retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: May 2, 2012

    Notes & comment from the Content Guy...

    DALLAS - The name of the presentation, as in past years, was “FMI Speaks.” But in some ways, it was the reaction of some retailers that really spoke volumes about the industry’s ability to face the kinds of challenges that exist today.

    In the presentation Food Marketing Institute (FMI) CEO Leslie Sarasin laid out four “significant and interrelated movements” affecting the food industry, with the goal of helping retailers shape their strategies for future growth.

    These movements included value-seeking as a new normal, technology-enhanced shopping (focusing on digital as a means of gathering information), e-commerce , and format innovation. All of them made perfect sense, and were beyond debate.

    Except ... there was a sense, when listening to some retailers reacting to the presentation, that the whole digital/e-commerce thing was seen as the kind of change that they are not happy about, that they would prefer not to have to deal with, and that, quite frankly, they only are embracing because they have to. (Which means that they are not. Not really. We all know that a forced hug is never as good as a sincere hug.)

    The thing is, keeping up with the digital/e-commerce revolution is hard. But, as Tom Hanks says in A League of Their Own, it is the hard that makes it worth doing.

    Furthermore, it really doesn’t matter whether retailers think it is hard, or would prefer not to have to adapt to change. Because the change is happening. The only real decision is whether to keep up.

    And here’s the other argument I would make to retailers who would rather not have to change. I would suggest that I know of one retailer who loves change. His name is Jeff Bezos, he is the CEO of Amazon.com, and he lives for change. He probably wakes up in the morning thinking about what he’s going to change today. He probably wakes up thinking about how his ideas will disrupt other people’s business models ... especially the models created by people who hate to change.

    Leslie Sarasin laid out the challenge, but some reactions would suggest that there are a few retailers who would prefer not to accept it. That reluctance, I’m guessing, would be music to Jeff Bezos’s ears.

    In a subsequent session, three leading retailers offered insights into social networking and how companies can use the findings in the latest Coca-Cola Retailing Research Council study to understand the fast growing area and plot a course for their companies.

    Jerry Golub of PriceChopper offered a word of caution to those executives who are fearful that social networking will erode control over their company's message. In short, Golub told them that social networking has already eroded that control, creating a new world where shoppers' opinions on a range of topics gain increasing legitimacy almost daily. Cathy Green Burns of Food Lion said in many ways the chatter on social networking provides a "window into the soul of brands" by clearly demonstrating what customers really think about a company's products, services or stores.

    And questioned about the business benefits of social networking, J.K. Symancyk of Meijer explained how his company uses social media to communicate directly with frequent shoppers on specific products, such as holiday specials, to build incremental sales and eliminate inventory that wasn't selling.

    In other FMI news...

    • FMI announced the 12th annual Store Manager Award Grand Prize Winners at FMI2012. The three winners were chosen from nine category finalists recognized for their work in innovative store operations, leadership and community involvement. The winners were Mike Jacob, ShopRite of Hunterdon County, Flemington, NJ; Lee Lucero, King Soopers, Denver, CO; and Ted Boyd, Bi-Lo LLC, Greenwood, SC.
    KC's View:

    Published on: May 2, 2012

    by Kate McMahon

    Hmmm, so this evening’s dinner options are to reheat the leftovers … or “ignite the night.”

    The folks at P.F. Chang’s Home Menu bet that consumers would be tempted by the latter, even at a higher price point in the frozen foods case.

    That gamble is paying off, with P.F. Chang’s Home Menu entrees topping the list of 2011 New Product Pacesetters recently named by SymphonyIRI Group. Backed by an “Ignite The Night” television and social networking campaign, the P.F. Chang meals promise “sizzling, bold” flavors to make your dinner at home more exciting.

    The success of this line launched by the P. F. Chang’s China Bistro chain reaffirms a key trend – that while 55% of consumers are dining out less frequently today versus before the economic downturn, they want quick and easy meals that provide more pizzazz and flavorful options.

    "We are out of the recession, but consumers are still very cautious and looking for smart ways to splurge," Susan Viamari, editor of SymphonyIRI's Times & Trends Magazine told the Chicago Tribune. "What we're seeing is food and beverage manufacturers putting fun twists on products to bring to market a gourmet mindset, product flavor combinations, or restaurant-inspired flavors, because people can't afford to go out as much as they did.”

    Other food products on the Pacesetter list fitting that profile include Lean Cuisine Market Creations, Oscar Mayer Selects, Folger’s Gourmet Select K-Cups, Gold Peak Chilled Tea and Bailey’s Coffee Creamer.

    My family has long been fans of the P.F. Chang China Bistro restaurants, with more than 200 locations nationwide, and its Pei Wei (pay way) Asian Diner quick casual, limited service outlets. So we were quick to try the frozen options (priced at about $9.49 per two person serving) when introduced last year and were pleased with the flavor, particularly the General Chang’s Chicken and the Beef with Broccoli.

    So were others, with the products generating $101.6 million in revenues, and prompting the recent launch of a line of frozen appetizers, joining the 12 entrees. But beyond the product and packaging, there is an emphasis on making dinner at home more interesting. Hence, the “Ignite the Night” slogan on its TV ad campaign (which just aired on “The Good Wife” this week) and on social networking sites. For example, P.F. Chang’s Facebook page includes three suggestions to enhance each dish, ranging from a wine or beer pairing, side sauces, table setting, music playlists or candles.

    Personally, I don’t look to Facebook for suggestions on wine or table setting, and question whether many people do. But the site does an admirable job linking menus and promotions at the restaurants and a user-friendly mobile ordering app with the Home Menu items, including a tool to find the products at your local supermarket.

    But most importantly, two-pronged approach creates a dialogue with the consumer, which works for both restaurant and the home menu. And P.F. Chang successfully manages to expand its footprint, using the supermarket frozen food aisle to expand its sales and build its brand equity.
    KC's View:

    Published on: May 2, 2012

    Bloomberg reports that the Walmart bribery scandal reported by the New York Times - revealing that its fast growth in Mexico over the past decade was fueled by bribes, and that top management was more concerned with details not being revealed and investigations not being allowed to move forward than it was with stopping the systematic corruption and adhering to US law that forbids American companies from bribing foreign officials - puts far more pressure on its new small store concepts to succeed.

    There seems to be some skepticism that Walmart has solved the small store puzzle. According to the story, “Wal-Mart has found out how to make Neighborhood Markets more profitable since starting them in 2000, said two people familiar with the project. In the early years, the net margins for the Neighborhood Markets stores were about 1 percent. Some of them failed and closed. Now they make about 3 percent. Supercenters produce about 5.5 percent net margins...” The story also notes that “at an investor conference in March, Wal-Mart Chief Financial Officer Charles Holley said that Neighborhood Markets have ‘about the same return of a new Supercenter’.”

    • The Wall Street Journal reports that Walmart has agreed “to pay employees $4.8 million in back wages and damages, as well as $464,000 in civil penalties, on Tuesday after the U.S. Department of Labor found the company failed to pay overtime to more than 4,500 workers ... the Labor Department found that workers employed as Wal-Mart or Sam's Club security guards or as managers in the stores' vision departments between 2004 and 2007 were denied overtime pay when they were incorrectly classified as exempt from the federal Fair Labor Standards Act's overtime laws.”

    According to the story, “While the fine pales in comparison to the $352 million the Bentonville, Ark.-company paid in 2008 to settle 63 suits across the country over allegations it didn't provide workers with proper rest and meal breaks, the settlement highlights the lingering complaints Wal-Mart faces over how it treats its workers.”

    • The Network of Executive Women (NEW) announced that Mike Duke, the president/CEO of Walmart Inc., will be inducted into the Network of Executive Women CPG/Retail Diversity Hall of Fame on June 28, 2012 during Women's Day at the LPGA, in Rogers, Ark.

    Duke will receive the NEW William J. Grize Diversity Hall of Fame Award, named after the late CEO of Ahold USA, an early advocate of industry diversity. The award, previously known as the NEW Outstanding Champion Award, honors industry leaders who have demonstrated "an enduring commitment to the advancement of women and to creating a diverse and inclusive workplace," NEW announced.
    KC's View:
    First, about the NEW award to Mike Duke.

    I’m sure this has been in the works for some time. I’m sure that NEW felt that it could not - and maybe should not - rescind the honor, despite the allegations incriminating Duke in the Mexico bribery scandal.

    But they better hope that no more charges or accusations are made between now and June 28.

    I also think that this is just part of what will be a concentrated effort to rehabilitate Duke’s and Walmart’s sullied reputations.

    As for the need for the small Walmart stores to succeed ... we’ll see what happens. I’m not convinced that they have the operational discipline to make them work, but I easily could be wrong.

    And regarding the fine Walmart is paying...I wonder if the retailer will be more willing to settle such cases for the foreseeable future, hoping to avoid any more bad publicity.

    Published on: May 2, 2012

    by Kevin Coupe

    This must be a metaphor for something. One thing is for sure - this is the kind of story I just can’t resist.

    The Sydney Morning Herald reports that Clive Palmer, described as a “Queensland billionaire mining magnate,” has hired a shipyard to build a new cruise ship.

    But not just any cruise ship. It is designed to be near replica of a very well known cruise ship, one that recently got a lot of attention because of a 100 year anniversary that was being observed.

    That’s right. Clive Palmer wants to build the - wait for it - Titanic II.

    It is expected that the Titanic II’s maiden voyage - quite naturally, from Britain to the US - will take place in 2016.

    The cost has not been announced, and Palmer says that “will be every bit as luxurious as the original Titanic but of course it will have state-of-the-art 21st-century technology and the latest navigation and safety systems.”

    He also says something else that sounds vaguely familiar: “It is going to be designed so it won't sink.”

    I think we’ve heard that before...
    KC's View:

    Published on: May 2, 2012

    Schenectady, New York-based Price Chopper announced that it is opening a new 19,000 square foot store, in Saratoga Springs, New York, described as a “ a first-of-its-kind concept store” and “a smaller, full-service grocery store designed to meet the needs expressed by this community and to complement the larger nearby Price Chopper stores.”

    The store, located in a condominium complex, “offers fresh produce and bakery, full-service, meat, deli and seafood departments, as well as the most popular products within most of the categories offered in the larger Price Chopper formats. The new store also includes a café with a substantial eat-in or take-out food service offer, inclusive of Price Chopper’s signature fresh made pizza, Roasters Chicken, sandwiches and wraps. During the summer months, café seating will be provided outdoors as well as indoors.”
    KC's View:
    Can’t wait to see it. It sounds cool, and I just think that these kinds of diversifications are going to be more important to retailers going forward. They may be tougher to run profitably, but they seem to be what consumers are demanding.

    Published on: May 2, 2012

    Consumers Union, the advocacy arm of Consumer Reports, said yesterday that it has “called on the U.S. Department of Agriculture (USDA) and the U.S. Food and Drug Administration (FDA) to take new measures to detect and prevent mad cow disease in U.S. beef and dairy cows, in light of USDA's announcement last week of a new case in a California dairy cow.”

    The consumer advocate group said it has sent letters to USDA Secretary Tom Vilsack and FDA Commissioner Margaret Hamburg saying that the new discovery is a warning flag, and that the government out to be testing far more than the 45,000 cows that it currently does - out of 35 million cattle slaughtered in the US each year. Consumers Union would like to see the testing sample raised to 400,000 annually.

    “It is essential that USDA conduct a thorough investigation of this case, including testing of all of the infected cow’s offspring, and all cows that may ever have consumed the same feed, including current herd mates,” stated Dr. Michael Hansen, a senior scientist with Consumers Union, and an expert on BSE.

    Consumers Union also called on FDA to ban certain materials in cattle feed that could potentially transmit mad cow disease; to prohibit all cattle brain and other high-risk material in animal feed, including pet food, since these are the tissues most likely to harbor the infectious mad cow agent; and to prohibit the use of cow blood in milk replacer for weaning calves, noting that blood transfusions are a known means of transmitting BSE infections.
    KC's View:
    I’m not smart enough to understand all this stuff, but testing 400,000 cows seems reasonable to me, and a lot safer than just testing 40,000.

    Published on: May 2, 2012

    The Associated Press reports that seven months after new rules went into effect limiting the amount of money that banks could charge as a fee when consumers swipe their debit cards, the Federal Reserve says that “the average fee paid by merchants for debit card transactions covered by the rule was 24 cents in the fourth quarter of 2011. That compares with an average of 43 cents before the Fed's rule took effect Oct. 1.”

    As the story notes, “Before the Fed set its level last June, merchants had said that reduced fees would allow them to lower their prices for consumers. Banks, on the other hand, had warned that a limit on what they can charge retailers would force them to cut back on other services, such as free checking and rewards programs.”
    KC's View:

    Published on: May 2, 2012


    • The Kansas City Business Journal reports that Target Corp. is remodeling and expanding the food sections of eight of its stores there.

    According to the story, “The remodeled stores dedicate about 10,000 square feet to a grocery section that includes fresh produce, pre-packaged baked goods, frozen foods, fresh packaged meats and more. Almost 1,000 stores offer these sections now; by the end of the year, they’ll be in more than 1,100 Target stores.

    “The remodels also enhance the beauty aisles, widen aisles in the home departments and add seating in the shoe departments.”

    • Price Chopper was recognized by GXT Green for its significant contributions to sustainability efforts and was named to the 2012 GXT Earth Day Honor Roll.

    In its announcement, GXT cited Price Chopper’s commitment to green building and environmental initiatives, saying that “Price Chopper has shown tremendous leadership in sustainability including LEED Certifications, and an innovative Natural Gas Fuel Cell that provides 60% of the electric energy for its newest Colonie store. They have made a public commitment to a sustainable seafood supply in their chain. They continue to commit to more sustainable stores, products, and packaging for their products, which ensures that they minimize their impact on our environment.”

    GXT Green is a division of Global Exchange Technologies, which helps the corporate community understand and mitigate their greenhouse gas emissions through verified, high value and high volume carbon offset projects such as rain forest preservation or reforestation.

    • The Los Angeles Times reports that “a Riverside County judge has ordered Ralphs and its parent company, Ohio-based Kroger Co., to pay $300,000 in penalties for selling frozen dairy desserts and other items with inaccurate prices and labeling.”
    KC's View:

    Published on: May 2, 2012

    ...will return.
    KC's View: