-book during the past year, and that “four times more U.S. readers, or 15 percent, were reading e-books on a typical day now compared with less than two years ago.”

A couple of other interesting notes from the Pew report:

“People who use e-books are more voracious readers of books of all kinds, with 88 percent of those reading e-books in the previous 12 months also consuming printed books.”

“They also are more likely to be under the age of 50, have some college education and live in households that make more than $50,000 a year.”

The story goes on to note that “The e-book industry has grown from $78 million in sales in 2008 to $1.7 billion in 2011, according to Albert Greco, a book industry expert at Fordham University. He has estimated e-book sales will be $3.55 billion in 2012.

“Forrester, a consultancy, has forecast that nearly a quarter of Americans will own an e-book reader by 2016. With prices for top models below $100, the readers ‘are a no-brainer for more and more consumers,’ it said in a report.”

And here’s the Eye-Opening kicker:

Amazon has about 65 percent of the e-book market.

That said ... independent booksellers are not going gentle into that good night.

The Arizona Republic reports on a new weapon that independents are bringing to the war against Amazon.com. Here’s how it frames the story:

“Independent booksellers have been fighting to survive since the advent of the superstores like Barnes & Noble. But as the rising popularity of e-books is shaking up the industry once again, the indies have a new weapon in their battle against archenemy Amazon.com.

“It's called the IndieBound Reader, a free app for smartphones and tablets that comes with a controversial pricing scheme pioneered by Apple, and it allows local outlets such as Changing Hands Bookstore in Tempe to sell e-books to their customers at the same price as the online retail giant.”

These numbers represent a consumer shift as well as a cultural shift. Nothing is as it was.

Nothing.

Published on: April 5, 2012

USA Today reports that “older workers are snaring an outsized share of job gains in the economic recovery as they put off retirement amid shrinking nest eggs, changes in Social Security benefits and improved health ... In February, employment for workers 55 and older rose by 277,000 from January, or 65% of the total 428,000 gains, according to the Labor Department's household survey, which is used to calculate the unemployment rate.”

Published on: April 5, 2012

 Convenience store sales, both at the pump and inside the store, set new records in 2011, according to data just released by NACS.

According to NACS, “In-store convenience store sales grew 2.4%, reaching a record $195.0 billion. Combined with $486.9 billion in motor fuels sales, total convenience store sales in 2011 were $681.9 billion, or one out of every 22 dollars of the overall $15.04 trillion U.S. gross domestic product.
 
The industry’s 2011 numbers were announced in Chicago at the NACS State of the Industry Summit.

Published on: April 5, 2012

• The Financial Times reports that Tesco is under pressure from some of its biggest shareholders because of disappointing sales numbers, with the story suggesting that “the culture of Tesco ... became over-centralised during Sir Terry Leahy’s 14-year reign as chief executive. The shareholders believe this culture could hinder efforts by Philip Clarke, the new chief executive, to boost the company’s performance.”

Published on: April 5, 2012

Restaurant Management has an interesting story about current trends in breakfast cuisine, noting that “pancakes are passé and omelets are out. An increasing number of diners want to eat lunchtime favorites as their first meal of the day.”

For some restaurants, that means breakfast pizzas - not a new concept, but one that is getting new twists in some establishments, such as one that serves a Smoked Salmon pizza that “sports lox alongside capers, red onion, cream cheese, Mozzarella, and dill,” and another that has mozzarella, crispy pancetta, an egg, and scallions.

A lot more innovative is the concept of the breakfast hamburger. The story notes that a restaurant called Burger, Tap & Shake in Washington, DC, “rolled out a breakfast burger menu earlier this year. There are only four options, including the straightforward Five Buck Chuck with pork sausage, egg, and American cheese, and the Southwestern-styled El Camino with chorizo sausage, black beans, egg, pepper jack cheese, and spicy sauce called XXX.”

According to the story, “According to Technomic’s 2011 Burger Consumer Trend Report, seven percent of diners indicated that they had eaten at least one burger for breakfast in the prior 90 days. In the same report, 23 percent of male diners indicated that they would like restaurants to sell burgers at breakfast.”

Published on: April 5, 2012

National Public Radio has a piece about something called an “optical stable isotope analyzer," which it says is “a not-too-sexy name for a device that could provide a lot more certainty about a product near the end of its long journey to the consumer.”

According to the story, this gizmo is “already in use to measure air quality and detect gas leaks,,” and has been determined by Picarro, the company that created it, to also detect isotopes in food.

NPR explains that “hydrogen, oxygen and carbon — found in everything from hamburger to oranges — leave a detailed signature behind illustrating the weather, plant type, growing conditions and manufacturing processes. Picarro calls it ‘nature's barcode.’ By analyzing the isotopes — versions of common atoms that have slightly different masses – in this barcode, the Picarro device can detect minute differences in the chemical composition of foods ... Access to this information could be a boon for food companies, government agencies and consumers who want to ensure raw ingredients and additives are really what they say they are. The company says it has already shown that isotope analysis can tell the difference between grassfed and corn-fed beef and the origin of various oils.”

Published on: April 5, 2012

...with brief, occasional, italicized and sometimes gratuitous commentary...

• Marketing Daily reports on a new study from NCH Marketing Group saying that “food marketers drastically cut their use of coupons last year, issuing 13.1% fewer coupons than they did in the prior year. That amounted to 305 billion coupons, a decline of 8.1% in all categories, reports NCH Marketing Services.”

However, “2011 coupon distribution was comparable to 2007, with 20 billion more coupons -- a 7% increase jump -- available to shoppers. And the $470 billion of coupon value in 2011 is a 26% increase from 2007.”

And, the story says, “Coupon-craving consumers redeemed $4.6 billion in savings, a jump of 12.2% from the year prior, and a 58.6% increase from five years ago.”

The surge in usage came because of the recession. The question is whether it will continue in a recovery.

And the other question I would ask is what the surge means in a culture where nobody knows what the actual price of anything is, and what expectations it creates among consumers.

• Stores magazine reports that in-store health clinics have continued to grow in popularity in the US, fueled by “a shortage of primary care physicians, rising concerns about access and costs, looming health reform requiring expanded coverage and care coordination and the ever-older Baby Boomer population ... Though growth of the clinics slowed in 2009 and 2010, 2011 showed a marked shift: The number of in-store clinics (1,355) rose 11.2 percent, according to research and consulting firm Merchant Medicine.”

• Safeway has announced its partnership with the Go Green Initiative “to launch the first annual Go Green Glogster Earth Day contest. Students will be asked to investigate the sustainability of the food, water, or energy system in their community, and express their findings through videos, podcasts, blogs, music and photos compiled in a ‘Glog’ (see www.edu.glogster.com).

“For the food system, students will examine the availability of locally grown and organic food in their neighborhood; food safety procedures at their local grocer; and the impact that higher fuel prices will have on the price of food where they live.”

Safeway said it is providing an organic garden to a winning school; a full-service, all natural BBQ for a winning class; and five (5) one-hundred dollar cash prizes to winning students.

• Published reports say that Starbucks’ efforts to offer beer and wine at one of its stores in Coronado, California, ran into a roadblock this week, as the City Council voted to oppose its application for a liquor license.

The council seems to be taking the position that making alcohol available at Starbucks is the same as making it available to people not yet old enough to drink legally. However, the opposition may not matter since Starbucks’ application has to go before the state’s Alcohol Beverage Control, which may not have any legal foundation to deny it.

Published on: April 5, 2012

Tomorrow is Good Friday, and MNB will be taking the day off. We’ll be back Monday...and hope you have a great weekend.

Published on: April 5, 2012

Lots of reaction to yesterday’s commentary about Consumer Reports’ annual supermarket ratings, concluding that the nation’s best stores are, in order: Wegmans, Trader Joe’s, Publix, Fareway, Costco, Harris Teeter, Market Basket, Raley’s, Hy-Vee and Stater Bros.

I commented:

Last week I took issue with the Consumer Reports bagel evaluations, and this week I’m afraid that I have to suggest that at the very least, these ratings do not represent the best of US supermarket retailing. Some of the chains mentioned are, indeed, something special ... but while some of them would never make my list, there are enormous gaps in the list.

Where is Dorothy Lane Markets? Or Lunds/Byerly’s? Or Metropolitan Markets? Or any of HEB’s formats, especially Central Markets? Or Schnucks?

“Best” and “worst” may not be the best descriptive words for Consumer Reports” to use here - in part because my “best” may be completely different from someone else’s ... it all depends on what our priorities and life-stages are. It may even depend on the day of the week and the time of day.

MNB user Lorri Putnam responded:

There are several problems with this research.  Although 24,000 households nationwide were polled, this is a convenience sample – not a demographically and geographically balanced sample of randomly selected grocery shoppers.  Instead, it appears to be a survey of Consumer Reports subscribers, as the terms “subscribers” and “readers” are used in the summary – and people who subscribe to something are different from people who do not (even MNB subscribers…).  This is what got the Chicago Tribune in trouble with the famous “Dewey defeats Truman” headline, because the paper made the mistake of basing at least part of its prediction on a survey of a specific subset of voters – their own conservative subscribers.

Dorothy Lane Market is not listed because although they have excellent customer service, they only have three stores, and this small number will not register highly in a nationwide poll.  Don’t know why larger chains like HEB were not listed, unless few CR subscribers shop at HEB stores…

Another problem is that this appears to be a convenience sample, where shoppers with a strong point-of-view (a beef with a store) are more likely to respond than people without an agenda.  Who responds to surveys at the bottom of the restaurant receipt or emailed after a hotel stay?  Mostly those with exceptional experiences, either good or bad.

Finally, just because they polled thousands of respondents does not make a convenience sample a good survey.  Convenience sample are not representative and should not be extrapolated to the broader market, and large convenience samples do not add to the accuracy.

Another MNB user wrote:

How Meijer could rate higher than Giant Eagle is a puzzle to me.  I guess low prices is 2/3rds of the perception.  In my experience Meijer has Walmart like pricing along with loss leader weekly specials and double coupons. But long lines and out of stocks are almost as bad as Walmart.

MNB user David D’Arezzo wrote:

I always felt the Consumer Report survey was weak, in particular because most people are only comparing their store to the “the other store” in town.  The gap between Wegmans and say, Tops might be larger than Kroger and HEB?

A common issue in product research is where people struggle to articulate why, for example, they like one restaurant over another (price, convenience, location, value, type of food, ambiance, service, etc.).  Serious researchers use conjoint analysis (I know it sounds very impressive, but it’s really a simple research technique) to draw out preferences, and the importance of each variable to people.  I’m sure the CR people are smart, but this problem of ranking stores, when most people haven’t been in any of the great regional stores you mentioned,  is a problem.  And of course Kevin, they obviously didn’t rate shadows in the aisle (and we all know how important that is to you!) because that would have surely knocked Wegmans down a peg or two! (rim shot).

Not shadows in the aisle. Shadows on the product. Big difference. 🙂



Responding to a different story, one MNB user wrote:

I’m really surprised anyone even cares about Yammer at Supervalu.  Have you ever used it?  1) the application is years behind Facebook, Linkedin, or Twitter.  2)  why would any employee at SV ever post any comments on Yammer knowing that senior leadership is watching it like hawks.  You can’t post anything anonymously.

In my opinion, social media can’t be forced on people.  Retailers & Suppliers can use these sites to better understand their consumers on a broader scale, but not their employees on an intimate scale.




Regarding new moves by Netflix to segregate its streaming and DVD customers, one MNB user wrote:

Are they trying to alienate their customers?  I think we could be looking at the beginning of the end for Netflix.  What a perfect time for someone new to come in and crush them.  Hello Blockbuster, move over and make room for Netflix in the obsolete bin!

I can tell you this, if Netflix makes it more difficult for me to manage my DVD's and Streaming queue, without huge improvements in the quality and quantity of available streaming choices, I will be looking to jump ship, and I have been a member since 2003.

Published on: April 5, 2012

Just a couple of quick notes this morning...

• I really liked a new film called Salmon Fishing in The Yemen, a disarming comedy about a timid and socially awkward UK fisheries expert (played by Ewan McGregor) who is dragooned by a financial consultant (Emily Blunt) into helping an Arab sheik (Amr Waked) realize his dream of bringing salmon fishing to the Yemeni desert. I’d seen the trailer, and thought that it was entirely possible that it could be awful ... but instead, I found a winning piece of filmmaking (directed by Lasse Hallstrom) that is at heart a meditation on the power of a dream, the challenge of realizing a vision, and the importance, sometimes, of swimming upstream against conventional wisdom. The performances are terrific, and the lessons of the movie can be applied to both business and personal behavior.

I’m guessing that Salmon Fishing in The Yemen may not be at the top of your to-see list. But I’m here to tell you that it deserves your attention. (Also...it is a great date movie.)

• I’m an enormous Aaron Sorkin fan, so I have a real bias here. For me, his writing credits include some of my favorite entertainments of the past decade or more: The Social Network. Moneyball. A Few Good Men. The West Wing. Sports Night. All just terrific movies and TV shows with crackling dialogue and literate characters.

This week, HBO released a trailer for a new series written by Sorkin that will being airing this summer - Newsroom, which which he appears to be channeling Paddy Chayefsky from his Network period. (No higher praise from me, by the way - Network is easily one of the best movies that came out of Hollywood during the Golden Age of the seventies.)

It features Jeff Daniels and Sam Waterston. And it just looks great. You can check it out here. I am now officially counting the days until it premieres on June 24.

• Finally, I have a wonderful white wine to recommend to you - the 2009 Il Bacco “Verdicchio dei Castelli di Jesi,” which is lovely with seafood and pasta and perfect to sip on as the afternoons get longer and the sun grows warmer.

That’s it for this (abbreviated) week. Have a great weekend, and I’ll see you Monday.

Slainte!