business 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 8, 2012

    by Michael Sansolo

    There are all kinds of things we love writing about here at MNB and we believe all of them are important. Whether it’s technology or great hamburgers, supply chain innovations or movie metaphors, we hope you find it all makes sense and matters because the truth is it all should make sense and it certainly matters.

    But occasionally we have to remember that what makes the food retail industry go is much more basic. As a CEO of a company told me years ago, “Nothing really matters if we don’t sell a few groceries.” So let’s pause for a second to discuss selling a few more groceries and fresh products.

    At last week’s Food Marketing Institute (FMI) show in Dallas, one of the workshops that resonated most with me was about that simple topic: selling more groceries through creative and logical merchandising. It’s a topic we can’t discuss enough.

    The session, moderated by my friend Thom Blischok of Booz and Company, examined the sales and profit successes recorded in two specific cases when a single retailer and supplier worked together to do what this business is all about: sell more groceries. As Blischok and his panelists detailed, there are some simple steps that should never be forgotten. Things like:

    • Merchandise products that consumers use for the same need together, no matter how they are traditionally displayed. One example was the importance of putting juice displays near cold and cough remedies because the same people looking for health relief are also looking to ingest more fluids.

    • Think about simplicity in merchandising, especially in categories where the number of SKUs makes the shoppers choice increasingly difficult. Take a hard look at your variety and debate whether you are really helping the shopper choose, or just obfuscating the options with clutter.

    • Remember that when motivated trading partners work together great things can happen. The workshop detailed joint efforts by Clorox and Roundy’s, and Coca-Cola and Kroger, and the results were sales gains in both cases. Nothing bad about that except that, as one audience member pointed out, more retailers need the ability to jump on such programs.

    Not the most profound or cutting edge stuff, but certainly every bit as important as Kevin’s session on e-commerce or mine on social networking. Because while those new trends demand our attention, so do the basics of the business like teaming up to build creative displays and increased sales.

    Of course, if things were that simple, everyone would succeed ... so it’s important to point out the challenges every company faces today which make merchandising so challenging. In a workshop at the co-located American Meat Institute meeting, Anne-Marie Roerink detailed findings on shopper decisions when purchasing meat products.

    As Roerink (a former colleague of mine) pointed out, price is the ultimate trump card these days for so many shoppers looking for ways to balance a budget, which is hardly a surprise. But it might have been more eye opening when she examined cooking techniques and pointed out that frying is way down and slow cooking way up. Such insights though small on their own can help retailers understand new points of emphasis that can also build sales.

    The details differ for every store and every product and that’s why retail success is so challenging. You have to find the answers every day and in countless ways. And that’s why it pays to pause from the new and complex repeatedly to contemplate the key question of success in business. How do we sell more and how to sell it profitably?

    That’s a discussion worthy of any company or any meeting.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: May 8, 2012

    by Kevin Coupe

    Daily deal company Groupon has had its problems, what with questions raised about its financial reporting procedures and accounting practices.

    As the company looks to put its house in order, here’s a fascinating statistic that speaks to the changing habits of consumers - that almost 30 percent of all the deals sold to consumers in North America during April were via mobile devices.

    That’s remarkable ... and a percentage that is likely to rise.
    KC's View:

    Published on: May 8, 2012

    Dow Jones reports that Safeway said yesterday that it plans to “eventually sell pork that comes from farms that don't confine breeding sows into small crates known as gestation stalls.” While companies like McDonald’s and Burger King have made similar pronouncements, the story notes that Safeway is the first supermarket chain to go this far.

    And, the story says, “The commitment from Safeway, with its 1,678 stores in the U.S. and Canada, is substantial for those who believe the use of the gestation stall are inhumane because the company is the fifth-largest grocery retailer in the U.S.

    “The stalls are narrow two-feet-wide cages used to confine breeding sows, which bear offspring that are slaughtered to make pork products. Breeding sows often can't turn around in the narrow stalls and are limited to standing up or sitting down.”

    Mercy For Animals, a advocacy group that has been pushing for the change, said that it “is cautiously optimistic about Safeway's plan to move toward a gestation crate-free supply chain. The pork industry's use of gestation crates is one of the worst forms of institutionalized animal abuse in existence and we praise Safeway for acknowledging that this cruel system is unsustainable and must be phased out. By speaking out against these inherently cruel crates, Safeway is taking a positive step forward in improving animal welfare.

    “We hope this announcement is more than PR hogwash and that Safeway acts quickly to remove these cruel confinement systems from its supply chain to spare millions of animals horrific misery and suffering.”
    KC's View:
    “Hogwash”? Really? That’s the best word they could come up with in this story? (There’s probably a group of pigs somewhere that would say that such language is hurtful and cliched, and amounts to as kind of verbal abuse of the species.)

    You’d think, by the way, that they’d be a little more gracious in an official statement designed to laud a company for moving in its direction.

    Published on: May 8, 2012

    Beef Products Inc. (BPI), described as the nation’s top producer of lean finely textured beef - now known popularly as “pink slime” - said yesterday that it will permanently close three plants where it previously has suspended operations in the wake of the controversy over ammonia-treated beef filler.

    The plants are in Amarillo, Texas; Garden City, Kansas; and Waterloo, Iowa. BPI’s South Sioux City, Nebraska, plant will continue to operate at a reduced capacity, the company said.

    Reuters reports that the closures will result in more than 650 people losing their jobs.

    "While we had hoped to be able to resume operation at those plants, that is not going to be possible in the immediate future and the temporary suspension of operations will in fact result in the elimination of those jobs effective May 25, 2012," the company said in a statement.

    Numerous retailers - big and small - stopped using the lean finely textured beef when the controversy erupted, and were very public about disavowing usage of it in their ground beef.
    KC's View:
    One can feel awful about 650 people losing their jobs and still feel that the pink slime issue was one ultimately created by a lack of transparency by manufacturers and retailers. We’re living in a world where technology creates transparency, and transparency potentially creates problems for any company not being up-front about its products and services.

    Published on: May 8, 2012

    USA Today writes that a tough job market, an uncertain economy and a general distrust of large institutions have combined to turn Generation Y into perhaps the most entrepreneurial generation in history.

    “According to a 2012 report by the Kauffman Foundation,the largest entrepreneurial foundation in the U.S., 29.4% of entrepreneurs were 20 to 34 years old, and roughly 160,000 start-ups a month were led by Millennials in 2011,” the paper writes. And studies show that even those Millennials who are not starting business would like to, but don’t have access to capital or a good idea.
    KC's View:
    I’m a born-again entrepreneur - I only went off on my own when I turned 40, when the company I was working for laid me off as a way of saving money. It seemed like a good time - Mrs. Content Guy wasn’t working for pay (she was raising our two sons) and she was pregnant with our daughter. Just actually was lousy timing, but I was tired of other people screwing around with my career, so I stopped looking for a job and concentrated on trying to do good work that would pay the mortgage. I got lucky ... I’m still doing it, 17 years later.

    My point here is that I don’t blame the younger generation for not wanting to work for other people...but I would also suggest that entrepreneurship can happen anytime. Sometimes it helps to have experience under your belt.

    But I also would suggest that companies can take advantage of these entrepreneurial leanings, because this also means that this generation would like to take ownership of their work and careers. There has to be a way of channeling that, of giving them away to be entrepreneurs while working for a larger company.

    Published on: May 8, 2012

    • The New York Times reports this morning that is leaping into what it calls “the high end of the fashion pool,” and is “taking on the high-end clothing business in its typical way: go big and spare no expense.” This means losing hundreds of millions of dollars a year on free shipping in its quest to make a splash in a category in which it currently does not have a major presence.

    According to the story, “Amazon’s decision to go after high fashion is about plain economics. Because Amazon’s costs are about the same whether it is shipping a $10 book or a $1,000 skirt,” gross profit is higher on the fashion item.

    The story notes that while Amazon has sold clothes for years, this is the company’s first concerted effort at making a dent in the high fashion world ... and it is an effort not entirely appreciated by top brands, which are afraid that Amazon will drive down prices and commoditize products.
    KC's View:
    History would suggest that the high fashion industry has a lot to be worried about, since that is precisely what Amazon has done in every other category in which it has been successful. As we’ve said here before, online shopping is by its very nature more transparent, and transparency leads inevitably to deflationary pricing.

    Amazon CEO Jeff Bezos says that in the long run, it will be better for the fashion industry to work with Amazon rather than against it. Whether or not that is true, history and momentum would suggest that high fashion retailers need to start thinking that how their customers define value and what differential advantages their stores are going to offer.

    Published on: May 8, 2012

    Bloomberg Business Week reports that “after vowing to open more than 1,000 stores selling fresh fruit and vegetables in underserved urban neighborhoods, or ‘food deserts,’ grocers have opened a fraction of them, putting in jeopardy Michelle Obama’s effort to improve food choices for low-income Americans.

    “Wal-Mart Stores Inc., which said last July it would have 300 food-desert stores nationwide by 2016, has opened 23 and delayed opening some locations after a backlash from activists. Supervalu Inc., which pledged to double to 2,376 its Save-A-Lot stores, has slowed the pace of openings amid declining sales and scarce financing for its licensees. Meanwhile, grocers are opening stores in wealthier urban enclaves.”

    In part, the story suggests, the problems have been created by various problems encountered by the companies - Supervalu is in turnaround mode, and Walmart continues to encounter opposition from highly unionized cities. But there’s also another problem - low income communities, by their very definition, have less money to spend on food, and it is hard to make money with them. That’s tough to rationalize if you are a company already having issues with the bottom line.
    KC's View:

    Published on: May 8, 2012

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

    Advertising Age reports that Pepsi’s “ambitious, high-energy marketers” have come up with a new campaign designed to “ to chart a new course for a brand that has endured an embarrassing slip to the No. 3 soda, just behind Diet Coke.”

    The new campaign, which uses the slogan “Live For Now,” is designed to make the brand cool again and “returning Pepsi to pop-culture relevance” that will lead to growing sales and profits for the company.

    With all due respect to my friends at PepsiCo, they may be sending mixed messages. “Live For Now” is the verbiage, but it is the image of a dead, drug-addicted, likely pedophile and absolutely weird pop star - Michael Jackson - that is being put on its cans.

    I can understand wanting to pay tribute to its marketing past. But they would be better advised to turn to another Michael - Michael J. Fox - who did so many great commercials for the company back in the eighties and who has done nothing to embarrass himself or his brand in the years since, and in fact has become through his charity work and medical research funding something more than just an actor.

    • The Philadelphia Inquirer reports that 16 years after it identified the market as a place where it would like to open a store, Wegmans has opened a 123,000 square foot unit in King of Prussia, Pennsylvania.

    Fortune was out yesterday with its list of top revenue-generating US companies, and Exxon Mobil passed Walmart to retake the top spot on the “Fortune 500” list.

    Walmart was second, followed by Chevron, ConocoPhillips, General Motors, General Electric Co., Berkshire Hathaway, Fannie Mae, Ford Motor Co. and Hewlett-Packard Co.

    How many of these top ten companies have gotten - or are getting - federal tax subsidies? I was trying to figure it out this morning, but sort of ran out of time.

    People on one side of the aisle will defend the tax subsidies to the oil companies, and on the other will defend the support given to companies like General Motors and Fannie Mae. I almost don’t want to get into that argument ... but I just thought this was interesting.

    • The Los Angeles Times reports that Ron Burkle - almost always described as “supermarket magnate Ron Burkle” - is shopping in a new aisle these days. Yesterday, Burkle’s Yucaipa Cos., together with Perry Capital, took ownership of Barneys New York in a debt restructuring deal.

    Burkle’s interest in Barneys dates back to 2010, when he tried but failed to buy the company.
    KC's View:

    Published on: May 8, 2012

    • Diamond Foods announced the appointment of Brian J. Driscoll as President and Chief Executive Officer, replacing Rick G. Wolford, a Director who has served as Interim Chief Executive Officer while the Company conducted a search for a permanent CEO.

    Driscoll, a veteran of Kraft, Nestle and Procter & Gamble, most recently was CEO of Hostess Brands.
    KC's View:

    Published on: May 8, 2012

    ...will return.
    KC's View:

    Published on: May 8, 2012

    • The four finalists on “The Voice” - Jermaine Paul, Juliet Simms, Tony Lucca, and Chris Mann - sang their hearts out last night on the penultimate program before the year’s winner is announced tonight.
    KC's View:
    I know this has nothing to do with MNB’s usual business ... but as I’ve noted here before, I’m totally hooked on “The Voice.” And I’m not someone who ever liked any sort of reality television, other than news and sports. But I wanted to find a place to say that I think that while all four performers are terrific, Juliet Simms strikes me as far and away the standout star ... even with a cold last night, she knocked “Free Bird” and “Born to be Wild” out of the park.

    We’ll find out in a few hours if I’m right...

    Published on: May 8, 2012

    The large and growing segment of consumers that are using digital tools to plan their grocery shopping and make purchases online is a key target for grocery retailers.  Overall, consumers who plan their trips using digital circulars, online or mobile shopping lists, and digital coupons and recipes SPEND 68% more  at their grocery retailer than the average shopper. Consumers who look for the convenience of online grocery shopping are even more valuable with an average spend that is DOUBLE that of traditional shoppers.

    Do you have the right set of solutions to provide an optimal experience for this shopper?  MyWebGrocer is the leading provider of digital grocery services and can power your online tools.

    Contact MWG today to learn more: Email us at, or call (888)662-2284.
    KC's View: